In today’s briefing:
- Worley Placement – Largest Shareholder Selling at an Attractive Discount
- Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
- Pacific Smiles (PSQ AU): A Brace Of Offers
- ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Iron Ore and The China Property/Auto Stimulus Angle
Worley Placement – Largest Shareholder Selling at an Attractive Discount
- DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
- DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
- As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days
Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
- Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
- This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
- The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.
Pacific Smiles (PSQ AU): A Brace Of Offers
- On the 18th December 2023, Pacific Smiles (PSQ AU), an operator of dental centers, announced and rejected a A$1.40/share non-binding proposal from Genesis Capital. Genesis subsequently increased its stake to 19.90%.
- Genesis then bumped its NBIO to A$1.75/share on the 19 March and was granted due diligence on a non-exclusive basis. PSQ said it would support the revised terms if firmed.
- PSQ has now entered a Scheme with National Dental Care at A$1.90/share. The Offer also requires FIRB signing-off. But the proposal is a non-starter if Genesis rejects terms.
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
- The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
- Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.
Iron Ore and The China Property/Auto Stimulus Angle
- The short term is suddenly looking bullish for iron ore, as rumors abound that tier-1 cities in China may remove home-buying restrictions in May, and auto stimulus measures were announced.
- Cities like Chengdu and Nanjing have already announced measures to make home-buying more attractive, such as removing purchase qualifications and pilot programs for old-for-new home housing.
- We like 62% Fe and see it trade up to its upper limit of 130 USD/ton (vs. current 117 USD/ton). On equities, we like Vale (VALE US) .
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