BREAKFAST DEALS: ASX anxiety

The mooted merger between bourse operators – Singapore Exchange and the ASX – may not see the light of day, with the deal reportedly unlikely to get the tick of approval from Canberra. The ACCC finds itself in hot water after embarrassing revelations weaken its case against grocery wholesaler Metcash. Meanwhile, Telstra shareholders may be happy to wait a little longer before voting on the NBN deal but a little extra information won't hurt, while AT&T and Deutsche Telekom seal a $US39 billion wireless deal. Elsewhere, James Packer vows to steer clear of the US gaming markets, Rio's deadline for Riversdale edges closer and Blackstone Group may have its eyes on the Good Guys.

SGX, ASX

The mooted merger between bourse operators Singapore Exchange Limited (SGX) and the ASX Ltd could be headed nowhere, with growing speculation that the deal is unlikely to get the blessings of the parliament. SGX lodged its formal application to the Foreign Investment Review board (FIRB) just over a week ago and while the suitor is confident that it has done enough to get the regulator's tick, the Sydney Morning Herald reports that the Gillard government may still be inclined to reject the merger and The Australian Financial Review suggests that the government may even issue an announcement before the FIRB completes its initial 30-day approval process. The latest bout of fear comes after three senior Coalition MPs said last week that they were not convinced about the merits of the deal. The opposition's scepticism coupled with the recalcitrant stance of the Greens and the Nationals would no doubt get alarm bells ringing for SGX and ASX management and what's even more alarming is the reported hostility towards the deal amid Labor ranks. On top of that, the value of SGX's bid has fallen sharply in the wake of the crisis in Japan. SGX's original $8.4 billion cash and scrip offer values ASX at $48 a share but recent turmoil in the markets has shaved a $1 billion off the offer, valuing ASX shares at $42.04 a piece. That's still a healthy premium to ASX's last trading price of $34.82 a share but the Nationals and Greens have made it clear that they will oppose the deal, the Coalition is yet to be convinced and even some Labor MPs may be turning their back on the merger. All of that adds up to a major political roadblock that may prove to be too difficult to surmount for the SGX, ASX and their army of lobbyists in Canberra. The FIRB has up to 120 days to make its final decision and one suspects that it will use every single one of them before this game is over.

ACCC, Metcash

The legal stoush between the Australian Competition and Consumer Commission (ACCC) and grocery wholesaler Metcash has taken an interesting turn, with the competition regulator taking heavy fire over secret dealings with Woolworths executives. The ACCC initiated the legal action in the Federal Court in the first place to block Metcash's $215 million acquisition of Franklins, but the latest revelations, secured no doubt after a lot of digging by Metcash's lawyers, shows the competition regulator and its chairman Graeme Samuel in very poor light. The ACCC maintains that Metcash will have an effective monopoly on grocery wholesaling to independent supermarkets in NSW if it's allowed to buy Franklins and that Woolworths and Coles weren't interested in the wholesale market despite Metcash's protestations that its ability to deal with the independent grocers is constrained by the retail heavyweights. However, that premise is now under scrutiny, especially now that we know that Woolworths has been and is interested in Franklins – and the latest report of Samuel attending a meeting with Woolworths executives in December gives Metcash's lawyers a lot of ammunition to blow the ACCC's case out of water.

Telstra, AT&T, T-Mobile

Moving to the telecoms sector, Telstra's shareholders will have to wait a little bit longer before they can have their say on the $11 billion NBN deal between the telco and the federal government, with the vote on the $36 billion deal now delayed. Telstra said that it was unable to meet the July 1 target for the shareholder meeting and added that while negotiations with the government were progressing well, a number of matters were yet to be finalised – some of which require government approval. Telstra shareholders are unlikely to have any problems with the deal given how much money the telco is going to receive from the government. However, they would no doubt like a little more information on just what the deal entails, especially if they have to wait around for a while before the vote can take place. Meanwhile, as Telstra shareholders twiddle their thumbs, the telecoms sector has welcomed a mammoth deal overnight with US telco AT&T agreeing to buy T-Mobile USA from Germany's Deutsche Telekom for $US39 billion. The cash and scrip deal will see AT&T swallow one of its four biggest competitors and would make it the market leader when it comes to wireless telecom in the US. Deutsche Telekom will get $US25 billion in cash and an 8 per cent equity stake in AT&T. The cash portion of the purchase price will be financed with new debt and cash on AT&T's balance sheet, and it has an 18-month commitment for a one-year unsecured bridge term facility underwritten by JP Morgan for $US20 billion. The blockbuster deal is a clear move by AT&T to cement its place as the top dog when it comes to the next generation of wireless network technology. However, it still needs regulatory approval and there are some who reckon that AT&T shouldn't be allowed to gobble up the competition without some caveats laid down by regulators.

James Packer, Crown

James Packer may be back making waves in the media sector of late, but the media and casino mogul has evidently learnt some lessons on where to draw the line, especially when it comes to his gaming operations. Packer has reportedly ruled out any plans for an immediate return to the US gaming market, telling The Australian that he was in no rush to return to the US after the ill-fated $3 billion expansion in 2009. The expansion saw Crown lob a $US1.75 billion bid for Cannery casino group, which subsequently crashed and burned. It also bought stakes in US casino giants Harrah's Entertainment and Stations Casino Group and Canada's Gateway Casinos & Entertainment group. The moves all led to significant writedowns and Packer is obviously not keen to repeat his mistake. He also told The Australian that Crown was not looking to issue fresh equity, and ruled out a privatisation of the group, saying he couldn't afford it.

Wrapping up

It's shaping up to be a big week for Rio Tinto and its $3.9 billion bid for Riversdale Mining, as the March 23 deadline imposed by the mining giant edges closer. Rio has so far secured shares and commitments over 33.04 per cent of the voting rights in Riversdale and it has two days to meet the 50 per cent threshold. Rio's bid gained momentum after it put forward a revised bid earlier this month and it will be interesting to see if it has enough support to get across the line. Meanwhile, late mining legend Ken Talbot's investment company, Talbot Group, has sold its 16 per cent stake in Sundance Resources to China's Hanlong Mining for $190.9 million, with the move hot on the heels of its decision in February to sell out of uranium hopeful Marathon Resources for $13 million. The Talbot Group holds stake in more than 10 ASX-listed companies and after selling out of Sundance and Talbot there is talk that the group could now turn its attention to Karoon Gas. Talbot's stake in Karoon is estimated to be around $178 million. Elsewhere, BC Iron looks set to take shareholder and former suitor Regent Pacific to the Takeover Panel with regards to Regent's aborted $345 million bid and finally, The Australian reports that US private equity giant Blackstone Group may have its eyes on electrical and whitegoods retailer The Good Guys. The retailer is jointly owned by founder Andrew Muir and store managers and the paper reports that the Muir family may be willing to sell their share for a hefty $1 billion price tag. With traditional retailers unlikely to take a punt amid volatile markets, a private equity outfit like Blackstone could just be the sort of suitor the Muirs are looking for.