Daily Brief Australia: Azure Minerals, CSR Ltd, Qantm Intellectual Property, Vection Technologies Ltd and more

• The AFR reports that JPMorgan is selling 14.5% of Azure Minerals (AZS AU) shares at A$3.42. The primary seller is said to be Mineral Resources (MIN AU), seeking to exit.
• MinRes’ decision to sell out a discount rather than accept the scheme A$3.70 offer reflects the cost of securing a say on Andover and the opportunity cost of capital. 
• The transaction booklet will be despatched in early March. At the last close and for an early May scheme payment, the gross/annualised spread is 2.5%/13.4%. 

• JPMorgan is placing MinRes (MIN AU)‘s 14.5% stake in Azure Minerals (AZS AU) at A$3.42/share, a 5% discount to last close and a 7.6% discount to the A$3.70/share Scheme price. 
• It was reported last month that MinRes, who paid up to ~A$4.00/share for some of its stake, was looking to exit. But cash now vs. ~8% more in two months?
• Given the recent rout in lithium and nickel prices, one wonders if a MAC landmine lurks. Or, quite simply, MinRes just needs the cash. Expect Azure to fall tomorrow.

• Cie De Saint-Gobain (SGO FP) has approached CSR Ltd (CSR AU) with a non-binding indicative offer to acquire all of CSR’s shares at A$9/share via a scheme of arrangement.
• At the last close of CSR (pre-trading halt) the gross spread to the offer price is 13.21%. That will close significantly once the stock resumes trading.
• Given the large premium to the last close, at a price higher than the highest high, and support from the CSR Board, the deal should go through.

• Mineral Resources (MIN AU) is looking to raise up to A$229m (US$150m) via a secondary block trade in Azure Minerals (AZS AU), which will be a clean-up. 
• The deal is a large one to digest, at approximately 51.6 days of three month ADV and 13.8% of current mcap. 
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• In response to media speculation, Cie De Saint-Gobain (SGO FP) confirmed a non-binding proposal for CSR Ltd (CSR AU) at A$9.00, a 32.9% premium to the undisturbed price.
• Saint-Gobain is conducting confirmatory due diligence. CSR is at a trading halt concerning receiving a proposal regarding a potential material transaction involving CSR.
• Shareholders should be supportive as the offer represents a 15-year high. The timing of a binding agreement is the key risk.  

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than- forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements. 

Vection Technologies secured multiple contracts in February, generating total contract value (TCV) of A$5.8m, with management expecting to recognise the associated revenue and cash across H224. Year to date, the group has delivered more than A$22.5m in TCV, c 80% of FY23 TCV, underpinning growth momentum in FY24. The most substantial contract, valued at A$4.9m, was won with an existing customer in the defence sector, Vection’s second-largest vertical, showing that management is delivering on its upsell strategy. The other contracts spanned healthcare, retail and real estate, reflecting growing demand for extended/virtual reality technologies across a myriad of commercial applications.

• QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
• It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with ~14.4% market share (H1 FY24) in its key patents segment (67% of service revenue) and a diversified mix of local and foreign clients.
• The company has reported a significantly better-than-forecast H1 FY24 result, driven by stronger revenue, productivity gains and cost improvements.