DataRoom AM: Nexus snub

Nexus Energy shareholders have cut Seven Group down to size by rejecting a lowball takeover offer, while Leighton ponders a selling spree.

Seven Group’s bid for Nexus Energy has been killed off and, in so doing, Nexus shareholders have seen their last chance for a return on the stock cast aside. It’s a case of principle over profit -- well, at least less of a loss -- and leaves Seven in an uncomfortable position.

Elsewhere, Leighton mulls a multi-billion dollar selloff, Seek receives some great news in the US, Baosteel’s bid for Aquila Resources remains up in the air and Healthscope moves forward on a float.

Nexus Energy shareholders have resoundingly voted down Seven Group’s lowball 2c a share offer, forcing the energy firm into administration in the process. As we suggested earlier this week, it was a vote of principle over pragmatism, with justifiably frustrated shareholders not willing to yield to a ruthless Seven offer. Many stockholders, according to reports, were dismayed about the possible conflict of interest given Seven boss Don Voelte was chair of Nexus up until February this year.

The rejection leaves Seven in a tricky position, with receivers now ready to choose the best offer as they hive off assets. That could result in some stern competition for Nexus’ most valuable assets amid reports Shell may have pre-emptive rights on the troubled group’s position in the Crux gas field. If the Shell reports are true, Seven may be left holding Nexus debt and still be unable to claim the main prize.

Leighton Holdings could pursue billions of dollars’ worth of divestments as it looks to simplify its structure while improving its balance sheet. It is believed the firm has hired Macquarie Capital to assess the best way forward on sales, with its John Holland business likely to be placed on the auction block alongside Leighton Property and services businesses within the firm.

The potential divestments follow last year’s decision to offload its 70 per cent stake in Nextgen Networks and Metronode for over $600 million.

In the IPO market, Smartgroup has priced shares through its IPO at $1.60 and should raise about $150m through the float. The firm, which own fleet leasing group Smartleasing and salary packaging company Smartsalary, will lodge its prospectus on Monday ahead of a likely debut on ASX boards in early July.

Meanwhile, Merrill Lynch will begin analyst briefings for the $4bn-plus float of Healthscope next week. According to The Australian Financial Review, a trade sale is still officially an option, but a July listing appears a near certainty.

The development comes as another IPO hopeful, Asaleo Care, faces heightened scrutiny from investors after the corporate regulator requested more time to study its prospectus ahead of a planned June 27 listing, the AFR reported.

Offshore, Australia’s Seek has seen its majority-owned Chinese business enjoy a great first day of trade on US markets.

Zhaopin, a job-seeking website based out of China, listed with a valuation of about $800m and rose over 10 per cent above its IPO price. Seek holds a 68.3 per cent stake after the offering, choosing not to sell into the float and instead watch from the sidelines as the value of its investment soared.

Investment banks are reportedly already lining up for the highly sought-after advisory roles on the sell-off of 49 per cent of three of NSW’s electricity networks. According to the AFR, $50m in fees are up for grabs, with 27 banks invited to pitch for the sale ahead of the government scaling back the list of hopefuls to just five next month.

In resources, Mineral Resources has confirmed the purchase of a 12.78 per cent stake in Aquila Resources, presenting an issue for Baosteel’s push to claim control of the company. Mineral Resources is looking for a seat at the table on development of Aquila’s multi-billion dollar iron ore project in WA.

Elsewhere, Wesfarmers has received the green light from regulators to sell its insurance broking arm to Arthur J Gallagher & Co. The conglomerate announced the $1.01bn sale in April, with completion now expected on June 30.

Finally, Qantas Airways is set to use funds from recent notes offerings to pay $450m of debt eight months early.