DataRoom AM: Leighton's China deal

A Chinese firm looks to be in poll position for Leighton Holdings’ John Holland business, while Metcash prepares to ward off any takeover moves.

Confidence is firming that Leighton Holdings could announce a deal for its John Holland business as early as next week, with ANZ Banking Group playing a key role in proceedings.

Elsewhere, Metcash readies to fend off would-be suitors, Fortescue asset sales could be on the agenda, the auction of Alinta Energy takes another step forward and United Petroleum joins the swelling 2015 IPO pipeline.

China Communications Construction Company appears in the box seat on Leighton Holdings’ auction of contractor John Holland, with reports a deal may be announced next week. The around $1 billion bid from CCCC has secured backing from ANZ Bank, which has teamed up with several other lenders to offer a bridging loan. Korea’s Samsung is believed to have dropped out of the process, leaving Leighton to choose between CCCC and going back to the drawing board.

Meanwhile, Metcash is again weighing takeover defence plans with adviser Citigroup after a sharp fall in its share price this week, The Australian Financial Review reports. The distant third force in Australian grocery retail is certainly ripe for the picking but prospective suitors are thin on the ground, with private equity, Pick N Pay and Metro Cash and Carry considered the only possible candidates.

In mining, UBS is talking up the prospects of partial asset sales at Fortescue Metals Group as the miner proceeds with a cost cutting plan that is set to lead to a number of job cuts, according to the AFR. The purported option involves hiving off a 10 per cent stake in its mines for as much as $2bn. However, that is easier said than done in this market.

The Fortescue rumours come as fellow iron ore heavyweight Rio Tinto again plays down the prospect of a merger with Glencore. Rio boss Sam Walsh said a combination made little sense strategically, though he added the miner was open to selling assets at the right price.

In the IPO market, United Petroleum has reportedly joined the pipeline of 2015 candidates. Credit SuisseMorgan Stanley and UBS are seen by the AFR as lead candidates for advisory roles on the potential float. It comes just a year after an auction of United failed to achieve the desired result amid expectations it could be sold for about $1bn.

In media, Foxtel has reportedly informed the ACCC of its plans to purchase a stake in Ten Network. The pay TV firm -- which is seeking to claim 14.9 per cent of Ten as part of a joint $590m bid with Discovery Communications -- had its lawyers contact the competition watchdog in recent weeks as it sought to determine the prospect of a regulatory green light.

The prospect of a deal is waning, however, with an 11 per cent drop in Ten’s share price on Thursday highlighting the lack of investor confidence.

Elsewhere, prospective buyers of the $2.5-$4bn Alinta Energy will receive confidentiality agreements next week ahead of the release of information memorandums on the sale. It appears likely the auction will end up being split in three, with OriginAGL and EnergyAustralia among potential bidders for the gas retail assets.

Finally, an auction of the Morgan Stanley-backed Investa is expected next year, while speculation of a takeover proposal for Recall continues to surface, with UBS suggesting an offer of as much as $9 a share is possible from rival Iron Mountain. That would mark a rather significant premium on the $6.14 a share level Recall ended Thursday.

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