DataRoom AM: Nine's rich pickings

The decision of Nine Entertainment’s major shareholders to stay for the long haul has investors cheering, though they now have the problem of getting access to a smaller pool of stock. Still, too much demand is hardly a problem that will keep Nine’s owners up at night.

The media group’s float isn’t the only one attracting overwhelming interest, with investors also lining up to get a piece of Freelancer and Veda. Elsewhere, Fonterra may enter the Warrnambool Cheese and Butter battle, Fairfax Media moves forward with a sale of Stayz and takeover speculation surrounds Cooper Energy.

Nine Entertainment

The major players behind the float of Nine Entertainment appear happy to stick around post-listing, helping to boost investor confidence. According to various media reports, Apollo Global Management, which maintains a 28 per cent stake in the media player, will retain most – if not all – of its holdings after the December IPO.

According to the Australian Financial Review, the media group’s second largest shareholder Oaktree Capital is also expected to hang onto a large proportion of its stake, potentially reducing the value of the shares on offer to $450 million.

It had originally been thought around $500 million to $900 million would be raised, valuing the group around $2.5 billion to $3 billion. It’s possible the lower proportion of stock available, coupled with news the group’s largest shareholders are planning to stay on, could see the group list toward the top of its valuation range.

If nothing else, the move of the major shareholders will calm the nerves of many investors with the memory of the disastrous float of Myer still quite fresh.

Meanwhile, the group’s chief executive, David Gyngell, will embark on an international road trip next week with chief operating officer Simon Kelly by his side, The Australian reports. The second international spruiking mission will see the pair try to drum up support in Asia, North America and the UK.

Given the current heat in the market, that shouldn’t be too challenging.

Yuma Energy, Veda, Freelancer, Precision, IPO market

A year ago the float of Nine Entertainment would have been the only listing worth watching but that’s not the case now. Ever since the successful IPO of OzForex, companies have been lining up to get a piece of the action. While Nine is undoubtedly the star attraction, credit checking group Veda will not go unnoticed.

The Pacific Equity Partners-owned company has already seen much of its stock picked up by cornerstone investors, according to the AFR, leaving little spare for retail investors and institutions that missed out on cornerstone activity. The bookbuild is being prepared for late November with the group to have a market cap of around $1 billion.

Freelancer Ltd, too, is receiving plenty of interest and may have to close its IPO early.

“I’ve got huge allocation problems because of a huge flood of money,” Freelancer chief executive Matt Barrie told DataRoom.

The four-year-old company has received many more applications for shares than it will be offering, meaning plenty of keen buyers will be left to wait for it to go on-market in a couple of weeks’ time.

Meanwhile, another IPO candidate has come out of the woodwork, with privately held Precision Group mulling a $300 million listing of a portfolio of its assets including two major shopping centres in Brisbane and Adelaide. It will join Yuma Energy, which is also pursuing a $300 million float, with a listing date slated for the second week of December, the AFR believes.

Warrnambool Cheese and Butter Factory, Saputo, Murray Goulburn, Fonterra

No announcements and little in the way of share price action made yesterday a dull day with regard to the fight for Warrnambool Cheese and Butter Factory. At least, so it appeared.

According to the AFR, New Zealand dairy giant Fonterra has recently engaged Reunion Capital Partners, a sign it may be more than just an interested observer.

Fonterra has long been the smoky in the takeover tussle, with its Victorian interests making synergies obvious and its large size meaning it has the capacity to go toe-for-toe with any bidder, including current frontrunner Saputo. For now it remains silent on its intentions but should it enter the race, WCB’s valuation could get further out of control.

Elsewhere, declared suitor Murray Goulburn will submit an application to the Australian Competition Tribunal in the next few weeks and expects the tribunal to make a decision in three to six months’ time.

Indeed, the wrestle for control could have a long way to go yet.

Fairfax Media, Stayz

Fairfax Media is ready to cash in its chips on accommodation booking website Stayz, with a sale possible before the end of the year, according to the AFR.

Questions will be asked about media group’s strategy of offloading some of its growing businesses in recent years while leaving its flagship media assets largely intact. Still, there’s nothing wrong with turning a $6 million buy in 2006 into a possible $150 million sale eight years later.

The most likely buyers are considered to be US-based HomeAway and locally-based Wotif, both Stayz competitors.

Goldman Sachs has been managing the process since the asset was first put on the market in August.

Fairfax shares were among the best performers on the ASX200 yesterday, an indication the rumours of an imminent sale may have already filtered into the market. Investors have been looking for signs the group is better managing its debt load.

APN Property Group

APN Property Group has launched a fully-underwritten $16.1 million capital raising at 25 cents a share. The money raised will be used to subscribe to 5 per cent of the group’s soon to be listed Industria REIT. It will list in December and has a $385 million portfolio.

The group’s stock closed down 10 per cent yesterday at 25 cents, meaning the handy discount on the raising has evaporated.

Wrapping up

Camping and adventurewear company Snowgum has entered administration, calling in Lawler Draper Dillon last week. It is not yet clear if this is the end of the decades-old brand or whether a white knight will step in.

In resources, Beach Energy has admitted it was the party responsible for strong buying activity in Cooper Energy’s stock last week. It has sparked takeover speculation, although Beach Energy told The Australian such plans were not currently on the table.

Elsewhere, miner Strategic Graphite is hoping to raise $40 million through a share sale and offtake financing to assist with the build of a new plant at its flagship mine in South Australia.

Finally, FKP Property Group has announced a five-for-nine, non-renounceable offer to raise $232 million. The raising will be completed at a major discount of 36 per cent to its most recent trading price.