DataRoom AM: Slippery merger

Investment banks are welcoming the latest sign of enhanced M&A activity as Roc Oil and Horizon Oil merge to create a much more significant energy firm. But not everyone’s happy with the ‘friendly’ merger, with a key shareholder airing some none-too-friendly sentiments.

Elsewhere, Goodman Fielder gets shopped around, the auction for the Port of Newcastle nears a conclusion and Archer Capital weighs up a bid for Mantra Group.

Roc Oil and Horizon Oil have announced a ‘merger of equals’ that will create a new $800 million energy firm on the ASX. The deal has the backing of both companies’ boards and is due for completion in August despite Roc’s largest shareholder coming out firmly against the proposal, with Allan Gray boss Simon Marais dismissing it as “crazy” and “stupid”.

Unfortunately for Allan Gray, Roc shareholders have no option to vote on the deal and Marais may have to convince Horizon shareholders, who will own 58 per cent of the enlarged group, to vote ‘no’ in order to kill the merger.

Horizon shares slumped over 4 per cent on the news while Roc stock lost 1 per cent, which on the surface suggested investors thought the deal favoured Roc. However, Horizon shares jumped 10 per cent before a trading halt last week and the weakness in its stock was more related to realignment of the share price to that of the deal, which was based on the 10-day weighted trading average of the two firms.

Investment banks are believed to be pushing private equity players to enter the ring in the fight for control of Goodman Fielder. Goodman’s board snubbed a $1.27 billion offer from Wilmar International and First Pacific on Monday, though it appears dealmakers are struggling to entice fresh suitors into the mix. Investors yesterday pushed Goodman’s share price above the current offer price, hinting confidence a revised deal of as much as $1.5bn could soon be forthcoming.

In property, AustralianSuper and Westfield Group are likely among the potential buyers of Lend Lease’s $1bn share of the Bluewater shopping centre in Kent. The two Australian firms have a fight on their hands as Norwegian, British and US interests are all rumoured to have put forward bids for the 30 per cent stake.

Meanwhile, Archer Capital is hunting failed IPO candidate Mantra Group, according to The Australian Financial Review. Mantra scrapped a $500 million float in March and its owners have since failed to stir enough interest in a trade sale at a price it would accept.

Elsewhere, Sydney-based social media network Spring.Me will join the ASX after its US owner, Helpa, secured a reverse takeover of resources firm GRP Corporation. The deal will see GRP relist under the name of Spring Networks after raising between $4.5m and $6m. It’s the second high-profile backdoor listing this year, following the entry to the local market of Deals Direct in January.

In infrastructure, the heated race for the Port of Newcastle is quickly heading for the finish line, with the five suitors expected to be informed of the NSW government’s preferred bidder next week. Hong Kong’s Cheung Kong Infrastructure is seen to be a frontrunner along with a bid from a consortium including Macquarie Group and China Construction.

Finally, Glencore Xstrata is looking for a buyer for its 33.3 per cent stake in the Port Kembla Coal Terminal, according to the AFR, while Gunns receiver KordaMentha is hoping to drum up interest in the bankrupt firm’s pulp mill licence in Tasmania. Last week, the receiver successfully sold off Gunns’ timber assets for $330m to New Forests.