DataRoom AM: Iron ore intrigue

Cliffs Natural Resources may be testing the waters on a sale of its Australian mines, while BHP Billiton makes progress on offloading its Nickel West division.

The prices of key commodities may be sinking but there’s still plenty of action in the WA mining sector, with Cliffs Natural Resources taking the first step in a possible $1 billion auction of its Australian iron ore assets and Glencore claiming the front seat in the race for BHP Billiton’s Nickel West assets.

Elsewhere, progress is seen with Leighton Holdings’ divestment spree, Snowy Hydro secures favouritism in the Lumo Energy auction and Noni B accepts a long-awaited takeover bid.

Cliffs Natural Resources has long been a rumoured seller in Australia and an auction now appears imminent after overnight reports of the US-based miner hiring Jefferies Group to sell its local iron ore mines. China’s Wuhan Iron & Steel and Baosteel have purportedly already shown interest, but it remains to be seen whether Cliffs will be able to get close to the previous $1bn valuation on its Australian assets given the current depressed iron ore market.

Cliffs isn’t the only miner looking to sell in WA, however, as global giant BHP Billiton makes steady, if unspectacular, progress on a sale of its Nickel West division. A report in the West Australian yesterday suggested Glencore is the only bidder in the race, delivering an offer of between $190 million and $230m. The rumoured offer is short of consensus estimates of $400m, but perhaps not horrible given the potential for environmental liabilities to hit $2bn. It may also not end as the only bid, with China’s Jinchuan Group preparing a rival offer, according to The Australian Financial Review.

Also peddling WA resources assets is Norilsk Nickel, with the Russian firm’s unhappy foray into the Australian market now behind it after it offloaded its mothballed Lake Johnston mine to the Andrew Forrest-backed Poseidon Nickel, likely for a measly sum of about $1m.

Meanwhile, Leighton Holdings’ divestment of a bunch of assets is gathering steam, with Korea’s Samsung claiming pole position in the $1bn-plus sale of John Holland and Spain’s Ferrovial a lead contender for Leighton’s services business. Leighton has also received a nibble for its properties division from ASX-listed Stockland.

In energy, Snowy Hydro has firmed as the favourite in the $400m sale of energy retailer Lumo Energy as an AFR report suggests Origin Energy has joined AGL Energy and M2 Telecommunications on the sideline. It leaves Snowy in a race with reluctant suitor Alinta Energy, with the former signaling a strong desire to expand in the retail sector.

Final bids are due next week.

In retail, the embattled Noni B has agreed to a $16.4m takeover by Alceon Group. The deal came at a meagre 13 per cent premium to Noni B’s last traded price, but has received the backing of the target’s board.

In the IPO market, APN News and Media adviser Grant Samuel has called for pitches from investment banks over the possible dual-listing of APN’s $400m NZ business, according to the AFR, while the Ingham family has drafted in the Commonwealth Bank to aid with a float or trade sale of six to eight Australian manufactured housing estates worth between $100m and $200m.

Fellow IPO candidate Hoyts Group could yet take the trade sale route, the AFR reports, as owner Pacific Equity Partners presses forward on a divestment. Trade parties and private equity have reportedly shown interest in the company, but a float still appears the best bet.

In property, GPT Group and GPT Wholesale Office Fund have joined forces to claim control of the CBW (corner of Bourke and William) group of buildings in Melbourne. The deal with current owner CBUS Property is worth $608.1m and is likely to be sealed in October.

Also in property, Morgan Stanley has sold its 50 per cent stake in the Grand Hotel Group, which includes Melbourne’s Grand Hyatt and Perth’s Hyatt Regency, to co-owner Tuan Sing Holdings. The deal valued the two hotels at $583m.

Elsewhere, Macquarie Group appears to have sealed its purchase of a $1.5bn non-branded mortgage book from ING, while Bendigo and Adelaide Bank has said it will raise $200m through a debt issue of convertible preference shares next week.

Finally, the ACCC is set to deliver a verdict on Fairfax Media’s purchase of All Homes and Expedia’s planned acquisition of Wotif today, while Brambles offshoot Recall Holdings has announced the sale of its German Secure Destruction Services business for an undisclosed amount.

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