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  • DataRoom AM: Float fatigue | Business Spectator
    bitter taste in investors mouths heading into the festive season and placed doubt on the prospect for a bumper float crop in 2014 A glimmer of light can be seen through the response to a taper of economic stimulus from the US Federal Reserve which has seen share markets around the world climb higher They will need to maintain that strength and possibly push on for the listing pipeline to swell in coming months Another positive is that you can make a case that many of the recent disappointments have been companies that are either highly priced Cover More entered on a price to earnings of 23 or in the wrong sector media Nine and retail Dick Smith aren t the most attractive industries to be in right now Healthcare and tech listings have largely held up well and perhaps we will see floats limited to such sectors in the first quarter Taking a look back at the most closely watched floats of the year and just four of the ten are trading in the black While there may have been a mini IPO boom there were 4 2 billion worth of listings in the fourth quarter many investors would have been burned Of those still trading above their listing price Freelancer remains the best performed up 180 per cent Next in line is Virtus Health 56 per cent followed by OzForex 35 per cent and education group Vocation 8 per cent In the red column are Pact Group 13 per cent Cover More 11 5 per cent GDI 11 Dick Smith 5 5 per cent Nine 3 per cent and McAleese Group 2 per cent Notably the group of six in red numbers all listed in December while Vocation was the only of the four in the black to list this month is a sign that investors have become a little tired by all the action after a multi year lull ACCC Bluescope Steel iSentia The Australian Competition and Consumer Commission has relayed concerns over Bluescope Steel s proposed purchase of Arrium s OneSteel Sheet and Coil business The watchdog s main fears centre on the sheet and coil distribution sector in Western Australia and could lead to the government body blocking the 23 million acquisition Market inquiries have identified strong concerns that the proposed acquisition would remove OneSteel Sheet and Coil as an effective competitor and the main alternative to BlueScope in Western Australia particularly for customers that require processed sheet and coil products ACCC chairman Rod Sims said A final decision on the deal is due on February 20 next year with further submissions invited until January 24 When announcing the deal in October Bluescope had hoped to finalise the purchase by the end of the year The ACCC had a busy day also flagging potential issues with iSentia s proposed acquisition of AAP s media monitoring business In a statement of issues the watchdog said its initial opinion was the takeover would result in a substantial

    Original URL path: http://www.businessspectator.com.au/article/2013/12/20/dataroom/dataroom-am-float-fatigue (2014-01-12)
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  • DataRoom AM: Bega backdown | Business Spectator
    process but if it gives its stake to Saputo that would be a gamechanger Such a move would bring Saputo s stake to around 36 per cent just 14 per cent off a majority stake There is still the worry of the combined 28 per cent stakes of Murray Goulburn and Kirin Holdings but if Saputo gets past 50 per cent those companies may be forced to yield Kirin has been tight lipped about its intentions other than to say it wants to protect its current relationship with WCB If Saputo manages to coerce Bega to sell and promises to retain the current deal between WCB and Kirin it may play ball with the Canadian group That would leave Saputo just shy of 50 per cent and almost certain to claim a majority stake It s still a big if as Kirin and Bega are yet to show any inclination of wanting to deal with Saputo but it appears the most likely scenario other than a continued stalemate It is bad news for Murray Goulburn however which has ploughed significant resources into its push to gain regulatory approval from the Australian Competition Tribunal That would all be for naught if Saputo gets its way on the stakes of Bega and Kirin in coming weeks Bega meanwhile is set for a tidy profit of over 60 million if it offloads its stake which could lead it toward a separate acquisition We have got plenty of opportunities in the business internal and external Bega boss Barry Irvin told The Australian We are not saying if we didn t get WCB we would need to do something else there may be other opportunities we will look at over time One suspects that if Bega can t seal a takeover of its own in the next six months this time next year we may be talking of it as the target in another dairy bidding war Investors appear to agree pushing Bega s shares 1 6 per cent higher yesterday to a level around 30 per cent above where it was when it first fired in a bid for WCB Among other possible deals rumoured in the dairy sector are a possible Parmalat bid for WA based Harvey Fresh and suspicions Kirin owned Lion Nathan is mulling a joint venture or sale of its dairy business Dexus Property Group Commonwealth Bank of Australia GPT Group Commonwealth Bank of Australia has officially thrown its weight behind the revised Dexus led bid for control of the Commonwealth Property Office Fund The decision to accept the 3 billion Dexus Canada Pension Plan Investment Board proposal will see it shun a rival offer from GPT Group However the move is hardly a surprise given the Dexus bid promised to pay 41 million for CBA s management rights while GPT opted not to do the same CBA move will only be relevant once Dexus takes its offer unconditional and if the sale of CBA s 7 8 per cent

    Original URL path: http://www.businessspectator.com.au/article/2013/12/19/dataroom/dataroom-am-bega-backdown (2014-01-12)
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  • DataRoom AM: IAG bounty | Business Spectator
    deal was made at close to a 14 times price to earnings ratio and it s hard to question Wesfarmers decision to exit on those metrics It had however just seen signs of traction with its strategy to use its extensive Coles retail network to sell insurance plans and the business did offer a growth avenue beyond retail Also it was only August when the division s managing director Anthony Gianotti made it clear there were no plans to sell any part of the Wesfarmers insurance business But after receiving unsolicited offers in the past couple of months and running a brief auction process Wesfarmers quickly changed its tune Analysts will no doubt welcome the deal given persistent calls for the Western Australian based group to focus more heavily on core assets which include Coles and Bunnings The big question is where it will redirect the profit of over 700 million on the deal Will it return some of it to shareholders or plough more money into its retail division perhaps via an acquisition Meanwhile IAG claims one of the rare valuable insurance assets available in the Australian market With the dominant three of Suncorp Group IAG and QBE Insurance there are few bolt on acquisitions of much worth in the market and the Wesfarmers asset as the number five was one of those unique opportunities It is consequently no surprise that Suncorp Group reportedly snuck a glance at the Wesfarmers books before opting out of the sales process Suncorp knew that despite the positives in the way of synergies and scale buying an insurance business at a near 14 times earnings ratio was a significant risk but it was one IAG was willing to take IAG will fund the deal largely through an underwritten institutional placement of 1 2 billion and a share purchase plan worth up to 200 million Wesfarmers gained half a per cent on the news while IAG entered a trading halt pending its capital raising activities IPO market Pact Group The strong end to the year for the IPO market appears likely to continue into 2014 with as much as 8 billion worth of floats expected in the first half of next year It s very very busy the equity capital markets co head of a leading underwriter told Business Spectator s DataRoom yesterday There are kick off meetings on transactions that mean many of us are working right through the holidays Among the possible listings is a return to the ASX for Spotless Group which is currently owned by Pacific Equity Partners as well as a bumper float of Healthscope which is in the hands of Carlyle Group and TPG Taxi startup ingogo the government s Medibank Private business and the Australian mortgage insurance unit of Genworth Financial are among other floats in the works Around three quarters of the action for the year in the IPO market has been seen in the final quarter with the latest company to hit ASX boards being

    Original URL path: http://www.businessspectator.com.au/article/2013/12/17/dataroom/dataroom-am-iag-bounty (2014-01-12)
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  • DataRoom AM: Qantas cold shoulder | Business Spectator
    be added to Joyce s I wish I didn t say that out loud list That list is getting quite long GrainCorp Outgoing GrainCorp chief executive Alison Watkins has taken the opportunity to criticise the federal government for the decision to block a takeover bid for the company by America s Archer Daniels Midland It is not for us to address what is in the national interest but we did feel that it is very important for us to ensure the discussion around national interest is based on facts Watkins said at The Weekend Australian s Global Food Forum We had a lot of people who had a point of view on GrainCorp who didn t necessarily have a great command of the facts Watkins has a strong case and is backed up by the Australian Competition and Consumer Commission As we discussed in this column a few weeks ago the biggest problem in the GrainCorp takeover debacle was not that it was rejected but how it was rejected Clearly seeking to manage tension within a divided Coalition party room Treasurer Joe Hockey ignored the advice of the ACCC when coming to the conclusion that competition had not been developed in the grains sector Prime Minister Tony Abbott went a step further siding with the Nationals in labelling GrainCorp a monopoly business We are one of the world s most open economies and I doubt that there would be any other G20 economy where a large foreign business would have been able to purchase an effective monopoly of a major industry here in Australia he claimed just days after the bid was blocked Just months earlier the ACCC had effectively ruled GrainCorp was not a monopoly business when giving the deal the green light with the consequent government decision a snub of its findings This has been glossed over too quickly with most reports choosing to focus on whether Australia is really open for business The question should have been does the government trust the ACCC And if the answer was yes then why did it ignore its viewpoint The broader question is what s the point in having an independent competition watchdog if the government disregards its findings whenever it suits their political viewpoint Hockey s form in ignoring significant government bodies gathered momentum last week through a decision to override FIRB rulings on Yanzhou Coal Company s ownership limitations on Yancoal Australia Queensland Investment Corporation Queensland Motorways BrisConnections The state owned Queensland Investment Corporation has chosen a trade sale to offload its Queensland Motorways business according to The Australian Indicative bids are due at the end of January with the process likely to be wrapped up by the end of April The news puts speculation of a possible IPO to bed with QIC confident that demand from pension and super funds will outstrip what it could expect to reap from a float A slight weakening in the IPO market would likely also have contributed to the decision Queensland Motorways was purchased by QIC two years ago for 3 1 billion and is now expected to be worth 5 7 billion on the back of what QIC has described as a significant amount of interest in the toll roads business Among the suitors are Transurban Group in a joint venture with Australian Super along with Canadian pension fund La Caisse de dépôt et placement du Québec and a select group of other pension and super funds Meanwhile the race for BrisConnections is just getting started as well with Fort Street Advisers Moelis and The Flagstaff Group making pitches to secure the advisory role on the deal Wesfarmers WA based conglomerate Wesfarmers has offloaded its 40 per cent interest in industrial gas producer and supplier ALWA and its associated interest in the Kwinana Industrial Gas Joint Venture The deal will see Wesfarmers receive a pre tax profit of 95 million with Liquide Australia Air Liquide claiming the stake Air Liquide now claims full control of both ALWA and the Kwinana JV The deal comes as rumours continue to swirl around Wesfarmers insurance unit It was speculated that Zurich Insurance Group was keen on the 2 billion asset but since negotiations broke down Wesfarmers has reportedly been chasing several other leads At this stage a sale seems more unlikely than likely given there has been some traction in the division but it certainly can t be ruled out with this latest sale an indication the company is keen to focus on its core assets Senex Energy AWE Limited AWE Limited entered a trading halt on Friday ahead of the release of details of a non binding and conditional merger proposal According to The Australian Financial Review fellow ASX listed energy group Senex Energy is behind the bid with the two reportedly negotiating a deal on Friday If a takeover goes ahead it would see the creation of a 1 5 billion company with Senex worth 881 million as of Friday and AWE valued at 619 million by the market The AFR said Macquarie Capital was advising the suitor while the target AWE was being counselled by UBS More details are expected by Tuesday It appears good timing by Senex with its shares trading closer to their 52 week high than their low and AWE in the reverse situation Wrapping up Warrnambool Cheese and Butter suitor Saputo has extended the deadline for its bid from last Friday until this Friday The date coincides with the recently extended deadline of fellow suitor Bega Cheese though expect both to stretch the deadlines further before the week is out Elsewhere Japanese trading house Marubeni is the fourth bidder for Macquarie Generation according to the AFR The group will look to beat off known suitors AGL Energy ERM Power and Shenhua Group when final offers are due on February 5 in the battle to control the state s largest power generator Finally the WSJ has suggested US mobile carrier Sprint could make a play for rival

    Original URL path: http://www.businessspectator.com.au/article/2013/12/16/dataroom/dataroom-am-qantas-cold-shoulder (2014-01-12)
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  • DataRoom AM: Virgin booster shot | Business Spectator
    shareholders only took up a quarter of their entitlements leaving underwriters Air New Zealand Etihad Airways and Singapore Airlines to boost their stakes As a result the big three international airlines have raised their combined position in Virgin to 67 per cent a level at which Qantas can only dream given the foreign ownership restrictions in place on the national carrier Air NZ Singapore and Etihad had previously held 63 per cent of Virgin stock We have often speculated in this column about the endgame do the international firms want to take Virgin private or are they happy with where they are It would be hard to foresee the companies sitting pat for a period much longer than a couple of years without someone getting itchy feet and with all three soon to receive a board seat at Virgin there is the promise of a shake up But that doesn t mean Virgin will be taken private anytime soon The popular perception is the closest alliance between the three is Air NZ and Singapore but in reality Air NZ and Etihad are much closer thanks to a significant codeshare agreement Still most rumours centre on an Air NZ and Singapore takeover down the line We doubt that will happen with Etihad unlikely to go calmly into the night Indeed little action can be expected in the near term as all three major shareholders are largely getting what they want out of their shareholdings a strong link with Australia and a more powerful competitor to keep international rival Qantas distracted by local issues Now they just need Virgin to turn a profit As for Qantas it is likely to be on its own in its fight with Virgin et al with the government s decision to cease the bailout culture with the car sector not a good sign it will be willing to chuck money at the national carrier It seems the state of the federal budget will make it very difficult for companies to get much more than cordial conversations out of requests for aid AustralianSuper Transurban Group Queensland Motorways Transurban Group and AustralianSuper will work together on a bid for Queensland Motorways according to The Australian Financial Review Last month QML owner Queensland Investment Corporation said it had hired UBS and Macquarie Capital to advise on a possible sale with the process likely to kick off in the first quarter of 2014 Speculation has suggested the toll road group could expect offers in a broad range of 4 billion to 7 billion with Transurban Australian super funds and Canadian pension funds considered the most likely suitors According to the AFR Transurban found its ideal partner while QIC was pursuing a two week global roadshow which has just come to an end Transurban indicated its interest last month when boss Scott Charlton said it was a good asset with good people and his firm would be keeping an eye on progress of the auction He was speaking as the company

    Original URL path: http://www.businessspectator.com.au/article/2013/12/13/dataroom/dataroom-am-virgin-booster-shot (2014-01-12)
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  • DataRoom AM: Woodside's gas lag | Business Spectator
    that we have a commercial outcome that delivers value to us Woodside chief executive Peter Coleman said at an investor briefing yesterday While the Israeli courts upheld a favourable government gas export decision for the project in October the Leviathan partners are still waiting on the government s tax policy for gas exports This is expected within two months and Woodside is likely to make a final decision after the details of the policy are made public In the meantime the Perth based oil and gas group is hoping to sell gas from its proposed Browse project to Japan Coleman would not outline the approximate prices being negotiated but Japan s search for alternatives to nuclear power puts it in a strong negotiating position Woodside is expecting to make a final investment decision on the floating LNG project in the second half of 2015 with pricing negotiations in Japan likely to be wrapped up next year Warrnambool Cheese and Butter Saputo National Foods Parmalat Rumours that the dairy business of the Lion Nathan owned National Foods is up for auction may have been swatted away by the company earlier this week but it appears there is some kind of movement at the station regardless According to The Australian Lion is in talks with Italian based dairy giant Parmalat over a possible dairy joint venture in Australia The discussions reportedly involve a rationalisation of their milk businesses It is believed Lion has also held discussions with Australia s Murray Goulburn and New Zealand s Fonterra over similar plans though any deal is expected to wait until the dust settles on the takeover of Warrnambool Cheese Butter which could still be months away Meanwhile WCB s Canadian suitor Saputo is reportedly keen to engage with the Takeovers Panel before it hands down a decision that could force it to alter its bid According to Business Spectator s DataRoom the dairy giant is prepared to call for a review of the findings should it not agree with them As it stands the Takeovers Panel is looking to work out whether Saputo broke the truth in takeovers rule in saying its latest offer was improved Rival suitors Murray Goulburn and Bega Cheese argue that Saputo misled shareholders in WCB by saying its latest bid of 9 20 a share was an improvement on a bid that was 9 per share plus the prospect of 56 cents per share in franking credits The case is not clear cut and it is likely ASIC s view will be a key guide to the final decision reached by the panel Recall Holdings Brambles Ltd IPO market Brambles Ltd spin off Recall Holdings had its first day of trade as a separate entity yesterday and investors lapped it up While Brambles dipped 4 5 per cent Recall added over 8 per cent to close with a market capitalisation of 1 4 billion The paper storage company has been criticised as a low growth business but investors put that

    Original URL path: http://www.businessspectator.com.au/article/2013/12/11/dataroom/dataroom-am-woodsides-gas-lag (2014-01-12)
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  • DataRoom AM: TPG top-up | Business Spectator
    million according to The Australian This blew the bids of iiNet and a Canadian pension fund out of the water with the other bidders reportedly unwilling to pursue a deal greater than 370 million It is the first significant purchase from TPG since 2010 when it acquired PIPE Networks for 373 million Importantly it is a victory for the company after it lost out to iiNet for AAPT s consumer arm which sold for 60 million in 2010 and to Ontario Teachers Pension Plan for Leighton Holdings telecommunications business this year Both of those firms iiNet and OTTP were outbid by TPG for AAPT The deal is not conditional and is expected to close by the end of February next year Amcor Brambles Metcash Demergers are the flavour of the week with Brambles and Amcor yesterday receiving approval to go ahead with plans to split their businesses in two Shareholders yesterday voted overwhelmingly in favour of Amcor s plan to spin off its packaging distribution company under the name of Orora A staggering 99 79 per cent of votes were cast in favour of the move which is not surprising given the performance of demerged businesses is usually improved in the immediate aftermath The notion of the sum of its parts being greater than the whole plays true with investors apparently not recognising value until its right in front of their faces The demerger will take effect next Tuesday with Orora securities to start trading on the ASX the following day Brambles meanwhile is slightly ahead of Amcor in its process to separate document storage division Recall The demerged business will begin its life on the ASX today after the Federal Court gave it the all clear yesterday on the back of an earlier vote of support from shareholders Recall was up for auction last year but a deal around the 2 billion mark could not be achieved with a 1 billion plus demerger pursued in its place Brambles shareholders will receive one Recall share for every five Brambles securities they own Meanwhile retailer Metcash has announced plans to separate its supermarket business from its convenience store operations just 18 months after merging the two together The operator of IGA supermarkets has found the going tough as Coles Woolworths and Aldi all scrap for market share often at its expense It hopes that the reversal of last year s move will refocus the business and investors offered a signal of support by sending Metcash shares 4 per cent higher yesterday They might not be so supportive should a merger reoccur in the next couple of years IPO market Vocation ingogo The successful 250 million float of education group Vocation has highlighted the IPO market is not yet at breaking point Concerns were raised about fatigue hitting new floats on the back of the lacklustre debuts of Dick Smith Holdings and Nine Entertainment last week but a gain of over 7 per cent for Vocation in its first trading day yesterday

    Original URL path: http://www.businessspectator.com.au/article/2013/12/10/dataroom/dataroom-am-tpg-top (2014-01-12)
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  • DataRoom AM: Qantas baggage drop | Business Spectator
    with Qantas which may see it come back into the picture for an equity stake but only if the Qantas Sale Act is repealed according to the report One can imagine the government having fits about the prospect of a state owned Chinese outfit taking a major share of Qantas given what eventuated with Archer Daniels Midland and GrainCorp so don t expect too much to come out of these rumours anytime soon There are reportedly other opportunities emerging for the airline however the best opportunity for Qantas to avoid a heavily dilutive capital raising in the near future is likely to be the purchase of some of its planes by a consortium led by former Macquarie Group banker Greg Woolley According to the Australian Financial Review Woolley has already gained 1 billion worth of commitments from foreign and local investors to pursue a 5 billion plan to buy Qantas planes and then lease them back to the airline It would reportedly require the federal government to guarantee the lease payments Qantas is no doubt waiting patiently to hear the full details of the proposal and see if the government will play ball The other capital options put forward include the spin off of either Jetstar Asia or its frequent flyer program though the former is likely its best growth option moving forward and the latter is likely too complicated National Foods Dairy Farmers Kirin Holdings While much focus has been centred on the Warrnambool Cheese and Butter Factory takeover saga one rarely discussed player in the battle for its control may be quietly seeking bids of its own According to The Australian Japan s Kirin Holdings could be looking to offload the dairy division of its National Foods business The news follows a recent report that Italy s Parmalat was circling Western Australian based Harvey Fresh While there may be merit to the speculation there must be doubts about the likelihood for the former to go ahead given Kirin has been adamant on the worth of the food and beverage sector It has steadily bought a major position in Australia through purchases of National Foods Dairy Farmers and Lion Nathan It would seem odd to make a partial exit now especially given the rumours suggest a sale of the dairy assets would only recoup 1 billion which is well below the amount paid for them In 2007 Kirin paid 2 5 billion for dairy and juice producer National Foods and the next year it bought Dairy Farmers for 910 million While not all of National Foods which owns the Pura Milk brand is dairy it is believed Kirin s total dairy purchases would amount to around 2 5 billion In October Kirin threw itself into the fight for WCB by buying a 10 per cent stake in the takeover target which was aimed at protecting its relationship with WCB It remains unclear which party Kirin would like to win out in the battle with Canada s Saputo considered its

    Original URL path: http://www.businessspectator.com.au/article/2013/12/9/breakfast-deals/dataroom-am-qantas-baggage-drop (2014-01-12)
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