DataRoom AM: Treasury in play

Reports of takeover interest in leading winemaker Treasury Wine Estates have proven accurate, to a degree. Most speculation in recent times has centred on a divestment of its US assets, but yesterday we learned that private equity firm Kohlberg Kravis Roberts has its eyes on the whole business. So what will it take to get the TWE board on side?

Elsewhere, judgement day nears for the Arrow LNG venture, Genworth Australia ignites the IPO market and UGL ditches its planned divestment of DTZ.

Treasury Wine Estates has finally received the long-awaited takeover proposal most in the market were tipping a few years ago, with Kohlberg Kravis Roberts putting together a $3.05 billion proposal that has been rejected by TWE’s board. KKR delivered the bid to TWE on April 16 with a request for it to be kept quiet. The move again poses the question: at what point should private discussions on takeovers be tabled to shareholders? Surely an offer at a 15 per cent premium should be released to the market as quickly as possible?

Regardless, stock in the firm jumped 18 per cent to a level 2 per cent above the rejected price, in a bullish signal that a revised offer could be forthcoming. Given KKR is discussing the offer with key TWE shareholders, it appears the private equity firm is testing the waters on what price would bring intense pressure for a sale from investors. Perhaps another 5 per cent might tip the scales in its favour?

Elsewhere, a sale of gas resources at the stalled Arrow LNG project in Queensland is shaping up as a likely outcome of talks between its owners and other developers in the region, according to The Australian Financial Review.

Arrow owners Shell and PetroChina have long been discussing the prospect of asset sharing with the three other big Curtis Island players, BG Group, Origin Energy and Santos. But after many false starts it appears Arrow’s joint venture partners could be ready to select a partner, with Santos reportedly a frontrunner should the Arrow JV pursue the gas sale option.

In the IPO market, Genworth Australia has celebrated its listing on the ASX in style, with the value of its stock surging 13 per cent on its first day of trade. The success of the biggest IPO in Australia this year ($583 million) is another fillip for the suddenly surging IPO market, ahead of billion dollar-plus floats in the form of Spotless Group, Medibank Private, Asaleo (formerly SCA Hygiene) and possibly Healthscope.

So far this year, newly listed companies have averaged gains of 12.8 per cent -- a sharp turnaround from the fatigued IPO market in late 2013, when investors were punishing high-profile floats.

In property, it appears UGL has abandoned the sale of its property services division, DTZ, after the only bid lobbed for the business came in a few hundred million dollars shy of where the engineering firm had hoped. A demerger of DTZ is still likely, but an announcement later this week is likely to reveal a delay to those plans.

Elsewhere, infrastructure fund Spark yesterday detailed plans to raise $200m to fund the purchase of a 14.1 per cent stake in Duet Group. The raising will be conducted at a 7 per cent discount to its last traded price.

Finally, speculation of a sale of a stake in Ten Network to British network ITV has been dismissed as an “overreach” by sources at the network.