BREAKFAST DEALS: AXA optimism?

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The chief of NAB's wealth management arm says he's still confident the bank will get ACCC clearance for its AXA APH bid.

AXA Asia Pacific, National Australia Bank, AMP

News that the Australian Competition and Consumer Commission had delayed its ruling on respective takeovers for AXA Asia Pacific from National Australia Bank and AMP strengthened a chain of thought that the NAB might face some troubles from the competition regulator. Still, the chief of NAB's wealth management arm, Steve Tucker, is confident the bank will get ACCC clearance, telling The Australian the NAB doesn't believe there are any issues on fundamental competition grounds. Responding to competition concerns in regards to investment platforms and the financial planning industry, Tucker told the paper there were new entrants into the platform market "all the time” and the bank's 3,000-odd aligned financial planners were "hardly an overwhelming” market share, compared to the 18,000 planners throughout Australia. And while the ACCC has chosen to look at the possibility rival bidder AMP might end up a target should it lose out on AXA, Tucker said AMP's viability as an independent entity was its own business. Elsewhere, NAB head honcho Cameron Clyne has reiterated that concerns over future wholesale funding were partly behind the bank's AXA play.

Telstra

Turning our attention to Telstra, and failing a sublime case of good luck and negotiating smarts – whereby the telco cuts an attractive deal with the National Broadband Network Co and is allowed to operate as is – plan Bs are starting to be aired for the company. One being considered by the telco is the demerger of its mobile business, according to The Australian Financial Review. While there would be some consternation at the idea of selling off the solidly performing business, the idea is based on the positive experience of British telco BT Group, which demerged its phone business to become the market leader (from number three). The demerged unit later snapped a mammoth iPhone deal and was eventually bought out by Spain's Telefonica. One path for Telsta would be offering stockholders one share in the mobile business and one share in the remainder of the company for every share owned, the paper says, with the strength of the non-mobile business expected to also attract international interest. Another idea flagged is the sell-off of the Sensis directories business, possibly to private equity, which undertook a directories business spending spree several years ago. The argument there is the proceeds could be used to further Chinese growth or return cash to shareholders, who by this stage are rightly described as 'long suffering', having survived government threats ranging from blocking wireless spectrum access to the forced the sale of the company's Foxtel stake and cable network.

Rio Tinto, Chinalco

To the inquiry into the aborted deal which fractured relations between Rio Tinto and its major shareholder Chinalco, and a study by China's 10-member State Council, or cabinet, has found the $US19.5 billion deal collapsed because of the "rapid recovery of the world resources market, including the related stockmarket, which was beyond everyone's expectations.” The report, seen by The Age, also notes the state-owned aluminium group overstepped the mark by seeking 18 per cent of the company and up to 50 per cent stakes in key projects, particularly amid concern within Australia about state-owned enterprises taking over key resources. Rio Tinto's decision to scrap the eal in favour of a $US15 billion rights issue and Western Australia iron joint venture with rival and one-time predator BHP Billiton prompted an outcry in China, with news agency Xinhua accusing the dual-listed miner of "perfidy”. Relations were also tested by terse and eventually unsuccessful iron ore pricing negotiations and the arrest of four China-based Rio employees, including one Australian, accused of stealing state secrets. And there remains no love lost for BHP Billiton, with the State Council report saying the global miner took "full advantage of its skilful mass media propaganda and its lobbying capacity to arouse public emotions and influence the judgements of government policy-makers”. Nonetheless, the report acknowledged that Rio had informed Chinalco of its talks with BHP, and recognised the target had "more strategic interests" in proceeding with a BHP deal than "vertically" merging with Chinalco, according to The Age.The State Council report coincides with a push by Chinalco for a Rio board seat and comments by Rio Tinto Australia chief Sam Walsh to The Australian Financial Review that the phone call informing him of the arrest of the so-called 'Shanghai four' took the huge toll on him last year.

Tatts Group

There could be more takeover activity in the works in the gaming and wagering field, with Tatts Group flagging an interest in Tabcorp's wagering business. Tatts chief executive Dick McIlwain put the argument to Inside Business at the weekend that Tabcorp's wagering business would be better placed within its business, rather than with its rival. Tatts, which recently paid a higher-than-expected price of $850 million to the New South Wales government for the state's lotteries business, said the wagering business would "sit better with a lotteries-type operator” than a company focused on casinos, hotels and gaming machines. Still, McIlwain doesn't expect such a sale any time soon and has responded to criticisms of the $850 million price tag, saying he struggled with the idea it had paid too much. While agreeing that Tatts' base bid had come in at around $700 million, McIlwain reiterated that he expected the business to produce an extra $120 million of earnings by 2014

Wrapping up

Pending court approval, wholesaler Metcash's takeover of 50.1 per cent of hardware chain Mitre 10 will be completed by the end of the month after the target's shareholders overwhelmingly voted in favour of the $55 million deal. Elsewhere, further developments on Seven Network and CBH Resources are expected this week, after a judge reportedly sought to bring in an independent barrister to help consider the proposed merger of the listed media group Seven Network with Kerry Stokes' private earth-moving business. And the Fin has suggested coal seam gas play Arrow Energy will likely reject a $3.3 billion joint takeover offer from PetroChina and Royal Dutch Shell on valuation grounds, although talks continue, and attention in that sector may yet turn to rival Santos, which has flagged a project selldown and is yet to announce a final investment decision on its Queensland operations.