DataRoom AM: Tempting Treasury Wine

Private equity firm KKR has reportedly sweetened its bid for Treasury Wine, while Lend Lease appears keen to stay in the chase for Leighton's John Holland division.

The punt taken by investors on a larger takeover offer being put forward for Treasury Wine Estates is closer to paying off as KKR reportedly comes back to the table with an improved bid. But will it be enough to seal a deal?

Elsewhere, the race for Leighton’s John Holland tightens, private equity firms opt out of the auction of Lorna Jane and Shell receives a setback to its local divestment plans.

Treasury Wine Estates’ private equity suitor, KKR, has lifted its conditional takeover offer for the wine giant by 6 per cent, according to The Australian Financial Review. The revised offer, if confirmed, would see KKR offer $5 a share, up from $4.70 a share. The news comes less than a month after reports emerged of KKR teaming with Canada Pension Plan Investment Board on a revised deal and follows 10 weeks after TWE shunned a $3.1bn deal from KKR and said it had no intention of engaging with its suitor.

The sweetened proposal is believed likely to at least tempt TWE enough to allow KKR to access its books, but may not be enough to satisfy the pricing demands of the winemaker’s board, especially given the firm’s share price has largely stayed above $5 since the rejected bid was announced.

Meanwhile, Lend Lease reportedly remains in the race for Leighton Holdings’ John Holland division, with the ASX-listed firm heavily involved in the second phase of the auction, the AFR reports. John Holland has drawn attention from America’s KBR and South Korea’s Samsung C&T, but Spain’s Ferrovial and France’s Bouygues are considered the frontrunners. A management buyout of the unit was also reportedly weighed, though a lack of private equity interest appears to have such plans on the outer.

In retail, the number of firms in the running for womenswear business Lorna Jane has thinned as private equity firms decide not to pursue a bidding war with trade buyers. Under ArmourAdvent International and Foot Locker are among the prospective buyers of the $400 million business.

In energy, the identities of the two mystery suitors for Roc Oil have been revealed, with the AFR unmasking them as Fosun Group and Tamarind Energy. The latter is reportedly close to dropping out but China’s Fosun may put forward a formal rival proposal to the planned merger of Roc with Horizon Oil ahead of an August 7 vote on the marriage.

Elsewhere, US-based Resource Management Services has reportedly all but wrapped up a purchase of Forest Enterprises Australia, after outbidding favourite New Forests and three other rivals. The price for the east coast forestry business could run as high as $400m.

In resources, takeover speculation is starting to swirl around Atlas Iron in the wake of the recent acquisition of rival Aquila Resources. According to Bloomberg, analysts at Morgans and Credit Suisse both see Atlas as a likely candidate for M&A activity given its valuation is the lowest among its peers relative to profit. Fortescue Metals Group and Chinese steelmakers were seen as likely candidates, though Fortescue appears more likely to continue its push to reduce debt rather than chase takeovers.

In the IPO market, online auction house Grays Australia is chasing a backdoor listing on the ASX via online retail group DealsDirect, according to the AFR. The deal will likely create a $200m company with a portion of the money raised to be redirected towards acquisitions.

Finally, it’s back to the drawing board for Shell’s divestment of a further 9 per cent of Woodside Petroleum stock, after shareholders in the Australian firm voted down a buyback plan on Friday.

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