DataRoom AM: Dairy déjà vu

Dairy groups battle it out for control of United Dairy Power, while Goldman Sachs weighs bids for BG’s Queensland gas pipelines.

The end of 2013 drew plenty of M&A eyes to the local dairy sector as a bidding war erupted for Warrnambool Cheese and Butter and already there is a sense of déjà vu for 2014 as United Dairy Power gets put on the block.

Elsewhere, the race for BG Group’s gas pipeline in Queensland remains on a knife-edge, takeover speculation continues to swirl around Santos and rumours of asset sales at Arrium draw market attention.

This time last year Canada’s Saputo was fighting Murray Goulburn and Bega Cheese for control of Warrnambool Cheese and Butter. Now, 12 months on and with Saputo having long locked away WCB, a scrap between the three is expected for Victorian milk processor United Dairy Power.

According to The Australian Financial Review, the three dairy groups expect UDP liquidators PPB Advisory to launch an auction this week and will all likely bid ahead of a December deadline. Early indications point to a valuation of as much as $100 million, with private equity firms tipped to battle the dairy players for control.

Meanwhile, Goldman Sachs has been sorting through bids received for BG’s $4bn gas pipeline assets in Queensland. A winning bid will be announced within a fortnight and while APA Group remains the favourite, consortiums led by AMP Capital and IFM shouldn’t be dismissed given their access to cheap funding.

Also in energy, takeover talk is ramping up at Santos as investors tip oil and gas M&A to pick up now that stocks have taken a beating at the hands of a collapsing oil price. French giant Total is the most heavily linked to a potential offer, but no bid has been put forward to date. Any prospective buyer will need confidence in an imminent recovery in energy prices to proceed.

In mining, Fort Street’s involvement with Arrium is likely to lead to further asset sales at the struggling mining and materials business. Analysts have called for a partial sale of Arrium’s Moly-Cop consumables division to reduce gearing. A deal could reap hundreds of millions of dollars for the business, with private equity and Japanese trading houses seen interested.

Elsewhere, Pacific Equity Partners has divested a 9.5 per cent stake in Spotless for $200 million with the aid of Deutsche Bank. The widely tipped deal came after investment banks lobbied hard for the rights to sell the shareholding and leaves PEP with Spotless stock worth a little over $700m.

Finally, Qantas Airways has teamed with JV partner Japan Airlines to inject a further $114m into Jetstar Japan amid an expansion push.

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