WorleyParsons Ltd (ASX: WOR)

Building a global MMO Business: WorleyParsons is expanding into the North Sea with the acquisition of AFW UK Oil & Gas for $303 million. WOR plans to raise capital for the acquisition via a 1 for 10 full underwritten, pro-rata, accelerated entitlement offer. The acquisition has found support from shareholders, Dar Group and chairman John Grill, and around 24.8 million new WorleyParsons shares are said to be issued while acquisition is said to get completed by the end of October. Further, WOR expects the acquisition to be EPS accretive in the first year of ownership and will reduce net debt/ EBITDA from 2.4x to 2.2x.

This move is expected to reinforce the group’s strategy to have a world class global maintenance, modifications and operations (MMO) capability in its integrated solutions business. This will help WOR become a global MMO business with medium term growth. Amec FosterWheeler’s (parent company of AFW) strategy to divest its assets to mitigate few concerns arising from competition and related to takeover by the UK’s John Wood Group, has given WOR an opportunity to be leveraged and expand its footprint.


Expansion of WOR’s operations (Source: Company Reports)

Commonwealth Bank of Australia (ASX: CBA)

Class action against the bank: Commonwealth Bank is again seen darted with the latest Maurice Blackburn’s class action against the bank relating to the fiasco on regulatory compliances. The claim statement now names outgoing Chief Executive Ian Narev and existing chairman Catherine Livingstone among others, who have been accused to be aware of the potential breaches. Further, the latest announcement from litigation funders IMF Bentham that its funding is now unconditional has gained attention. This has been a challenging scenario for the bank considering the allegation on bank’s involvement in misleading or deceptive conduct along with the breaching of continuous disclosure obligations in relation to its non-compliance with the AML/CTF Act. It is also worth noting that the claim period has been extended back to July 1, 2015.

Legal proceedings filed in the Federal Court are on an open class basis and buyers of shares during the period are said to be entitled to recover losses. As mentioned earlier, implied recoveries in excess of $200 million are expected to be emerging out of the class action. 

Mantra Group Ltd (ASX: MTR)

Takeover Proposal from Accor: Mantra Group’s securities surged up 16.4% on October 09, 2017 as Paris-based operator of hotels, Accor made a proposal to the group entailing $1.2 billion all cash offer to buy Mantra Group. The indicative, non-binding proposal includes acquisition of MTR at $3.96 per share, or $4.02 less the 6 cents final dividend paid in 2017. The offer price is at about 23% premium to MTR’s share price on closing of October 06, 2017. The business is valued at $1.17 billion. MTR has granted Accor the access to due diligence in order to determine if a transaction can be agreed and recommended unanimously by the Mantra Board. This takeover is said to bring country’s two biggest hotel operators together with many brands and hotels under one giant group.As of now, the transaction is subject to many approvals including the ones from the boards of the Mantra and Accor groups and regulatory approvals and other conditions. Highbury Partnership has been appointed by MTR as financial adviser and Baker McKenzie as legal adviser to advice on the Accor proposal.

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