DataRoom AM: Rio's asset watch

Rio Tinto wraps up its divestment push as its looks to get its Simandou project off the ground, while a sweetened bid wins over Goodman Fielder.

Australia’s big two miners have been rapidly pushing non-core assets out the door for the better part of two years, but it appears Rio Tinto is finally near the end of its divestment push. However, it’s the miner’s investment plans that are drawing all the attention.

Elsewhere, Goodman Fielder’s board agrees to a revised takeover proposal, the queue for the IPO market remains congested and UGL has trouble divesting its property services division.

Rio Tinto is just weeks away from agreeing to an investment framework that may finally get the oft-delayed Simandou project off the ground, chief executive Sam Walsh has said. Already about $US3 billion has been spent developing the mammoth Guinean project and another $US18bn is tipped to be directed to it during the construction phase by Rio and its partners, Chalco and International Finance Corporation. First iron ore production is still tipped to be just ahead of the end of the decade, after it was revised from 2015 last year.

Walsh also signalled a possible end to the miner’s heavily publicised divestment spree, with the company not planning to divest any assets this year. If “somebody comes along with a large checkbook”, however, the miner may reconsider.

Meanwhile, another slight sweetener to the offshore offer for Goodman Fielder has won the food manufacturer’s board over, as suitors Wilmar International and First Pacific bid 70c a share plus a special 1c dividend -- up 6c on the initial proposal.

The bidders now start a four-week due diligence process that will end with the formal $1.4bn offer being delivered to shareholders for approval. Given the firm’s performance in recent years, the endorsement of Goodman’s investors appears all but a foregone conclusion.

UGL’s sale of property services division DTZ is tilting towards failure as just one fully financed bid has been lobbed, according to The Australian Financial Review. Despite drawing the close attention of four private equity groups, it is believed only TPG offered a firm deal. UGL had been seeking $1.2bn-plus for the group, but the TPG offer is reportedly likely in the $1bn-$1.2bn range.

In the IPO market, there is still uncertainty on whether Pacific Equity Partners will move on a $450 million float of Peters Ice Cream, or instead choose to pursue a trade sale. Contradictory reports are coming regularly, with the latest news being that should an IPO proceed, Peters will begin trading on June 24, the AFR reports. Assuming the listing route is taken, PEP is expected to divest 80 per cent of the firm.

Also still mulling a listing is fleet management firm Smartgroup, which has received the backing of former high profile Macquarie execs Michael Carapiet and John Prendiville for a $200m float in June, according to the AFR. Both will be on the board of the firm when it lists, with Carapiet to serve as chair.

Finally, IOOF is set to claim control of Shadforth Financial Group Australia through a $670m merger plan that has the backing of the target’s board. The news sent Shadforth shares skyrocketing 18 per cent higher on Friday, to within touching distance of the value of the offer. A deal will be sealed in August as long as it gets the green light from regulators and Shadforth shareholders.