BREAKFAST DEALS: Barrick's guns
Barrick Gold may have another copper play in mind, while it's business as usual between BHP and Beijing.
Barrick Gold may have another copper play in mind with the gold giant looking set to take a stake in ASX-listed Metminco, and China's Minmetals list of possible targets could include Lundin Mining and PanAust. Meanwhile, it's business as usual between BHP Billiton and Beijing and Leighton looks set to welcome Hochtief's new boss to local shores. Elsewhere, Santos creeps up on the share register of potential takeover target Eastern Star Gas and Warren Buffet's former right-hand man David Sokol could be in real hot water after Berkshire Hathaway's board gives him the stick.
Barrick Gold, Metminco, Minmetals, PanAust
Barrick Gold's management came out all guns blazing overnight as chairman and founder Peter Munk and chief executive Aaron Regent countered shareholders concern about its $7.1 billion bid for Equinox Minerals. The gold heavyweight's move into copper has raised more than a few eyebrows but Munk and Regent have told shareholders at the miner's annual general meeting that the takeover will not change its focus on gold. However, they also took the opportunity to re-emphasise their bullish outlook for copper fundamentals, and with cheap financing on the tap an opportunity like Equinox was too good to pass up. Essentially, Munk and Regent are asking Barrick shareholders to keep the faith with the management and trust that they are on the right path. Given how much Barrick is paying for Equinox there's a very slim chance of a counter offer but if copper really is the new gold then you never know, a rival suitor just might decide to make things interesting. Interestingly, Equinox isn't the only copper play on Barrick's agenda, with the Australian Financial Review saying that the miner is set to take a stake in ASX and London listed junior Metminco. Metminco went into a trading halt last week pending an announcement in relation to its South American assets. Now Barrick holds a 51 per cent clawback options on one of these assets and the paper reports that it's about to swap that option for equity in Metminco. Another ASX-listed miner that is coming into focus as a result of the Barrick/Equinox/Minmetals dealmaking is copper-gold player PanAust, which some analysts have pointed out as a possible target for Minmetals – which may have given Equinox a miss but is still hungry for acquisitions. Good copper assets are hard to come by so Minmetals boss Andrew Michelmore has limited options but one obvious target will be Lundin Mining, which was in Equinox's sights not that long ago.
Leighton Holdings, Hochtief
It looks like construction giant Leighton Holdings is set to receive a prompt visit from the new man behind the helm at its major shareholder Hochtief. According to The Australian, Hochtief's new boss Frank Stieler has scheduled a trip to Australia for mid-May. That's pretty much as soon as he takes over from outgoing CEO Herbert Luetkestratkoetter and gets ready to front a shareholder meeting at which its new key shareholder, Spain's ACS, is expected to change Hochtief's supervisory board. Presumably ACS's presence and just what that means for the board of Leighton will be on the agenda for the meeting between Stieler and Leighton chief David Stewart and CFO Peter Gregg. The other thing on the list could be the rate at which executive talent seems to be departing Leighton, especially its Thiess unit, and The Australian reports that the unit is bracing itself for a management reshuffle with a number of senior management figures likely to walk away. Meanwhile, there was some good news for Leighton's Middle East subsidiary with Al-Habtoor Leighton securing two new contracts in Abu Dhabi worth more than $150 million.
BHP Billiton, China
It's business as usual between BHP Billiton and Beijing with the mining giant's boss Marius Kloppers confident that the recent argy-bargy over iron-ore pricing and the miner's complicity in scuttling the tie-up between Rio Tinto and Chinalco has not dented its relationship with its biggest customer. Still, it doesn't hurt to put a bit of effort into putting further polish on the glittering relationship and BHP has done its bit with its decision to fund the new Chair of Australian Studies at Peking University in Beijing. The miner will provide $650,000 funding a year for at least three years, with the potential to expand to five years and Kloppers said the partnership will enhance research and education opportunities between the two countries. By the looks of things Kloppers has had a busy couple of days in Beijing. Apart from hobnobbing with steelmakers he has also found the time to tell the AFR that the lack of LNG exposure was a sore point for the miner, something that it may remedy later on the down the line. Meanwhile, he has also told The Australian that Chinese companies were getting a little frustrated with the delays in commissioning projects in Australia, especially when it comes to lengthy environmental approvals and community consultations. Kloppers has also joined the chorus of business leaders casting doubts on the proposed carbon tax, telling the paper that a one size fits all approach is not going to achieve anything and the government needs to take a more sector-specific approach.
Origin Energy, Santos, Eastern Star Gas
Origin Energy may have grabbed the headlines of late with its sweet deal with Sinopec but it looks like fellow LNG player Santos has also been busy increasing its stake in potential target Eastern Star Gas. According to Santos' 2010 annual report, it has raised its stake in Eastern Gas from 19.42 per cent to 20.97 per cent. Interestingly, the less than one per cent increase allowed Santos to avoid posting a Change of Substantial Shareholding notice, thereby avoiding undue attention. Eastern Star shareholders have been banging on about a potential takeover for quite some time now and this will give them more ammunition. Meanwhile, Origin boss Grant King has told analysts that the company may not need to raise more capital in the short term. However, the one thing he does need is more buyers like Sinopec who will be willing to take Origin's LNG and possibly a stake in the Australia Pacific LNG project. In fact The Australian reports that Goldman Sachs and Credit Suisse analysts reckon Origin could sell another 7.5 per cent stake in the project to net another $US750 million dollars, provided it manages to get a similar price to the one paid by Sinopec. An equity sale would avoid the need for a capital raising as long as Origin is happy to cut its stake in the project to around 35 per cent.
Berkshire Hathaway, Warren Buffet, David Sokol
Warren Buffet's former right hand man at Berkshire Hathaway, David Sokol, could be in some hot water with regards to his trading of shares in Lubrizol. Berkshire's audit committee said overnight that Sokol had violated the company's insider-trading rules and had misled the company about his personal stake in Lubrizol. That's quite an about turn from the statement released in March when Sokol announced his departure. Buffet came out swinging at the time saying that he didn't think Sokol had broken any rules. Well the audit committee has obviously taken a different view, in what could be seen as a reaction to what many saw as a benevolent response from Buffet. There were many who believed that Buffet was putting his reputation on the line by going soft on Sokol and Berkshire's audit committee evidently agrees.
Wrapping up
Barrick Gold, Metminco, Minmetals, PanAust
Barrick Gold's management came out all guns blazing overnight as chairman and founder Peter Munk and chief executive Aaron Regent countered shareholders concern about its $7.1 billion bid for Equinox Minerals. The gold heavyweight's move into copper has raised more than a few eyebrows but Munk and Regent have told shareholders at the miner's annual general meeting that the takeover will not change its focus on gold. However, they also took the opportunity to re-emphasise their bullish outlook for copper fundamentals, and with cheap financing on the tap an opportunity like Equinox was too good to pass up. Essentially, Munk and Regent are asking Barrick shareholders to keep the faith with the management and trust that they are on the right path. Given how much Barrick is paying for Equinox there's a very slim chance of a counter offer but if copper really is the new gold then you never know, a rival suitor just might decide to make things interesting. Interestingly, Equinox isn't the only copper play on Barrick's agenda, with the Australian Financial Review saying that the miner is set to take a stake in ASX and London listed junior Metminco. Metminco went into a trading halt last week pending an announcement in relation to its South American assets. Now Barrick holds a 51 per cent clawback options on one of these assets and the paper reports that it's about to swap that option for equity in Metminco. Another ASX-listed miner that is coming into focus as a result of the Barrick/Equinox/Minmetals dealmaking is copper-gold player PanAust, which some analysts have pointed out as a possible target for Minmetals – which may have given Equinox a miss but is still hungry for acquisitions. Good copper assets are hard to come by so Minmetals boss Andrew Michelmore has limited options but one obvious target will be Lundin Mining, which was in Equinox's sights not that long ago.
Leighton Holdings, Hochtief
It looks like construction giant Leighton Holdings is set to receive a prompt visit from the new man behind the helm at its major shareholder Hochtief. According to The Australian, Hochtief's new boss Frank Stieler has scheduled a trip to Australia for mid-May. That's pretty much as soon as he takes over from outgoing CEO Herbert Luetkestratkoetter and gets ready to front a shareholder meeting at which its new key shareholder, Spain's ACS, is expected to change Hochtief's supervisory board. Presumably ACS's presence and just what that means for the board of Leighton will be on the agenda for the meeting between Stieler and Leighton chief David Stewart and CFO Peter Gregg. The other thing on the list could be the rate at which executive talent seems to be departing Leighton, especially its Thiess unit, and The Australian reports that the unit is bracing itself for a management reshuffle with a number of senior management figures likely to walk away. Meanwhile, there was some good news for Leighton's Middle East subsidiary with Al-Habtoor Leighton securing two new contracts in Abu Dhabi worth more than $150 million.
BHP Billiton, China
It's business as usual between BHP Billiton and Beijing with the mining giant's boss Marius Kloppers confident that the recent argy-bargy over iron-ore pricing and the miner's complicity in scuttling the tie-up between Rio Tinto and Chinalco has not dented its relationship with its biggest customer. Still, it doesn't hurt to put a bit of effort into putting further polish on the glittering relationship and BHP has done its bit with its decision to fund the new Chair of Australian Studies at Peking University in Beijing. The miner will provide $650,000 funding a year for at least three years, with the potential to expand to five years and Kloppers said the partnership will enhance research and education opportunities between the two countries. By the looks of things Kloppers has had a busy couple of days in Beijing. Apart from hobnobbing with steelmakers he has also found the time to tell the AFR that the lack of LNG exposure was a sore point for the miner, something that it may remedy later on the down the line. Meanwhile, he has also told The Australian that Chinese companies were getting a little frustrated with the delays in commissioning projects in Australia, especially when it comes to lengthy environmental approvals and community consultations. Kloppers has also joined the chorus of business leaders casting doubts on the proposed carbon tax, telling the paper that a one size fits all approach is not going to achieve anything and the government needs to take a more sector-specific approach.
Origin Energy, Santos, Eastern Star Gas
Origin Energy may have grabbed the headlines of late with its sweet deal with Sinopec but it looks like fellow LNG player Santos has also been busy increasing its stake in potential target Eastern Star Gas. According to Santos' 2010 annual report, it has raised its stake in Eastern Gas from 19.42 per cent to 20.97 per cent. Interestingly, the less than one per cent increase allowed Santos to avoid posting a Change of Substantial Shareholding notice, thereby avoiding undue attention. Eastern Star shareholders have been banging on about a potential takeover for quite some time now and this will give them more ammunition. Meanwhile, Origin boss Grant King has told analysts that the company may not need to raise more capital in the short term. However, the one thing he does need is more buyers like Sinopec who will be willing to take Origin's LNG and possibly a stake in the Australia Pacific LNG project. In fact The Australian reports that Goldman Sachs and Credit Suisse analysts reckon Origin could sell another 7.5 per cent stake in the project to net another $US750 million dollars, provided it manages to get a similar price to the one paid by Sinopec. An equity sale would avoid the need for a capital raising as long as Origin is happy to cut its stake in the project to around 35 per cent.
Berkshire Hathaway, Warren Buffet, David Sokol
Warren Buffet's former right hand man at Berkshire Hathaway, David Sokol, could be in some hot water with regards to his trading of shares in Lubrizol. Berkshire's audit committee said overnight that Sokol had violated the company's insider-trading rules and had misled the company about his personal stake in Lubrizol. That's quite an about turn from the statement released in March when Sokol announced his departure. Buffet came out swinging at the time saying that he didn't think Sokol had broken any rules. Well the audit committee has obviously taken a different view, in what could be seen as a reaction to what many saw as a benevolent response from Buffet. There were many who believed that Buffet was putting his reputation on the line by going soft on Sokol and Berkshire's audit committee evidently agrees.
Wrapping up
Takeover target SunRice's management has again appealed to its shareholders that Spanish suitor Ebro Foods' $600 million offer was in the best interest of the company and this time it has pointed to an independent expert report prepared by Lonergen Edwards & Associates to further bolster its claims. According to the report, Ebro's proposed $50,000 payment for each A-class share is at the top end of an assessed valuation range and in the absence of another offer, the ability to realise anything is extremely limited. SunRice chairman Gerry Lawson has told shareholders that the deal would provide SunRice security from profit shocks, rate increases and credit market volatility while providing a platform for further growth. Meanwhile, Lynas Corporation's shares took a tumble yesterday over concerns that its rare earth metals processing plant in Malaysia may be delayed, and worries about the company's decision to postpone its extraordinary general meeting to consider a development deal with Forge Resources until mid-June. The meeting had been scheduled for May 18 but given the howls of disapprovals from shareholders and scrutiny from ASIC, Lynas has prudently decided to release more information on the deal to address some of the questions that have been raised. Finally, the Australian Competition and Consumer Commission has wrapped up its legal challenge to Metcash's $215 million purchase of Franklins. According to Fairfax papers, the competition watchdog has warned that a negative decision on the matter from the federal government could have grave implications on predicting the future in takeover cases.
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