DataRoom AM: Fairfax’s TV dreams

Fairfax Media may be looking to buy a slice of Nine Entertainment as media regulation reforms come back on the agenda, while Leighton’s selling spree could soon include another addition.

Expectations of media regulation reform have seen the rumour mill running on high all year and while much has been made of the potential for regional TV network takeovers, Fairfax Media could yet be the biggest player in any shake-up.

Elsewhere, another asset is added to Leighton Holdings’ large list of planned divestments, Woodside Petroleum leaves Shell to deal with its stake sale on its own and Archer Daniels Midland is encouraged to keep its eye on GrainCorp.

Fairfax Media is considering a play for a significant stake in Nine Entertainment that could see it receive a board seat in the TV network owner ahead of possible reforms that may lead to the ‘two out of three’ reach rule scrapped. The latest reports indicate Fairfax could buy shares from major Nine shareholder Oaktree Capital as the hedge fund mulls a partial exit at the end of an escrow period on Thursday. Oaktree holds a 14.3 per cent stake, which would suit Fairfax as current legislation ensures it cannot own more than 15 per cent of a TV network.

Such a move would be viewed as a potential catalyst to a $4 billion, landscape-changing merger between Nine and Fairfax, though major Fairfax shareholder Gina Rinehart may prove a thorn in the side of such plans as the rich-lister would reportedly prefer a tie-up with Ten Network.

Meanwhile, Leighton Holdings’ selling spree could be enhanced, with expectations the firm’s international marine division is on the auction block. The $400m operations will join the John Holland, services and property businesses as part of a long list of planned divestments, worth about $3bn.

While speculation has been rife that the firm has seen little interest in its John Holland division, the latest rumours suggest a number of prospective buyers are undertaking due diligence on both John Holland and the services division, which could be worth a combined $2bn. It comes as expressions of interest for listed property firm Devine, 50.6 per cent-owned by Leighton, fall due today.

Shell’s push to rid itself of its stake in Woodside Petroleum is unlikely to receive a leg-up from the WA-based firm, with Woodside chief Peter Coleman telling Shell the ball is in its court after a selective buyback of 9 per cent of Shell stock was knocked back by shareholders last month. Coleman told The Australian Financial Review that Woodside shareholders had little appetite in further reducing Shell’s stake below the current 13.6 per cent level, which ensures the Australian firm will not direct any of its time to aiding the European energy giant.

In agribusiness, former Coalition senator and current Consul-General in New York Nick Minchin has encouraged US-based Archer Daniels Midland to consider bidding again for GrainCorp in the medium-term. ADM had a near-$3bn bid for GrainCorp knocked back by Treasurer Joe Hockey last year, but Minchin has told them to “remain interested” in a sign the Coalition may be more amenable to the deal in the not-too-distant future.

Elsewhere, RBS’s auction of its stake in Sydney’s Royal North Shore Hospital is under way, with AMP Capital and UK-based John Laing likely to be among the frontrunners, according to the AFR. Goldman Sachs is running the potential $1bn-plus sale, with first round bids expected to be forthcoming early next month.

Finally, another investment vehicle is set to hit the ASX as Ellerston Capital seeks to raise between $50m and $100m for a new global equities fund, while Nathan Tinkler continues to press forward with a purchase of the Wilkie Creek coal mine despite significant financial challenges.