DataRoom AM: Big-spending Nine

As the Nine Entertainment float nears reality, the group appears set to continue its spending spree with its regional affiliate in its sights. Meanwhile, fellow noteworthy IPO candidate Dick Smith Electronics appears ready to go to the market in December after its owners made a big concession.

Elsewhere, political games continue over the GrainCorp takeover, Bega Cheese loses ground in the chase for Warrnambool Cheese and Butter Factory and Dexus Property Group appears set to claim the Commonwealth Property Office Fund.

Nine Entertainment, Dick Smith Electronics

As the Nine Entertainment IPO edges closer, it’s becoming clear that the media group is keen to spread its wings.

Nine has been on somewhat of a spending spree of late, buying out Microsoft’s stake in the Mi9 joint venture as well as retaining the NRL and cricket rights and acquiring the WIN Corporation stations in Adelaide and Perth.

But it may not be done just yet.

According to The Australian Financial Review, Nine has openly flagged further acquisitions should the 75 per cent audience reach rule be scrapped as expected.

“In that event, Nine Network would consider all of its options in light of market conditions and the actions of its competitors, amongst other factors, which may potentially involve NEC engaging in a merger or undertaking acquisitions,” the group’s updated prospectus reportedly reads, in a none-too-subtle hint it harbours strong M&A ambitions.

Nine boss David Gyngell last week told the paper he suspects the reach rule could be gone as early as next year. And the group has already positioned itself for a run on its regional partner WIN Corp, having signed a deal in September to ensure it gets first look should the reach rule be abandoned.

Nine is expected to list on December 6 with a market capitilisation of more than $2 billion. It will likely be the most closely watched of all ASX IPOs this year given the company’s heritage and recognised name.

Meanwhile, another high-profile IPO anticipated before the end of the year appears to be going ahead, with the AFR reporting Dick Smith Electronics’ owner Anchorage Capital Partners will look to raise $300 million through the sale of a float of a 50 per cent share in the business.

Anchorage had hoped to get out entirely, but investors are keen for the private equity group to show a sign of confidence in the retailer’s future by sticking around a bit longer.

According to the report, joint lead manager Goldman Sachs had considered walking away if the group didn’t maintain a significant stake.

GrainCorp, Archer Daniels Midland

It appears Treasurer Joe Hockey’s comments about bullying in relation to Archer Daniels Midland’s GrainCorp bid go beyond the Nationals, as we suggested in this column on Friday.

Last week, Hockey warned he would not be intimidated on any takeover deals in what was believed by many as a shot across the bows to Coalition partners the Nats, who had just launched an offensive against the $3.4 billion Archer Daniels Midland proposal.

Hockey, however, further clarified the comment at the Centre for Independent Studies on Friday, explaining that it “applies to applicants as much as it applies to anyone else", adding he would not shy away from blocking deals if he thought it was in the country’s best interests.

Indeed, while the timing was significant – being just a few days after Nationals leader Warren Truss came out criticising the deal – it should also be noted that it came at a time when senior ADM execs were in town.

It seems the Treasurer just wants a bit of peace and quiet from everyone.

The Greens, meanwhile, aren’t going to allow that, pressing for the Coalition to delay a decision once again as a Senate inquiry likely moves forward.

However, there comes a point when, for the good of all parties involved, we just need a decision. And that point really should be December 17 – the current deadline.

Dexus Property Group, Commonwealth Property Office Fund

Dexus Property Group and its joint venture partner, Canada Pension Plan Investment Board, are set to win approval for their bid for control of the Commonwealth Property Office Fund, according to The Australian.

Last month, Dexus lobbed in a lowball offer of $1.15 a share for CPA and was quickly rebuffed by the fund’s managers. However, Dexus entered a trading halt on Friday ahead of news of a revised bid.

According to The Australian, the improved proposal, said to be around $1.20, is likely to win approval.

CPA securities last traded at $1.19.

The deal is expected to be applauded by Dexus investors and, as we discussed last month, could even lead to an improved credit rating for the group.

Cover-More, Vocation, Mark Carnegie, Riversdale

Dick Smith isn’t the only company making a late run at the ASX boards this year, with travel insurance business Cover-More reportedly set to join the host of big names listing in December.

According to the AFR, a Cover-More float could raise as much as $700 million with lead advisors Macquarie Bank and UBS reportedly working flat out to get the listing through before Christmas.

Owner Crescent Capital Partners is thought to be keen to offload its entire holdings.

Elsewhere in the IPO market, a planned $250 million float of the Mark Carnegie-backed Riversdale pub group may be put on hold after the company received an attractive recapitalisation proposal, according to The Australian.

Meanwhile, Vocation has priced its IPO at the highest end of the range on the back of strong demand. The education training provider is expected to raise $253.5 million through its December 9 listing.

Let the IPO frenzy begin.

Wrapping up

Picking the likely victor in the fight for Warrnambool Cheese and Butter Factory remains challenging, with original suitor Bega Cheese’s share price moves seeing it drop well off the pace once again. Bega’s stock hit an all-time high earlier this month when Fonterra took a slice, but a 4 per cent fall of the stock Friday means Bega’s cash and scrip offer is now more than 5 per cent below Saputo’s all-cash offer and only 1 per cent above that of Murray Goulburn’s bid.

Meanwhile, Billabong International has received a major setback to its planned $386 million refinancing deal, with its AGM postponed until next year after the Australian Securities and Investments Commission rejected an independent expert’s review of the proposal. The eagerly anticipated bailout still requires shareholder approval.

Elsewhere, Platinum Capital is hoping to raise $98.3 million in a placement and rights issue, according to the AFR. The group went into a trading halt on Friday.

Finally, Twitter received a bit of a reality check on Friday as its shares fell more than 7 per cent. But the group is still 60 per cent above its listing price and has undoubtedly handled the float much better than rival Facebook.