A speculative business column in an Australian newspaper has indicated a South American group may be interested in buying the mining division of Downer EDI Ltd (ASX & NZX: DOW).
The DataRoom column in The Australian on Wednesday said the Chilean conglomerate Sigdo Koppers may be in talks with Downer to buy its mining division for $A36 billion ($NZ37.94 B).
Sigdo Koppers owns the mining services business Magotteaux and has operations in construction, transportation and logistics.
The South American company is known to the Australian and NZ market after investing $A70 M in the previously listed Bradken group now owned by Japan’s Hitachi.
The Australian said investment bank Deutsche is working for Downer on its mining division at a time when speculation is mounting that “a sale of the business is on the cards.”
“This comes with improving conditions for resource companies on the back of rising commodity prices,” the newspaper said.
The column said that earlier parties were trying to raise funds for a buyout and were thought to involve former management.
It reported that at June last year the Downer mining assets were worth $A836.3 M while it had liabilities of about $A264 M. Earlier this year, it was claimed the assets could be worth about $A450 M based on a multiple of between five and seven times.