DataRoom AM: BHP's nickel flip

BHP Billiton’s divestment and spin-off plans are back in focus, while Treasury Wine Estates catches the attention of another potential suitor.

Divestment plans at BHP Billiton are again under the microscope as its Nickel West business is put on the block. But will the miner chase the ultimate simplification of a $15 billion spin-off?

Elsewhere, Treasury Wine Estates again draws the spotlight on takeover speculation, AGL Energy works on a back-up plan for NSW growth and a fresh face joins the lengthening list of possible IPO candidates.

BHP Billiton has said it is reviewing all options for the long-term future of its Nickel West business barely weeks after Glencore Xstrata declared an interest in the assets. The timing of a sale would be opportunistic, coming on the back of a surge in the beaten down nickel price in recent weeks on an ore export ban in Indonesia and the risk of sanctions in Russia. The metal’s price has climbed close to 10 per cent over the last week alone, meaning the asking price could tilt towards the top end of current estimates for $600-$800 million.

The enhanced speculation about Nickel West -- which comprises the Mt KeithCliffs and Leinster mines and associated refineries and smelters -- followed ‘simplification’ comments from BHP boss Andrew Mackenzie that again stirred talk of a massive $12-$15bn spin-off of the miner’s non-core assets.

While Mackenzie insisted no decisions had been made, it’s interesting to note that the rhetoric on non-core asset sales has been ramped up after reports late last month that former Xstrata boss Mick Davis was manoeuvring to take them off BHP’s hands through his new venture X2 Resources.

Treasury Wine Estates is never far away from takeover speculation, with the latest reports suggesting Constellation Brands may soon make a long awaited move. According to The Australian Financial Review, Constellation is only interested in the troubled US assets, which could fetch anywhere between $500m and $1bn should they be sold.

The news follows Treasury’s move to distance itself from rumours Pernod Ricard was set to make a play on its US assets and three years after Constellation declared it would be interested in buying some of TWE’s divisions should the opportunity present itself. That opportunity may have finally arrived.

In energy, AGL Energy has a back-up plan should it fail to win a bid to overturn the ACCC’s decision to block its proposed $1.5bn purchase of Macquarie Generation, with the company putting its hand up to buy Delta Coastal, another generator that has been put on the market by the NSW government, according to the AFR. The ASX-listed firm has a short list of rivals, with just Japan’s Marubeni and Thai-owned Ratch Australia considered likely to put forward final bids.

In the IPO market, yoghurt maker five:am is mulling an listing as it embraks on a bold expansion plan, the AFR reports. It comes as no surprise given the hot M&A action in the dairy sector that the three-year-old company has reportedly received offers from trade buyers, though the firm appears more likely to pursue joint ventures than sell out.

Meanwhile, clothing brand Lorna Jane has been put up for sale after a failed push to list earlier this year. Owned by private equity firm Champ Ventures and founder Lorna Jane Clarkson, the company has put a price tag of $500m on its head, according to the AFR.

Finally, Telstra has wrapped up the sale of its stake in Hong Kong-based mobiles business CSL, securing a tidy profit of $561m. Questions for what the telco giant will do with its large war chest remain unanswered.

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