DataRoom AM: Westfield target talk

The Lowy family could be priming Westfield Corporation for a takeover, while the mid-tier banks look for a way to counter the power of the big four.

Ever since the Lowy family announced demerger plans for Westfield at the end of 2013, speculation has been rife that it was a play to make the business more suitable as a takeover target. But could there be action at the station already?

Elsewhere, rumours surface of a major regional bank tie-up in Queensland, NSW Premier Mike Baird opens the door for China on the state’s ‘poles and wires’ sell-off and a game of pass the parcel is played with BrisConnections’ debt.

It hasn’t taken long for Westfield Corporation to become a takeover target in the eyes of investors, with The Australian Financial Review reporting that rumours of M&A activity have “swept the market” in recent days. The latest speculation largely stems from a very bullish outlook from the Lowy family -- which may suggest they are priming the firm for a takeover, or could merely be a case of them trumpeting their controversial demerger. Either way, the paper labels two firms as standout suitors -- Simon Property Group and Unibail-Rodamco -- and a recent 5 per cent lift in the firm’s stock suggests some optimistic investors think a move may come sooner rather than later.

In finance, the banking sector was abuzz yesterday as reports emerged of merger talks between Suncorp and Bank of Queensland earlier this year. Discussions between the two parties are believed to have ended back in February and appear unlikely to restart soon given BoQ is searching for a new chief executive. BoQ’s former boss Stuart Grimshaw also reportedly tested the waters on a deal with Bendigo and Adelaide Bank.

The moves hint at the prospect of M&A plays among the mid-tier banks as they try to counter the power of the big four.

Meanwhile, the potential sale of BrisConnections remains up in the air as hedge funds continue to pile in to the toll road owner’s distressed debt. Davidson Kempner Capital ManagementStrategic Value Partners and King Street Capital have been linked to purchases of $1.4 billion worth of debt from BNP ParibasANZ BankDZ Bank and Societe Generale in recent weeks as leading debt holder Macquarie Bank seeks to delay a sale of BrisConnections until its financial performance improves.

Also in infrastructure, NSW Premier Mike Baird has encouraged Chinese investors to make a play for ‘poles and wires’ assets in the nation’s most populous state. The state government is planning to offload 49 per cent of its electricity distribution network, with Baird’s comments a boost to rumoured suitor State Grid Corporation of China, which has been mulling a joint venture with a local firm to lift its chances in the $15bn-plus auction.

In the IPO market, Macquarie Capital and UBS have been tapped to run the $500m float of digital property marketing firm PropertyGuru on the ASX, according to the AFR. An investor roadshow is tipped to begin today as the Singapore-based IPO candidate looks to capitalise on Australian interest in digital classifieds businesses.

Elsewhere, Aristocrat Leisure has offloaded its European lotteries division, securing close to $15m from buyer Playtech. The deal will result in a write-off of $45m for the ASX-listed group.

Finally, retirement village operator Ingenia Communities Group has abandoned a $200m takeover of a parks fund managed by Aspen Group, while South Africa’s Woolworths Holdings has secured full control of Australian clothing group Country Road after a $213m takeover play.