DataRoom AM: Glencore's copper catch?

Rumours of a bid for Oz Minerals from Glencore Xstrata have surfaced offshore over the weekend, but would the Swiss giant really be interested? Elsewhere, Westpac is in the box seat for the Australian arm of Lloyds as final offers are submitted today. Meanwhile, ANZ Bank mulls a Hong Kong buy, the IPO market bursts to life, Queensland Motorways makes a major toll road buy and interest grows in Nathan Tinkler’s Aston Metals.

Oz Minerals, Glencore Xstrata

Speculation over the weekend in London suggests commodities trader Glencore Xstrata has built close to a 10 per cent stake in Australian copper miner Oz Minerals. According to the UK’s Daily Mail, the massive Swiss-based group is eyeing a £750 million ($1.3 billion) bid for the ASX-listed Oz Minerals.

That price is light on given it represents no premium over the current market capitalisation of Oz Minerals, but if Glencore truly has established a 10 per cent stake then it is unlikely to stay idle. The query, however, remains whether it indeed has a stake of such magnitude and if so, how it would have gained the position without a substantial shareholder declaration.

There’s little in the trading of Oz Minerals over the last month to indicate a takeover approach is imminent, and the report’s assertion of a lowball $1.3 billion price adds a further dampener to the prospect of a deal.

An offer from Glencore may also rile China, given it agreed in April to sell the $5 billion plus Las Bambas copper development in Peru in order to win approval from Beijing for its takeover of Xstrata. That concession was made in light of China’s concern that Glencore exerted too much power in the copper market, where it is the third largest producer and the largest trader in the commodity.

If that wasn’t enough to reduce the likelihood of a takeover, Glencore has also made it known that it is looking to diversify its portfolio and buying into a copper company when the metal is already the largest contributor to its profit doesn’t marry with that aim.

Nevertheless, earlier this month Glencore boss Ivan Glasenberg did indicate the company is on the lookout for more bolt-on acquisitions, specifically companies with mines already in operation. Oz Minerals has that in the form of Prominent Hill in South Australia. It also has cash reserves of more than $400 million and a healthy stake in Sandfire Resources, which has the Degrussa mine up and running. On the downside, Prominent Hill may not have many good years ahead of it with the Oz Minerals growth story tied to the development of the multi-billion dollar Carrapateena deposit.

Glasenberg has said greenfield projects are largely off the agenda, meaning Carrapateena would be of little interest to the group. That said, should it buy Oz it could offload Carrapateena and potentially look use its new position in Sandfire to make a bid for that miner.

For now it all appears doubtful, though the extent of the stock price response and the possibility of a statement from Oz Minerals are worth keeping a close eye on this morning.

Lloyds, Westpac, ANZ, Pepper, Macquarie Bank

Final bids are due today for the Australian banking arm of Lloyds Banking Group, with Westpac widely considered to be in pole position.

After ANZ Bank dropped out of the running last week, the list of contenders to challenge Westpac is down to just Macquarie Bank and Pepper Group, which has formed a consortium with General Electric Capital and Bank of America Merrill Lynch. The synergies are seen to be best for Westpac, which means its willingness to outbid is seen as greater than the other suitors.

Meanwhile, ANZ Bank’s decision to exit the bidding process may not just be down to a lack of synergies, with the bank reportedly keen to make a multi-billion dollar purchase elsewhere. According to Reuters, ANZ Bank is one of at least two businesses in the race to acquire Hong Kong’s Wing Hang Bank. Singapore’s United Overseas Bank was named as the other candidate to buy the $5 billion Wing Hang.

A deal would see ANZ Bank boost its Asian expansion, though it has previously failed in bidding for a Hong Kong bank – Wing Lung, back in 2008.

Spotless, Pacific Equity Partners, BIS Industries, KKR, Macaleese

The Australian IPO market may finally be following the lead of America’s, seemingly bursting back to life for the last quarter of calendar 2013.

The latest to join the likes of Meridian Energy, Veda, Dick Smith, McAleese Group and Nine Entertainment as likely floats are Spotless Group and BIS Industries.

We’ll start with the former, which could be relisting next year, according to the Australian Financial Review.

Last year business services firm Spotless was bought out by private equity group Pacific Equity Partners for $724 million, with the buyers looking at a relisting value of at least double that and possibly as much as $2 billion, according to the report. Earlier this year it was reported that PEP had doubled profits at the company since assuming control.

The AFR is also reporting that Kohlberg Kravis Roberts could chase an IPO for mining services group BIS Industries. UBS is reportedly already looking to drum up interest in what could be a listing in the first quarter of next year, though the valuation is unknown at this stage.

Meanwhile, fellow IPO candidate McAleese Group has seen enough interest from its investment bank partners to secure cornerstone investors in its $155 million float. The investors in the transport and logistics company were sourced by JP Morgan, Credit Suisse and Macquarie Bank.

McAleese may list as early as the last week of October.

Queensland Motorways, RiverCity Motorway

Queensland Motorways has paid $618 million to buy the Clem7 tunnel in Brisbane. The deal, announced Friday, was made with the receivers of Clem7 owner RiverCity Motorway, who had been brought in back in February 2011.

Queensland Motorways operates the 62 kilometre Gateway, Gateway Extension and Logan motorway network under a 40-year tolling concession with the state government until 2051. It was always seen as the frontrunner to buy Clem7 given the synergies it could capitalise on.

Given the tunnel cost $3 billion to build, Queensland Motorways seems to have got itself a pretty good deal, though driver traffic has long fallen short of what was predicted.

The transaction is expected to be finalised in three to four months. 

Wrapping up

Perpetual has edged closer to gaining full control of The Trust Company after receiving regulatory consent in New Zealand. The news means that Perpetual now has approval in all three relevant markets of Singapore, Australia and New Zealand. The next step is a scheme meeting slated for late November where shareholders will vote on the $250 million proposal.

Moving to resources, and the independent directors of Queensland-based Inova Resources – formerly Ivanhoe Australia – have backed a 22 cents-a-share bid for the company by China’s Shangxi Donghui. The bid was made back in August when the company’s shares were trading at 17 cents. The company’s stock last traded at 21 cents.

Sticking with the resources sector, and receivers have extended the deadline for bids on Nathan Tinkler’s Aston Metals after interest swelled over the past week. Suitors now have until October 11.

And finally, HP has been cut from the race for a $700 million contract with the Defence department to consolidate 200 data centres into just 10. The news leaves IBM and Lockheed Martin to go head-to-head, according to the AFR.