Private equity ghost spooks the market

SPECULATION of an imminent private equity deal swept through the market yesterday, with bankers jumping at shadows and pointing the finger at a potential acquisition of Foster's Treasury Wine Estates or Primary Health Care.

While it's true a number of private equity groups have looked at TWE, rumours that a Macquarie-advised team of KKR and Blackstone were about to lodge a bid were quickly hosed down by those closest to the situation.

However, late in the afternoon, KKR did announce a deal to invest in distressed recycling group CMA Corporation. The transaction, under which KKR will assume about $82 million of debt owed to ANZ and take a stake of up to 85.5 per cent in the company, is being done by KKR Asset Management, which is thought to be looking for more distressed investments in this market.

It's a little like TPG's $2bn deal to take over ailing energy group Alinta earlier this year and highlights a growing interest in Australian distressed assets from private equity groups. CMA, which has been suspended from trading for more than a year, is set to resume trading from late July if the deal is approved by shareholders.

End of sidebar. Return to start of sidebar.
In the meantime, speculation about TWE is unlikely to die down, with a wine transaction thought to be more likely than a deal to take out the demerged Foster's beer operations.

Banks jostle over Burrup sale

 THE Burrup Fertiliser sale is still about a month away, but that hasn't stopped investment banks positioning themselves to back the horse most likely.

Wesfarmers' CSBP division, which submitted an offer before Christmas, just as the business was collapsing, is thought to be working with Macquarie and Gresham.

Orica is so far going alone and it seems Norwegian group Yara International, which owns 35 per cent of the business and has pre-emptive rights over the sale of the rest, is yet to mandate local counsel.

Sinofert has been linked with Citigroup but while the bank has had a relationship with the Chinese group, it's understood it is yet to form an official alignment. Sinofert worked with Royal Bank of Scotland in its failed bid for pesticide group Nufarm back in 2009.

The other Burrup bidder, Incitec Pivot, is thought to be closest to Credit Suisse.

Incitec has surprised rival bidders by securing what appears to be a fast-track decision from the competition regulator on its potential offer for the asset, which owes $800m to ANZ Bank.

The Australian Competition and Consumer Commission is scheduled to announce its decision on June 9, after the review began this week.

In contrast, Wesfarmers and Orica won't get an ACCC ruling until May 12, after the regulator kicked off its reviews in February and March, respectively.

Myer moves on direct buying in Asia

HIGHLY regarded Myer buying operations director Penny Winn spent much of last week in Hong Kong and Shanghai, where the retailer is finalising lease arrangements for its first offices in Shanghai.

It is part of Myer's push to source more of its private label and exclusive branded products directly, cutting out the middleman, global sourcing giant Li and Fung.

Myer's international supply chain manager John Amm has moved to Shanghai, where the department store chain is looking to build a team of 35, with 30 to be hired in Hong Kong. About 10 per cent or $US150 million ($138m) worth of Myer's purchases are sourced in US dollars. From August, Myer will make those purchases directly through its Asian offices.

Analysts expect the move to add an extra 30-40 basis points to Myer's gross margin of 39.6 per cent by 2014. It's not a massive deal but in times like these, every little bit helps. With retailers still waiting for consumer spending to catch up with sentiment, it's the kind of little detail to which Myer and its rivals should be paying more attention.

Packer drops by Vegas hitching

JAMES Packer is believed to have returned to Australia this week after a month abroad, but not before he dropped into Las Vegas for the other big wedding of last weekend.

While Prince William and Kate Middleton were exchanging vows in Westminster Abbey, across the Atlantic Las Vegas casino billionaire Steve Wynn was marrying British sweetheart Andrea Hissom in a big-budget Hollywood-style ceremony at his Encore resort.

Packer has Wynn to thank for his entree into the Macau gaming market after the US billionaire sold he and business partner Lawrence Ho a sub-concession to operate hotel casino resorts in the province back in 2006.

Wynn once said of Packer and Ho: "I consider them both friends and I think they are very bright men, considering their age and the position they are in."

Packer, whose Melco Crown Entertainment launched an international Chinese currency denominated bond issue to raise $US350 million ($322m), was joined by a host of other billionaires and celebrities, including Donald Trump, actors Sylvester Stallone and Hugh Jackman and singers Celine Dion and Garth Brooks. Clint Eastwood was Wynn's best man.