DataRoom AM: Treasury Wine tug-of-war

Another suitor looks ready to enter the battle for Treasury Wine Estates, while Dexus Property is reportedly in a rush to unload some assets.

The fight for Treasury Wine Estates may soon turn into a three-horse race, with another major private equity firm ready to put its hat into the ring.

Elsewhere, Dexus Property Group presses on with a selling spree, energy giants line up for Infratil Energy’s local assets and Telstra leaves itself plenty of wriggle room on acquisitions.

Private equity firms TPG and KKR could soon have another strong contender to worry about in the $3.4 billion battle for control of Treasury Wine Estates, with The Carlyle Group close to making a call on a rival bid, The Australian Financial Review reports. Carlyle has reportedly been mulling an offer for weeks and is now seen close to pulling the trigger, which may explain the late afternoon lift in TWE’s share price yesterday.

Stock in the target has been drifting lower for days, but just before 3pm Thursday afternoon the firm’s shares suddenly jumped 1 per cent after scarcely moving all day. While 1 per cent would rarely draw attention, it is a noticeable move in late trade for a multi-billion dollar company in a market that had found its level for the day.

Meanwhile, the battle for control of Infratil Energy’s Australian assets is heating up, with four local energy giants ready to submit final bids to buy both Lumo Energy and Direct Connect Australia, according to the AFR. The sale could reap offers upwards of $500 million, with AGL EnergyOrigin Energy, TPG’s Alinta Energy and Snowy Hydro all in the mix. Snowy is believed to be the most aggressive in its pursuit, while prospective suitors M2 Telecommunications and Pacific Hydro have dropped out of the running.

The takeover competition comes amid expectations for Origin and AGL to pursue $1bn-plus capital raisings and while the latter is believed set to announce a rights issue next week, Origin is eager to defer as it looks towards a period of strong cash-flow in three years’ time, the AFR reports. If true, it’s a strong hint AGL is not a major player for Infratil’s assets.

In property, Dexus Property Group appears in a rush to get rid of assets, potentially teeing up almost $700m worth of divestments in Sydney alone this week. The most prized of the assets offloaded will be the $400m sale of a residential development site in Sydney’s CBD, with Dexus seen close to a deal with a Chinese firm over the land. It follows this week’s $190m divestment of a site in Sydney’s Rosebery to Harry Triguboff’s Meriton Apartments as well as a $90m sale of an office building in Sydney’s CBD to Brookfield Office Properties.

In the IPO market, stock in Barrack St Investments lifted 5 per cent on the company’s ASX debut yesterday. It was a positive start to life as a listed company, but came after the firm only raised the minimum amount signalled in its prospectus of $16m, well short of hopes for $50m.

Hoping to enjoy a similar first day of trade will be Australian Dairy Farms, but first it has to get to the boards. The milk producer is planning to list later this year and hopes to raise $14.5m in the IPO. The firm currently operates two dairy farms in Victoria, with milk supplied to NZ giant Fonterra.

Finally, Telstra has announced a share buyback worth $1bn as a result of significant asset sales over the past 12 months, including the divestment of its CSL business in Hong Kong and a majority stake in its local Sensis operations. Credit Suisse analysts had tipped a $2bn buyback, which suggests Telstra has left itself plenty of room to grow via acquisition, with Asia a likely target for its cash.