DataRoom AM: UGL downer

UGL’s sale of its property services arm looks in doubt, while two of the biggest floats of the year move closer to judgment day.

UGL appears close to be abandoning the sale of its property services arm and the news has investors rushing for the exit. The markets may be ebullient at the moment but if any firm fails to meet expectations, investors are happy to dish out the punishment.

Elsewhere, there’s progress with two of the biggest floats of the year, a ‘for sale’ sign remains a possibility for David Jones’ property assets and Ten Network draws interest from the UK.

The value of UGL stock was crushed during Monday trade, with investors responding pessimistically to news only one bidder bothered to submit a final bid for the engineering firm’s property arm, DTZTPG Capital is widely considered to be the only suitor left in the race and the lack of competition hints at a pricing level below management expectations for $1.2 billion.

The news comes after management had hinted at confidence there would be strong bids after receiving signs of interest from 14 private equity firms. With that confidence now in question, shares in the firm slumped 10 per cent. It now appears likely UGL will hang onto the division, though initial plans for a demerger could be revitalised.

In the IPO market, two of the biggest floats of the year are fast progressing towards judgment day, with consumer products maker SCA Hygiene and catering firm Spotless Group both receiving $1bn-plus valuations. Spotless is the closer of the two to the finish line as it rounds out final preparations for a listing on Friday. The Pacific Equity Partners’-owned firm has received significant investor interest at the bottom end of its pricing range and is on track to raise $1bn, which would result in a valuation just shy of $2bn.

Meanwhile, SCA, which manufacturers PurexSorbentHandee and Libra products, has changed its name to Asaleo ahead of a listing that analysts say could value the firm at anywhere between $927 million and $1.15bn. CitiMacquarie Capital and Bank of America Merrill Lynch are serving as lead advisors.

Also preparing to float is salary packaging firm Smart Group, which is staring at a valuation of about $200m.

In retail, David Jones’ flagship Market Street building in Sydney could yet be the subject of action, with the retailer’s new owner reportedly keen to assess the sale of development rights. South Africa’s Woolworths said it would “review alternatives” on the property assets, with the door again opening on the prospect of a sale of the retailer’s $600 million-plus property assets.

In media, Ten Network has been the subject of interest from UK network ITV, according to The Australian Financial Review. The report suggested that ITV discussed the prospect of taking a stake in the struggling Australian network in January, though talks have “not gone anywhere”.

Elsewhere, Etihad Airways has again upped its shareholding in Virgin Australia, this time to 21.2 per cent. Air New Zealand, with 24.5 per cent, remains the biggest shareholder in Qantas’ bitter domestic rival.

Finally, Mark Bouris’ Yellow Brick Road has acquired mortgage aggregator Vow Financial in a $17.6m deal that is due to close by the end of July.

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