DataRoom AM: BHP drum beat

Rumours of BHP demerger plans may be an exercise in attracting buyers, while Nathan Tinkler is reportedly raising capital for Peabody's Wilkie Creek mine.

The world’s largest miner could be about to slim down through a $20 billion demerger of non-core assets. The idea is logical on the surface, but even BHP Billiton would admit that $20bn seems a bit rich.

Elsewhere, another Australian dairy firm falls into foreign hands, former Xstrata boss Mick Davis builds a hefty war chest, Nathan Tinkler circles a Queensland coal asset and Therese Rein cashes in on her jobseeker business.

BHP Billiton has failed to directly address reports it is considering a $20bn spin-off of its non-core assets, instead declaring that a number of divestment options remain under consideration.

The simplicity of such a move would appeal, though the idea the assets could be worth $20bn is wildly optimistic given the market subscribes very little value to the non-core assets. A spin-off in the order of $12bn to $15bn would appear more likely.

The development suggests trade sales aren’t quite stirring the interest BHP had hoped. However, given the news wouldn’t be public if BHP and advisor Goldman Sachs didn’t want it broadcast, it appears largely an exercise in drawing out bidders for its non-core assets.

One such bidder may be X2 Resources, which has built a sizeable war chest to pursue deals in the commodities space. Led by former Xstrata boss Mick Davis, X2 now has as much as $3.75bn at its disposal for takeovers of battered mid-tier projects and his knowledge as a BHP rival and former BHP finance chief leaves him well equipped to select the right assets.

Another big mining name, Nathan Tinkler, can’t escape the headlines, this time drawing attention for chasing Peabody Energy’s Wilkie Creek coal mine. According to The Australian Financial Review, Tinkler is trying to drum up funding, with Asian funds believed to be interested in backing a $100 million purchase.

In dairy, a foreign predator has snapped up another Australian firm, with Western Australia’s Harvey Fresh falling into the hands of Italy’s Parmalat. The owner of the Pauls and Vaalia dairy brands reportedly paid $117m to complete the deal.

It is the third significant dairy takeover of the year after Canadian group Saputo sealed control of Warrnambool Cheese and Butter for $500m and a Hong Kong-based investor paid $70m for United Dairy Power.

Therese Rein is in for a big payday after her jobseeker company, Ingeus, agreed to a $220m takeover. American employment firm Providence Service Corporation will retain Rein, the wife of former Prime Minister Kevin Rudd, as managing director of Ingeus. Over half of the buying price is contingent on performance hurdles being met over the next five years.

The first quarter of the calendar year is behind us and it wasn’t a great one for the IPO market. The largest float of the quarter was the $188.5m listing of SG Fleet, leaving investment bankers’ predications of a strong March dead in the water. Still, bankers remain confident the second quarter will be an improvement.

One company potentially boosting IPO numbers in 2014 is Mantra, which is likely to make a fresh attempt at a listing later in the year, the AFR reports. The hotels operator has reportedly rebuffed several lowball takeover offers since abandoning a float in March.

In infrastructure, Hastings Fund Management has lured the state-owned China Merchants Group into a joint bid for control of the $700m Port of Newcastle, according to the AFR. The two parties will try to fend off competitors including Macquarie Infrastructure and Real Assets, Cheung Kong Infrastructure and Deutsche Asset & Wealth Management.

Finally, the preferred bidder for the $2bn professional finance unit of Investec Australia could be chosen this week. Macquarie Bank, National Australia Bank, Bank of Queensland and Bendigo and Adelaide Bank are among the suitors.

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