DataRoom AM: Wesfarmers harvest

Wesfarmers has a few options for the proceeds of its latest insurance divestment, while Rio Tinto sheds its stake in Northern Dynasty.

Wesfarmers has made its second insurance divestment in the last four months, this time offloading its broking division for $1 billion. Now the conglomerate has a big decision to make on how it will employ its rising cash pile.

Elsewhere, Rio Tinto makes an unexpected move in Alaska, speculation swirls around an optimistic Oz Minerals takeover, Peters Ice Cream draws plenty of suitors and National Australia Bank mulls options for its struggling life insurance business.

Wesfarmers has sold its insurance broking arm to Arthur J Gallagher for $1.01bn. The deal includes the OAMPS business as well as Crombie Lockwood in New Zealand, Monument Premium Funding and Lumley Finance. The news further builds the conglomerate’s war chest after it sold its insurance underwriting division to IAG for $1.84bn in December.

The question now is how Wesfarmers will use the funds. There are three options: a special dividend, a share buyback or an acquisition. Given Coles boss Ian McLeod has been slated to analyse overseas takeover targets in a newly created position from July, a new acquisition may be the smart bet.

In resources, Rio Tinto has opted to exit the large Alaskan Pebble copper-gold project amid community concerns about its proposed development. The giant miner paid $US166.5m ($180m) to claim a 19.9 per cent stake in developer Northern Dynasty across 2006 and 2007. The shareholding has since shrunk to 19.1 per cent, with Rio making the surprise move of donating the stake to two charities in the region.

Meanwhile, Britain’s Betaville blog has set tongues wagging with boasts that Evolution Mining may be mulling a $1.6bn bid for Oz Minerals. The comments come from the Daily Mail writer who last year talked up the prospect of a Glencore Xstrata offer for Oz. It seems a longshot, however, given that Evolution is half the size of Oz. Perhaps highlighting the worth, or lack thereof, of the report, the stock of both companies climbed 1.5 per cent yesterday. That doesn’t bode well for an imminent deal.

Peters Ice Cream owner Pacific Equity Partners is running a dual track sales process, according to The Australian Financial Review, with plans for a divestment by June 30. Five suitors -- including Murray Goulburn, R&R Ice Cream, Bain Capital and two Asian firms -- are believed to be conducting due diligence on the business, which could be worth as much as $500m.

Another high profile firm pursuing a dual track sales process, Healthscope, has pushed back a deadline for divestment, the AFR reports. A $4bn float is now tipped for July should trade offers due in early May not satisfy owners TPG and The Carlyle Group.

In finance, National Australia Bank has been discussing the prospect of a life insurance partnership with several financial services firms in a bid to extract capital from its underperforming division, which is housed inside subsidiary MLC. Recent reports suggested Japan’s Dai-Ichi Life Insurance may be interested in an outright purchase, but a sale is now considered unlikely, the AFR said.

Fresh from a failed attempt to list on the ASX, the owners of online shopping website Ozsale are chasing a buyer in Britain. The company has reportedly already received offers, with hopes more could be reaped than expected through an IPO.

Finally, Canadian gold miner Spur Ventures has agreed to pay $30.2m to acquire ASX-listed Atlantic Gold.