DataRoom AM: Glencore flirts with Fortescue

A meeting between Ivan Glasenberg and Fortescue executives has fuelled speculation that Glencore is interested in acquiring the mining company.

Rumours of Glencore coming back to test the waters on a Rio Tinto takeover next year have reached fever pitch, but could the Ivan Glasenberg-led firm have its eyes on another iron ore heavyweight?

Elsewhere, Stockland is named the new favourite to buy Leighton Properties, float fatigue fears have several IPO candidates on edge and a Canadian giant eyes a $1 billion timber deal.

Glencore is almost certainly weighing a fresh approach for control of Rio Tinto next year, but the latest speculation suggests a bid for local iron ore giant Fortescue Metals Group could take the prospect of a Rio deal off the table. According to The Australian Financial Review, Glencore CEO Ivan Glasenberg may have held discussions with Fortescue during a quick visit to Perth last week, with an $11bn-plus offer not out of the question in coming months.

Should an offer eventuate, its success or failure will come down to one man: Fortescue founder Andrew Forrest, who owns a third of the miner. It’s very hard to see Forrest selling in such a weak market, but the rumours suggest he might be tempted should a high enough premium be put forward.

Meanwhile, the race for Leighton Properties has taken a twist as ASX-listed Stockland surges into pole position ahead of Singapore-based suitor City Developments. Stockland is tipped to be running due diligence on the $500 million Leighton division, with a deal possible before Christmas.

Also in property, Brookfield and Dexus Property Group are believed to be among the suitors for two historic sandstone buildings in Sydney’s CBD. The NSW government-owned buildings on Bridge Street are slated to be turned into hotels, with The Travel Corporation and Far East Organization among other likely bidders before the December 3 deadline is reached.

In the IPO market, concerns of float fatigue are again hitting the market just prior to Christmas. The worries have bubbled to the surface after the stock of Medibank Private hit a flat spot shortly after listing on Tuesday and already have led outdoor ad firm oOh!Media to consider a 10 per cent reduction in its listing price, according to the AFR.

A bigger valuation reduction has been seen at online retailer SurfStitch, with previous expectations of about $300m revised sharply lower to $200m. The former Billabong-owned group will list on December 16 after raising as much as $93m from investors.

Fellow IPO candidate Pepperstone has opted to delay its float until the first half of 2015 after the forex broker was forced to retreat from a key market in Japan.

In media, Nine Entertainment is mulling a switch to Southern Cross as its regional TV partner, with the broadcaster potentially able to extract $20m more out of a deal with the current Ten Network affiliate, according to the AFR. Talks between the regional and metro networks will kick off in the first half of next year, with Nine’s current deal with WIN slated to end in December 2015.

Elsewhere, a Canadian pension fund is hunting a $1bn timber deal with Hancock Timber Resource Group. The Public Sector Pension Investment Board is reportedly at the pointy end of negotiations with Hancock amid a broader investment push from the firm into Australia.

Finally, GWA Group has said it will offload its Dux Manufacturing business to Japan’s Noritz Corporation for $46m, while the Packer family’s investment vehicle, Ellerston Capital, has cut its stake in Tabcorp to below the significant shareholder threshold just four weeks after lifting its position in the gambling giant.

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