Capital raising activity and block trades are once again ramping up, judging by some recent interesting moves in the market.
In the past fortnight, there’s been Woolworths selling out of Endeavour Group, Aussie Broadband divesting its interest in Superloop, Apollo reducing its stake in Challenger and Crescent Capital selling its final interest in Australian Clinical Labs.
But when it comes to raisings, there’s also been movement, with data centre powerhouse NextDC once again rattling the tin as an example of groups with strong share price gains wanting to take advantage of that and use its scrip to do a deal or raise funds.
The other example is REA Group, which has a strong share price and has made an $11bn takeover play for UK peer Rightmove, and it may raise equity if it decides to come back with a higher offer.
On NextDC, analysts at Macquarie said the $550m placement and $200m Share Purchase Plan was as its capital spending budget increases by about $400m to $1.5bn. The offer price at $17.15 per share was a skinny 3.9 per cent discount to the last closing price of $17.84 and is typical of NextDC, which likes to capitalise on its rising share price while it can and the huge demand for exposure to data centres.
REA Group is going to need to pay more to win Rightmove; the question is whether it wants to.
REA told the market on Wednesday that it bid for the UK target on September 5 in a cash and scrip deal, but the offer was rejected.
It included 305 pence cash and 0.0381 REA shares, and values the target overall at £5.6bn ($11bn), or a 27 per cent premium to its undisturbed share price of 556 pence on August 30 and 20.5 times its earnings before interest, tax, depreciation and amortisation.
REA would have a secondary UK listing and Rightmove shareholders would own 18.6 per cent of the overall business.
In the position it is currently in, REA would not need to tap the market, but if it offers more cash, it could be a different story.
Good as gold
Greatland Gold’s equity raising by way of a $US325m ($487m) placement and $US9m retail offer, meanwhile, was well supported as the UK listed group secured the funds to buy the Telfer Gold Mine and remaining 70 per cent interest in the Havieron gold project it doesn’t already own from Newmont for $US475m.
Greatland, with pre-emptive rights, was always known to be extremely keen to buy the assets and thought to be the most likely candidate – the question was always how it would fund a deal.
The verdict is that it was a top price achieved by Newmont and adviser Macquarie Capital, considering there wasn’t known to be much other buyer interest.
It’s not an easy asset, being an old mine with a new deposit, but Greatland Gold chief executive Shaun Day is believed to be a strong believer.
Telfer produces copper and gold and is the largest processing facility in the Paterson province in Western Australia.
The valuable Havieron processing facility is 45km away.
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