BREAKFAST DEALS: Archer's new target

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A bid by Archer Capital for Boom Logistics underlines growing confidence in the private equity sector.

Boom Logistics, Archer Capital

Crane operator Boom Logistics is considering a $240 million indicative cash offer from private equity firm Archer Capital – further evidence that private equity operators have dusted off their boots and are ready to return to the game. Archer has allied itself with Boom's largest shareholder McAleese Group to lob a second offer after reports that its initial overtures in early April failed to get any traction from the target. While Boom's decision to not disclose the offers at an early stage have raised some eyebrows, managing director Brenden Mitchell has told the AFR that the board needed to keep the offers confidential until it had conducted a review of its operating performance and budgets for next year.

Prudential, AIG

With Prudential Plc calling it quits on its efforts to snare American International Group's (AIG) Asian unit AIA, the collapse of the mega-deal has got tongues wagging on what's next for both parties. The general consensus seems to be that a failed deal is likely to make Prudential's management position untenable, with chief executive Tidjane Thiam expected to lose his job, and increase the call for a break-up of the UK insurer. As for AIG, which is majority owned by the US taxpayers, the scuttled deal could pose problems to its plans to pay back the US government's $US182 billion bailout money. There are rumblings that AIG may have to revisit its earlier divestment strategy of a public offering in Asia. However, analysts have said that the IPO path will raise a lot less than what was on the table from Prudential. Talks of another buyer waiting in the wings are also being hosed down for the moment, with one analyst telling Bloomberg that given the jitters in the market the possibility of another buyer was highly unlikely. According to the UK's Telegraph, there is another option for AIG chief Robert Benmosche to salvage the situation, which would involve a deal with sovereign wealth funds. If pursued, the measure will see a minority stake in AIA floated in Hong Kong with the US Treasury remaining the largest shareholder, the paper said.

Staying with the insurance sector, Insurance Australia Group, the country's top car and home insurer, will have to dig deep to maintain its full year dividend after a third successive cut to its 2010 insurance margin. The latest hit to the insurer's second half earnings has come from the UK markets where IAG has spent close to $1.7 billion since 2006. With IAG shares taking a tumble on the news The Sydney Morning Herald reports the insurer may again come in the sights of rival QBE which made an unsuccessful bid two years ago. IAG CEO Michael Wilkins is confident that things will turn around for its motor insurance business, Equity Red Star, in the UK. However, one analyst has told The Australian that it would not take much for the insurer to change its tune if the right suitor and the right price came along.

Murray Goulburn Co-Op, Warrnambool Cheese

Murray Goulburn Co-Operative has pulled the plug on its $180 million takeover bid for Warrnambool Cheese & Butter Factory Company Ltd (WCB), just days before the Australian Competition and Consumer Commission was set to rule on the merger. Murray Goulburn's move was to a degree driven by its inability to convince the competition regulator to change its mind on its initial misgivings about the impact of the tie-up on the raw milk markets, the AFR reports. While WCB has welcomed the decision the suitor – which has retained its 10 per cent stake in the target – has not ruled out the possibility of another tilt, with Murray Goulburn chairman Grant Davies telling the paper that another bid was a possibility once the 15 per cent single party share ownership cap stipulated by the WCB constitution is removed in May 2011.

Vale, Aquila

With the recent corporate activity around Macarthur Coal highlighting the attractiveness of Australian coal, Brazilian miner Vale is keen to grab itself a bigger piece of the action, setting its sights on the $2 billion Belvedere coking coal project in Queensland. The miner has already increased its stake in the facility to 75.5 per cent after a $92 million deal with local operator AMCI Investments and has now turned its attention to Aquila Resources' 24.5 per cent stake in the mine. Vale has exercised an option to buy Aquila's stake in the project in a deal that could be worth as much as $900 million, reports The Australian. Aquila, which went into a trading halt yesterday, has made its intentions to jettison for some time with the funds earmarked for the development of its iron ore project in West Pilbara.

CBH, Toho Zinc, Nyrstar

CBH Resources Ltd says its directors have accepted a proportional takeover bid by the lead, zinc and silver miner's largest shareholder, Japan's Toho Zinc Co Ltd. According to CBH, its directors Robert Willcocks and Ian Plimer have given the nod to Toho's 24 cents cash per share offer while, another CBH director, Lewis Marks, has placed his shares in the company into an institutional acceptance facility. The news will be blow to CBH's Belgian suitor Nyrstar, which has lobbed a $310 million offer for the miner, especially after CBH's independent directors unanimously backed Toho's $361.5 million offer. Nyrstar has made three revisions to its original offer tabled in April and will now have to come up with far sweeter offer to keep its bid in play.