DataRoom AM: Shell clean-up

Shell’s divestments look set to continue, while David Jones reportedly prepares for a chin-wag with Myer.

Royal Dutch Shell is offloading Australian assets at will, with the latest move a decision to sell its downstream assets to Europe’s Vitol. And while Shell might not be done selling Down Under, Vitol is definitely not finished buying.

Elsewhere, David Jones engages with Myer Holdings on a $3 billion merger proposal, Fairfax Media and Macquarie Radio Network again fail to seal a radio tie-up and Monadelphous Group may capitalise from Forge Group’s misfortune.

Royal Dutch Shell has offloaded its downstream Australian assets to world leading oil trader Vitol and the Abu Dhabi Investment Council for $2.9 billion. As predicted by this column, the end price was significantly higher than the $2.4 billion suggested in reports early last week. Shell insists it remains committed to Australia, though that commitment is already a lot smaller than what it was at the start of the year and expected to shrink further through the likely sale of its 23 per cent stake in Woodside Petroleum. Vitol, meanwhile, has declared its intention to hunt further local deals as part of a significant Australian push.

As expected, David Jones is ready to engage with Myer Holdings over a possible $3 billion merger. According to several media reports, DJs remains sceptical about the value of a tie-up but will commence discussions amid intense pressure from several large investors. The target has reportedly run the numbers on a deal on several occasions in recent years as part of its own reviews of operations, but is unlikely to agree to a merger without a significant premium.

For the second time in almost as many years merger talks between Fairfax Media and Macquarie Radio Network have broken down. The two firms had been hoping to combine their radio assets to claim talkback dominance almost Australia-wide, but an unwillingness of Macquarie shock jocks Ray Hadley and Alan Jones to work with Fairfax has seen talks collapse, according to The Australian Financial Review. Bad blood and big egos seem destined to keep this deal on the scrapheap for a while.

Monadelphous Group entered a trading halt on Friday ahead of the announcement of a “significant” new contract. The news follows swiftly after the Western Australia-based contractor assessed the books of the now failed Forge Group and it would be no shock if Monadelphous has already swooped on one of its contracts. The Gina Rinehart-backed Roy Hill iron ore project is the most high-profile of these.

The Papua New Guinean government has raised the cash to reclaim its 14.6 per cent stake in ASX-listed Oil Search. The strategic shareholding is currently held in Abu Dhabi by the state-owned International Petroleum Investment Company, with the PNG government desperate to take it back amid fears IPIC could sell to an unwelcome foreign suitor.

Sundance Energy Australia has postponed its $150 million-plus IPO in the US due to ‘poor market conditions’. The $500 million ASX-listed oil and gas firm announced plans for a dual-listing on the NASDAQ in December and is in a trading halt ahead of an official announcement.

Finally, audit firm KPMG is on the hunt for more acquisitions in the technology space after purchasing Australian social media intelligence group SR7 for an undisclosed fee.

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