DataRoom AM: BHP sheds shale

BHP Billiton plans to auction off its US shale operations, while India's Adani Group looks to sell part of the Abbot Point project.

BHP Billiton has detailed plans to exit the worst performed division of its US shale operations, in a move broadly reminiscent of Rio Tinto’s divestment of its Riversdale Mining assets this year. However, BHP will at least be able to recoup significantly more than the $US50 million Rio reaped through its bargain-basement sale.

Elsewhere, Adani chases a partial sale at Abbot Point, Telstra seeks a deal with US-based Roku and there’s mixed news on the IPO front.

BHP Billiton will run an auction to offload its Fayetteville Shale operations in the US, which it picked up from Chesapeake Energy in 2011 for $US4.75 billion ($5.39bn). However, the mining giant has warned it will not proceed if a suitable valuation cannot be agreed.

Since the acquisition three years ago, BHP has been forced to downgrade the value of Fayetteville to the tune of $US2.84bn, a move that cost former boss Marius Kloppers his bonus in 2013. It leaves the assets with a current recognised value of about $US2 billion, but given depressed energy prices and the cost problems at Fayetteville, that would appear an optimistic sale price.

Meanwhile, the plot has thickened on developments at the Abbot Point project, with Morgan Stanley hired by Indian giant Adani to sell part of its stake in the coal port to fund its controversial expansion. The news comes just a week after Morgan Stanley said it would not “lend to or invest in” the Abbot Point expansion, with the ban clearly not stopping the bank making coin from the port’s extension.  

It is not yet clear how much of the development Adani will sell.

In the IPO market, the first sign of float fatigue has emerged as construction software developer Aconex abandons its planned November listing. The $400m firm was set to join the ASX on November 18, but despite strong demand from investors during its bookbuild, it has opted to cancel on advice it would face a challenging initiation to the market.

The news comes as the government opens applications for retail investors to purchase stock in Medibank Private, the biggest float on the ASX in at least four years. ‘Mum and dad’ investors have until November 14 to stake their claim for a slice of the private health insurer, ahead of the $5bn listing on November 25.

Elsewhere, the $400m NZ operations of APN News & Media are set to be partially listed on the NZX and ASX after the firm hired Credit Suisse and Forsyth Barr to advise on an IPO, according to The Australian Financial Review. APN will likely hold 40 per cent of the business post-listing.

Another IPO candidate, aged-care facility operator Estia, has kicked off an international roadshow to spruik its planned $1bn float. The Quadrant Private Equity-owned firm is making a late rush at ASX boards this year, with plans to run a bookbuild in the second week of December and list ahead of Christmas.

In media, Telstra has initiated talks with US-based video streaming device group Roku as it seeks to replace its T-Box video recorder, the AFR reports. It forms part of a broader push into the media sector that has reportedly seen it discuss the prospect of getting its BigPond media properties onto Google’s Chromecast.

In gaming, the Crown Resorts and Echo Entertainment-led consortiums fighting for the right to build Brisbane’s second casino are due to enter their bids today, with Echo the favourite ahead of an early 2015 decision from the Queensland government.

Finally, biotech giant CSL has paid over $300m to secure control of Novartis’ global influenza vaccine division, Vocus Communications has been confirmed as the mystery suitor behind an all-scrip bid for a $1bn merger with Perth-based Amcom and ASX-listed Wilson HTM has said it will spin off its securities business.

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