Thundering herd's ascent
The sale of Bluescope's NZ iron sands operation marks Merrill Lynch's rise up the league tables.
Merrill Lynch's climb up the M&A rankings after a slow start to 2008 continues apace, having advised Australia's Bluescope on the $NZ250 million sale of its iron sands operations in New Zealand.
The Taharoa Iron Sands Business attracted significant interest from Australian, US, and Asian steel businesses and mining groups before finally being sold at a healthy multiple of 15 times EBITDA to Hong Kong-based Cheung Kong Infrastructure.
Iron sands is an iron ore substitute. The fine black sand created by volcanic activity is 60 per cent iron and is used by steel-makers in their smelting process. The high multiples reflect the significant interest in iron ore and its substitutes and confidence steel making capacity will continue to grow.
Although Cheung Kong Infrastructure invests primarily in infrastructure assets, it was attracted by the strong and stable cash flows from the operation. It already owns interests in quarrying and cement.
Bluescope, which used a Merrill Lynch team led by Ken Lim and legal firm Chapman Tripp, will retain another New Zealand iron sand operation to feed its NZ smelters.
Merrill Lynch, meanwhile, is also seeking offers for the Humes concrete pipe business being sold by Mexican cement giant Cemex. Up to 10 parties are reportedly interested in the asset, with information memorandum already sent out and first round offers due within the next month.
Analyst valuations for the business, inherited through the acquisition of Rinker, range from $250 million to more than $400 million.
The Taharoa Iron Sands Business attracted significant interest from Australian, US, and Asian steel businesses and mining groups before finally being sold at a healthy multiple of 15 times EBITDA to Hong Kong-based Cheung Kong Infrastructure.
Iron sands is an iron ore substitute. The fine black sand created by volcanic activity is 60 per cent iron and is used by steel-makers in their smelting process. The high multiples reflect the significant interest in iron ore and its substitutes and confidence steel making capacity will continue to grow.
Although Cheung Kong Infrastructure invests primarily in infrastructure assets, it was attracted by the strong and stable cash flows from the operation. It already owns interests in quarrying and cement.
Bluescope, which used a Merrill Lynch team led by Ken Lim and legal firm Chapman Tripp, will retain another New Zealand iron sand operation to feed its NZ smelters.
Merrill Lynch, meanwhile, is also seeking offers for the Humes concrete pipe business being sold by Mexican cement giant Cemex. Up to 10 parties are reportedly interested in the asset, with information memorandum already sent out and first round offers due within the next month.
Analyst valuations for the business, inherited through the acquisition of Rinker, range from $250 million to more than $400 million.
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