DataRoom AM: PanAust attraction

GRAM's PanAust takeover offer has the whole copper sector jumping, while Nathan Tinkler has reportedly forked out for Peabody's Wilkie Creek coal mine.

Australia’s copper sector is all of a sudden in great demand as a near $1.5 billion takeover proposal was put forward for mid-tier miner PanAust. But despite some heavy bets being placed on the sector as a whole, investors appear unconvinced a deal will go through.

Elsewhere, Nathan Tinkler returns to the coal sector, the government confirms an asset sell-off, the owner of Sorbent readies for an IPO and Baytex Energy ups its offer for Aurora Oil and Gas.

Copper miner PanAust has received a $2.30 a share takeover offer from China’s Guangdong Rising Assets Management in a deal that values the firm at $1.46bn. Guangdong, which already has a 23 per cent stake in the Asian-focused miner, has met resistance at PanAust however, with the target’s board saying it could not recommend the current proposal to shareholders. Despite this, the firm will open its books for the suitor to conduct due diligence.

The news had the whole sector jumping, with investors placing heavy bets that Sandfire Resources and Oz Minerals, long rumoured as takeover targets, could soon be in the M&A firing line. However, it was interesting to note that PanAust shares only rose to within 18c of the offer price, a clear sign a rival bid is not expected and perhaps a hint the board’s resistance could ultimately see a deal fall flat.

Also in resources, Nathan Tinkler hopes to put rumours of imminent bankruptcy to bed through the $150 million purchase of Peabody Energy’s mothballed Wilkie Creek coal mine in Queensland. Tinkler secured the deal with backing from US investment bank Jefferies Group. Speculation of Tinkler interest in the mine surfaced last month, but it was thought that he dropped out of the race even as the asking price allegedly dropped to $100m.

Elsewhere, gold mining giant Newmont Mining has offloaded its Jundee gold mine in WA to Perth-based Northern Star for $82.5m. It’s the second recent purchase by Northern Star -- following the $100m buy of three Barrick Gold mines in WA around the turn of the year -- as it seeks to shore up a place as a mid-tier gold producer.

Meanwhile, the federal government has confirmed a privatisation push is officially underway, saying it will soon spend $11.7m on scoping studies on Australian HearingDefence Housing Australia, the Royal Australian Mint and the registry service of ASIC. It is expected the assets, combined with the previously announced IPO of Medibank Private, could reap over $10bn. The budget also set aside $5bn worth of incentives for state governments to offload assets.

One state government seeking to capitalise is the Victorian coalition, with plans already afoot for the divestment of the nation’s busiest port, the Port of Melbourne. According toThe Australian Financial Review, bidders have started preparations for the auction with Hong Kong’s Hutchison Port Holdings likely a frontrunner, but tipped to meet strong competition from China MerchantsIFM InvestorsAustralianSuper and QIC as well as Canadian pension funds.

In the IPO market, SCA Hygiene Australasia is readying for an $800m listing later this year, the AFR reports. The maker of Sorbent toilet paper, as well as Libra feminine hygiene products and Handee paper towels, is currently jointly owned by private equity firm Pacific Equity Partners and Sweden’s Svenska Cellulosa Aktiebolaget, with the paper reporting that the latter will likely retain its 50 per cent stake after the IPO.

In energy, Canada’s Baytex Energy has raised its takeover offer for ASX-listed Aurora Oil and Gas by 2.5 per cent to $4.20 a share. The $1.88bn offer has the backing of Aurora’s board and, crucially, now has support from Harbour Advisers and Stirling Global Value Fund, which together own 17.4 per cent of the target’s equity. The deal was first trumpeted in February and remains reliant on shareholder and FIRB approval.

Finally, Ramsay Health Care and Healthscope are fighting for the right to build and run a new $400m public hospital in Sydney, according to the AFR.

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