DataRoom AM: Myer on stand-by

David Jones’ new chairman has a few things to do before chatting with Myer, while Hochtief may face some regulatory headaches in its Leighton bid.

Some investors are hoping Myer and David Jones will have something for us in their results next week. But DJs’ new chairman has some work to do before then.

Meanwhile, Leighton’s Hochtief deal is already ruffling regulatory feathers, TPG is planning to flog Ingham property, Woolworths helps rescue SPC Ardmona and WestSide gets another Chinese suitor.

Myer and David Jones both report first-half results next week and the market will be looking closely for any hints of merger intentions.

The appointment of Gordon Cairns as chairman of David Jones might have some hoping a swift change in tone between the two companies can quicken the merger story, but The Australian Financial Review reports that an immediate phone call to his Myer counterpart is not the new chairman’s first priority.

Cairns says speaking to current-but-departing chief executive Paul Zahra is top of the agenda. Engaging external advisors on the merger deal, to then articulate to shareholders what the company’s position on it is, comes next.

That’s a lot to do by next week. Perhaps retail investors might have to wait a bit longer for something conclusive.

In construction, Hochtief’s $1.15 billion off-market offer for Leighton Holdings isn’t yet a day old and already two big obstacles are looming: the Australian Securities & Investments Commission and the Foreign Investment Review Board.

The corporate regulator has announced it is investigating the trades leading up to the announcement of the deal because there was an unusual spike in Leighton shares -- one that was big enough to attract a speeding ticket from the ASX.

The deal also requires approval from FIRB.

In terms of strategy, we were all well aware that Hochtief coveted control of Leighton and was going to use the 3 per cent creeping provision in the Corporations Act to climb up the company’s register.

Consider this a way to jump a few rungs on the ladder in one go.

Meanwhile, private equity firm TPG, the owner of Ingham Enterprises, is reportedly hoping for more than $600 million to sell and leaseback of two big property portfolios.

TPG, which picked up the famous Ingham family brand a year ago for $880 million, has chosen the sale and leaseback option rather than floating the company, according to the AFR.

There was speculation late last year that a sharemarket listing could generate up to $1bn for TPG.

SPC Ardmona has won a five-year, $70m supply deal with Woolworths a week after winning a $22m assistance package from the Victorian government for facility upgrades.

The deal also follows warnings to the federal government that refusing to give the company a $25m bailout could kill the fruit and vegetable cannery. SPC Ardmona is a subsidiary of ASX-listed Coca-Coca Amatil.

In resources, coal seam gas producer WestSide has become the subject of yet another takeover offer from China. Thankfully, this one looks better than half-serious.

Landbridge Group, run by Chinese billionaire Ye Chang, has flagged a $160m cash bid for WestSide. The offer is conditional on WestSide’s assurances about gas resources and its production potential.

However, The Australian believes that the company is close to signing gas sales agreements that could lift the value of the company materially. Perhaps the timing is opportunistic.

WestSide was the subject of a $185m indicative, conditional takeover ‘offer’ from Chinese giant PetroChina that went precisely nowhere. The suitor never really seemed interested.

Elsewhere, BT Investment Management has popped up on the Nine Entertainment register with a 5.2 per cent stake. The owner of BT, Westpac Banking Corp, is the company listed on the substantial shareholder notice.

Speaking of the commercial networks, former top competition watchdog Graeme Samuel has thrown his weight behind an easing of media ownership laws, Fairfax Media reports. Such a move could allow Nine, along with the other two metropolitan networks, to merge with their regional counterparts.

In shipbuilding, Austal has won a $US125m ($138.7m) deal to build two vessels for an unnamed buyer in the Middle East. The deal is for 72-metre, high-speed support vessels.

In manufacturing news, the AFR reports that pre-marketing research landed on fund managers’ desks yesterday for Quadrant Private Equity’s Burson Auto Parts, of which it owns 90 per cent.

The newspaper says UBS analysts assigned it an equity valuation of $314m-$318m.

The AFR also reports that the initial public offer for accommodation operator Mantra Group was launched yesterday. Shares were being shopped around for between $2.00-$2.60 each, giving the lot an implied value of $476m-$549m once you take into account the share issue range.

Elsewhere, insurance industry figures have questioned whether Wesfarmers will get the same kind of euphoric response from the market that previous industry IPOs, like Steadfast Group, received if it does indeed press ahead with the float of its OAMPS Insurance Brokers business.

And staying with Wesfarmers and insurance, Insurance Australia Group will begin marketing its subordinated debt issue to wholesale investors this morning, with the aim of raising $200m to partially fund its acquisition of Wesfarmers’ underwriting business.

Alexander Liddington-Cox is a freelance business journalist based in the Middle East.

Follow @aliddingtoncox on Twitter.

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