DataRoom AM: BHP setback

BHP Billiton has received a blow in its hunt for a high valuation for its Nickel West assets as a big name contender drops out of the race.

Elsewhere, the takeover of David Jones clears its biggest hurdle, merger talk in the media sector reignites, the Productivity Commission urges more government asset sales and a full takeover of Devine is now a probable outcome.

The field of suitors for BHP Billiton’s Nickel West operations has thinned as favoured contender Glencore opted out after conducting due diligence, according to The Australian Financial Review. Six parties were previously believed to be in the hunt for the $600 million to $800m assets, including commodity trading giant Trafigura, Canada’s Sherritt International and China’s MMG and Jinchuan Group. Head of the queue of suitors, however, is Mick Davis’ newly formed X2 Resources, which has a war chest to deploy on second-tier mining assets.

In retail, logic won over bravado at David Jones, with Solomon Lew opting not to use his stake to shoot down the generous takeover offer made for the department store retailer. In all, over 89 per cent of votes cast were in favour of the $2.15 billion acquisition by Woolworths SA. It leaves Federal Court approval as the last obstacle, with the takeover set to be wrapped up on August 1. David Jones’ ‘DJS’ code will be seen on ASX boards for the last time this Friday.

In media, UBS and Gilbert Tobin have reportedly kickstarted talks with Southern Cross on behalf of Nine Entertainment as merger speculation swirls. The AFR said the discussions were at an informal level ahead of possible changes to media ownership laws and Nine could yet opt to go the simpler route of making a play for regional affiliate WIN Corporation.

The Productivity Commission has re-entered the privatisation debate, arguing more government-owned ports and transportation agencies should be hived off. Among the assets put forward as ideal sale options were Snowy Hydro, Australian Rail Track Corporation and Airservices Australia. Selling such assets would free up funding for infrastructure spending, but may not be politically feasible.

In property, Devine has hired Goldman Sachs to advise on a full takeover of the business. As previously suggested in this column, the auction of 50.6 per cent of the business by Leighton Holdings has stirred interest in a full takeover, with Devine believed likely to send out marketing material to prospective suitors later this week. A deal is expected to reap just shy of $200m.

Also in property, Frasers Centrepoint’s $2.6bn bid for control of Australand has been declared "fair" by independent expert KPMG. The news paves the way for what will most likely be a strong acceptance rate from Australand shareholders ahead of an August 7 deadline.

It’s not the only deal Frasers is involved with that is raising eyebrows, however, as the launch of Frasers Hospitality Trust in Singapore is tipped to lead to Australian hotel assets worth $500m changing ownership.

Meanwhile, listed curtain manufacturer Kresta has received a $34.3m takeover offer from Hong Kong-based Ningbo Xianfeng New Material Co. The target’s board has told investors to sit tight as an independent view is sought on the deal.

In the IPO market, freight and logistics software maker WiseTech Global has joined the list of upcoming floats. According to the AFR, WiseTech will hit ASX boards before the end of the financial year, with a market capitalisation of over $1bn.

Elsewhere, UBS and Deutsche Bank have won the right to conduct scoping studies on the planned sale of 49 per cent of NSW’s electricity businesses, beating out a field that likely also included Macquarie Capital, Goldman Sachs, Lazard and Morgan Stanley.

Finally, Woodside Petroleum has sought to further its future growth potential by claiming a 70 per cent stake in Beach Energy’s Lake Tanganyika project in Tanzania, while risk management firm SAI Global prepares to update shareholders on its auction process later this week.