DataRoom AM: Confident Leighton

Leighton Holdings’ $1bn sale of its John Holland business to China Communications edges closer, while NAB looks to offload its UK commercial real estate loan book.

Late yesterday speculation of an imminent sale of Leighton’s John Holland operation reached fever pitch. But is a deal really ready to be announced today?

Elsewhere, National Australia Bank seeks to offload a large package of UK loans, Pepper Australia makes a bold play in the race for GE Capital’s local consumer lending operation, and Hoyts appears likely to fall into the hands of its Chinese suitor.

It now appears certain that Leighton Holdings will offload its John Holland contracting division to China Communications Construction Co for a little over $1 billion, it’s now just a matter of time. Both Bloomberg and The Australian Financial Review have speculated a deal could be signed today, though the latest reports suggest a few more details need to be ironed out before an agreement is declared next week.

Either way, China Communications will soon have a foothold in the Australian market having edged out rival suitor Samsung on the deal.

Meanwhile, National Australia Bank has entered talks with three global investment firms on the possible divestment of about half of its $4bn British commercial real estate loan book. Cerberus Capital Management, Pimco and CarVal Investors have lodged bids this week, with the assets tipped to sell next week at close to a 20 per cent discount to book value. The move comes as the bank continues to assess the potential for a float of its entire British banking operation.

Also in finance, lender Pepper Australia is weighing a bold move for control of GE Capital’s $1.5bn-plus local consumer lending division, putting its assets in play through a consortium with Macquarie Group. It is believed Pepper was willing to sell its business into the consortium – which originally included Blackstone – for about $460 million, but Blackstone opted out amid a push from Pepper to retain management rights.

As it stands, Macquarie and Pepper will likely chip in a more conventional joint bid by today’s deadline, with competition coming from TPG, The Carlyle Group and Flexigroup (in a JV with KKR). However, GE will mull an IPO should offers fall short of expectations.

Elsewhere, the previously unidentified backer of Hoyts suitor ID Leisure International Capital has been exposed as Sun Xishuang, a Chinese-based billionaire. Last week it was revealed that the Pacific Equity Partners-owned cinema chain had received an offer from ID Leisure after abandoning IPO plans. According to the AFR, a potential $900m deal may be sealed by the end of the year as PEP seeks approval from its lenders to sign on the dotted line.

In the IPO market, QMS remains keen to offload its Australian outdoor ad division, though expectations on size have been lifted. According to the AFR, a float could secure a $150m valuation, with the first quarter of next year firming as the likely timing of the IPO.

Finally, Bradken has opened its books to the PEP-Bain Capital JV that recently lobbed an $872m takeover proposal, while Perpetual’s first listed investment company – Perpetual Equity Investment Company – has raised over $250m ahead of its planned December 18 listing.