DataRoom AM: Myer scrutiny

Myer may still need to up its merger proposal for David Jones, while Woodside is set to get the final say on its Leviathan project.

The proposed merger of Myer and David Jones continues to drum up headlines, and expectations are growing that Myer could soon lift its non-binding offer. However, it has a long way to go before David Jones will bite.

Elsewhere, Woodside Petroleum’s Leviathan deal nears judgement day, Sundance Resources signs a major iron ore supply deal, the IPO market receives mixed news and frontrunners emerge in the race for Queensland Motorways.

David Jones continues to assess Myer’s $3 billion merger proposal, inviting Macquarie Capital to join Gresham Partners in advising it on the best way forward. It comes as Myer mulls a revised cash and scrip offer that could finally see a premium attached to its offer, according to The Australian Financial Review. Given the respective share price movements of the two firms since Myer lobbed the bid however, the suitor has a large gap to fill just to make its offer one of equals.

Meanwhile, Woodside Petroleum is due to finalise its entry into the Leviathan gas field in 24 hours, but another delay could be on the cards. According to the AFR, Woodside boss Peter Coleman this week said the firm was “hopeful” of sealing an agreement, but his admission that there are “some remaining issues” does not bode well for the oft-delayed $2.85bn deal.

Sticking with resources, Sundance Resources has signed a 10-year deal with Noble Group to supply iron ore from its flagship project in Africa. The agreement could be worth up to $3.8bn a year and sent the company’s flagging share price up over 10 per cent yesterday. Sundance is still working towards financial close, with two firms reportedly putting forward offers to the ASX-listed group.

In the IPO market, the planned listing of Burson Auto Parts has been well received by investors through a cornerstone book build, with lead advisors Morgan Stanley and UBS raising $220 million on behalf of the company. Majority owner Quadrant Private Equity will cut its stake in the firm from 74.9 per cent to 19.9 per cent upon listing.

Less successful has been Mantra Group, which may be forced to lower its pricing expectations after a bookbuild failed to stir significant interest, according to the AFR. If it goes ahead, the $350m-$450m float will be the largest on the ASX so far this year. Meanwhile, Crescent Capital has begun hearing pitches from advisers for a planned $450m listing of New Zealand-based building materials business Metro GlassTech on both the Australian and NZ exchanges, according to the AFR.

In infrastructure, Ontario Teachers Pension Plan has stepped back from its bid for control of Queensland Motorways, leaving its joint venture partners IFM Investors and Borealis Infrastructure battling to find a new partner, the AFR has reported. As a result a consortium led by Transurban and a syndicate headed by Hastings Fund Management appear the two clear frontrunners.

Elsewhere, Automotive Holdings Group has announced the acquisition of two refrigerated transport businesses for $116m and a group of auto dealerships for $68m. The deals -- which see AHG claim control of Scott’s Refrigerated Freightways, JAT Refrigerated Road Services and Newcastle-based Bradstreet -- will be funded in part by a $115m capital raising underwritten by UBS.

Monadelphous Group has continued its good run by picking up three Queensland gas contracts for the Origin Energy-backed Australia Pacific LNG Project. The construction contracts are worth $250m and are due for completion in 2015.

Finally, Orica has secured a gas deal with Strike Energy worth $52.5m. The deal will see Strike supply Orica with 100 petajoules of gas over 10 years from 2020.

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