Kerry Packer, Ron Walker, Robert De Crespigny, John Singleton, Mark Carnegie and John Wylie make an unusual group lining up a potential bid for Perth-based mineral sands company Iluka.
Their syndicate spent $110 million buying a 7.25% stake at $6.50 a share and is already showing a paper profit of $24 million after yesterday’s 62c surge to a record $7.93.
But before getting too excited, it’s worth remembering that Kerry Packer has a woeful record when it comes to investing in resource companies. Paul Barry’s biography details the various fiascos including a crazy scheme in November 1986 where Packer was persuaded by the ever-colourful Warren Anderson to plough $200 million into a bunch of jungle properties in the Pacific rim that never produced any gold.
1,300 minority shareholders in the Packer-controlled Muswellbrook Energy and Minerals saw their shares plunge from $1.40 to just 5c when Australia’s richest man took it private to end the embarrassment of spending $88 million exploring for fool’s gold in the jungles of PNG, Indonesia and The Philippines.
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Other Packer resources plays such as Bendigo Mining and various dreams to find commercially viable diamonds have also come to nothing.
Iluka is now valued at about $2.3 billion (including $400 million in debt) and would be too big a bite for De Crespigny’s gaggle of mates without Packer being on board. The stock was available for purchase at just $4.50 a share six months ago.
Given Packer’s reluctance to make big offers at the top of the market for listed companies, don’t hold your breath for a bid to emerge, which means De Cresigny’s fourth attempt to climb atop a major Australian mining house will probably be as successful as his campaigns to save MIM and WMC Resources.
If the Rich Lister really wanted to keep running a major Australian mineral house, why did he create an auction for Normandy Mining a few years back?