DataRoom AM: Chemical attraction

Wesfarmers may be interested in Orica’s non-mining chemicals division, while David Jones looks likely to delay talks with Myer until after earnings results.

Could Wesfarmers be ready to make use of the proceeds of its $1.85 billion insurance arm divestment? Speculation is swirling that the conglomerate may be harbouring interest in Orica’s non-mining chemicals division, though Wesfarmers may have other ideas for its cash pile.

Elsewhere, David Jones takes a measured approach to Myer’s takeover offer, Nexus Energy’s lenders mull options for the firm to dodge liquidation, the Future Fund makes a US push and state-owned ports draw plenty of attention.

A demerger has long been considered the most likely outcome of Orica’s strategic review into its $1bn non-mining chemicals division, though a takeover or joint venture with Wesfarmers is now rumoured as another alternative. Wesfarmers undoubtedly has cash to throw around on acquisitions after selling its insurance business, though it has signalled more interest in offshore retail opportunities than chemicals expansion. There is no timeline on Orica’s review so an update may be months away.

Department store operator David Jones is believed certain to engage with rival Myer on a possible $3bn merger, though talks will wait another fortnight, according to Fairfax Media. The delay stems from confidence at DJs that the imminent release of results by the two retailers will put it in a better negotiating position. However, the prospect of a high profile merger remains a longshot.

As Nexus Energy fights to stave off bankruptcy, its lenders are bickering over the best way for the struggling business to raise money. One option put forward is a bridging loan by senior bank lenders Nomura and Bank of America Merrill Lynch, while the other is the hiving off of assets. The latter is preferred by noteholders who want quick action after the company rebuffed a recent takeover bid and also allegedly turned down a $175 million bid for its stake in the Shell-run Crux project. Such an offer is more than two times the current valuation of Nexus as a whole.

The Future Fund has entered into a $1bn joint venture deal with US-based Hillwood to pursue investments in industrial real estate in North America. The fund joins a growing line of Australian entities more actively pursuing property assets in the US, including Westfield and Grocon.

Suitors for the Port of Newcastle are getting close to judgement day, with final bids due next month. The AFR reports that four consortia are left in the race, with Hong Kong’s Cheung Kong Infrastructure considered a frontrunner for the $700m-plus asset, perhaps slightly ahead of others, including Hastings Fund Management, ATEC Rail Group and Deutsche Asset & Wealth Management.

Sticking with privatisations, the Victorian government expects a scoping study on the $6bn Port of Melbourne to be completed in time for the state budget in May. A sale of the asset is expected soon after the November state election.

In finance, Westpac has spent $5m in claiming a stake of peer-to-peer lender SocietyOne, according to The Australian Financial Review. The deal, made through Westpac venture capital fund Reinventure Group, sees the bank join the likes of Kohlberg Kravis Roberts’ Australian boss Justin Reizes and German-based Rocket Internet in taking a punt on the start-up.

Carsales.com boss Greg Roebuck has turned his firm’s attentions offshore after claiming the Australian Competition & Consumer Commission had effectively killed off any Australian acquisition plans when blocking its takeover of Trading Post last year. Carsales.com yesterday announced a 3 per cent increase in its 19.9 per cent stake in iCar Asia yesterday, with more overseas deals in the works.

Finally, engineering firm Downer EDI has secured a $70m contract for work at the Technical Ammonium Nitrate Plant in Western Australia.

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