DataRoom AM: Rio rumours grow

Rio Tinto shares are expected to jump on news that Glencore is seeking a friendly merger, while software provider Aconex is set to float next month.

Rumours of Glencore’s interest in a landscape-changing merger with Rio Tinto are growing stronger by the week, with the latest reports suggesting the groundwork is being laid for a friendly deal.

Elsewhere, a hectic last quarter appears certain for the IPO market, the future of Fairfax Media’s Domain business remains the subject of plenty of conjecture and Valad Property Group makes moves at home and abroad.

A $180 billion behemoth could be coming to knock BHP Billiton off its perch as the world’s largest miner as speculation of a Glencore play for Rio Tinto gathers momentum. According to Bloomberg, Glencore has informed Rio of its merger deliberations and sought to gauge interest from the miner’s largest shareholder Chinalco, which controls almost 10 per cent of Rio’s stock. However, no formal talks have taken place and should an offer be forthcoming, it will likely not be seen until 2015.

There are also several hurdles to jump, especially given reports Glencore is not interested in a hostile deal and any offer would largely come in the form of Glencore stock, rather than cash.

Expect an interesting day of trade for Rio on Tuesday as its American Depositary Receipts jumped as much as 20 per cent on the news before closing 9 per cent higher (London markets closed before the report could have an impact).

In the IPO market, construction software provider Aconex is pressing forward with a 2014 IPO that will value the firm between $400 million and $700m, according to The Australian Financial Review. The listing is expected to finalised in November, with UBS and Macquarie Capital taking the reins on the deal.

Another firm testing the waters on a float is dental group Pacific Smiles, which is assessing investor interest in a $200m float. The company should hit ASX boards in late November, the AFR said.

Meanwhile, mid-tier law firm Sparke Helmore could float on the ASX in 2015, engaging KTM Capital to advise on the potential listing. It is believed that the firm’s board is keen on an IPO, but partners in Sparke are yet to be convinced. Should a deal proceed, it is expected to lead to further floats in the sector.

The developments come after Huon Aquaculture yesterday priced its IPO at the lower end of the indicative range, raising $132m and offering a valuation of $415m ahead of its October 24 listing.

In property, Blackstone Group is looking to hive off the European assets of the formerly ASX-listed Valad Property Group. The private equity firm, which secured control of Valad via an $808m takeover in 2011, has appointed UBS to advise on the possible sale of the European arm. It comes as Valad tweaks its local operations through acquisitions and the sale of legacy assets.

Elsewhere, rumours that Fairfax Media will pursue a demerger of its Domain classifieds business continue to surface, with Morgans analyst Ivor Ries telling The Age that: “a lot of investment banks are running research valuing it, and you’d think, where there’s smoke, there’s fire.” The Australian reported last week that Fairfax was running the numbers on a Domain listing.

Finally, financial services firm Crowe Horwath has accepted a $137m takeover offer from Findex, while Telstra has wrapped up its $1bn off-market share buyback at the maximum discount despite strong demand.