DataRoom AM: Skilled’s Programmed delay

The labour hire group is yet to respond to suitor Programmed Maintenance Services, while the Queensland premier has stepped up his pitch for power asset sales.

Programmed Maintenance Services is ramping up the pressure on takeover target Skilled Group, but with Skilled yet to officially respond there appears to be a long way to go before a $660 million merger can be negotiated.

Elsewhere, Servcorp is singled out as a likely takeover candidate, Rio Tinto’s takeover defence strategies draw plenty of attention and Queensland premier Campbell Newman ramps up his privatisation pitch as Spark Infrastructure readies for action.

Programmed Maintenance Services has said it is still attempting to engage with target Skilled Group as investors patiently await a response to a $660m merger proposal. According to The Australian Financial Review, correspondence between the two workforce and service providers remains by email only, which is not a good sign for an imminent agreement.

However, Programmed chairman Bruce Brook has suggested he is willing to negotiate on the terms put forward in a sign the suitor is determined to realise the synergies of a merger during a period of turbulence for the key mining and energy sectors.

Meanwhile, Queensland premier Campbell Newman has stepped up his pitch for asset sales amid the election campaign as he promises voters the state won’t lease key energy assets unless they receive fair value. Such a pledge was deemed required after the NSW government recently took a power plant off the market due to insufficient demand.

With the fading resources boom -- hampered most recently by a slumping oil price -- casting a shadow on the Queensland budget, fair value might prove a fluid concept as the government hopes to draw in about $30 billion from the privatisation spree.

Among those looking to get in on the action is Spark Infrastructure, which has made no secret of its intentions to play a role in the auction process. Spark -- which has teamed with Hastings Funds Management and Kuwait’s Wren House in preparation for a bid -- is seen as a frontrunner for the likely first cab off the rank in Queensland’s Powerlink. Should a Spark-backed bid be successful, the AFR reports that it could lead to a $1bn-$1.6bn capital raising.

In the mining sector, Rio Tinto’s bitter court battle with Brazilian rival Vale will see it forced to divulge details of its takeover defence strategy during the 2008 pursuit by BHP Billiton. According to Vale, Rio was so desperate to escape the clutches of BHP that it considered allowing the Brazilian group into its data room amid hopes a rival bid would put BHP on the back foot.

Rio disputes the assertion but more details appear likely to come to light before current suitor Glencore’s six-month takeover ban ends in April. At such time the Swiss heavyweight is tipped to resume its chase for Rio and the local firm may need to pull a few more evasion tactics out of its playbook.

Elsewhere, takeover tips for 2015 are coming in thick and fast, with the AFR reporting that many fund managers believe Servcorp is one of the most obvious targets to watch this year. The virtual office solutions group has turned down several offers from UK-listed Regus in the past, but 2015 could be the year Regus finally claims control.

Finally, Qantas Airways’ largest shareholder has taken the opportunity to sell a portion of its stake after the national carrier hit a four-year high this week. Franklin Resources now holds 14.2 per cent of the company’s stock, down from 15.4 per cent.