BREAKFAST DEALS: Betting on BHP

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Rumours rise on a potash acquisition for BHP Billiton, there's talk of a major deal announcement between B&B Infrastructure and a private equity investor, News Corp looks to the Middle East and Macquarie is rumoured to be planning an Islamic bond issue. Plus, is CBA going to bid for ING's private banking assets in Asia?

BHP Billiton

Those derivatives traders are at it again, betting on rumours that BHP Billiton will make a big acquisition. The same guys who were punting on a bid for Woodside Petroleum have pushed up call options in Mosaic Company and Intrepid Potash in North American markets this week. Both Moasic and Intrepid, along with Potash Corporation of Saskatchewan have been rumoured to be on BHP's immediate radar. Shares in Potash Corp rose 1.9 per cent in New York overnight, Mosaic was up again, rising 2.5 per cent and Athabasca Potash, another possible target, spiked 10.3 per cent. Intrepid Potash rose 5.8 per cent and Toronto-listed Potash One was up 2.9 per cent.

Babcock & Brown Infrastructure

In addition to a capital raising announcement from Elders (delayed apparently because of this week's Bank Holiday in Britain), the market is expecting big news from Babcock & Brown Infrastructure today. Macquarie Capital, Credit Suisse and Gresham Partners are said to be advising BBI on a recapitalisation plan that will involve private equity giant Texas Pacific Group as a cornerstone investor. Well that's the talk anyway. Private equity firms Kaplan Funds Management and Carlyle Group have also been speculated to be possible investors. A stake in BBI's Darylmple Bay coal terminal will also be sold as part of the deal, which will allow BBI to pay some of its $1.2 billion of debt, $500 million of which is due in six months. If BBI pulls this off it will be a coup for the debt-laden port operator.

News Corporation

Amid the gloom over the future of the media industry there's still riches in niches if a report is to be believed that Rupert Murdoch's News Corporation is in talks with Saudi Prince Alwaleed bin Talal to buy 20 per cent of broadcaster Rotana Media. Prince Alwaleed is the world's 22nd richest man and is perhaps best known for his investments in Citigroup, Fairmont Hotels and a customised Airbus A380 complete with a marble steam-room, grand piano and computer generated prayer mats that always face Mecca. Alwaleed is also a major shareholder in News, which sells Fox channels to Rotana for broadcast in Saudi Arabia. Rotana also owns the rights to over 2,000 Arabic movies and thousands of songs. We wonder what the shock-jocks on Fox News would say about that.

Macquarie Group

Vaguely on the same topic, there's a rumour floating around that Macquarie Group is planning a sukuk Islamic bond issue. As the corporate bond market globally and in Australia has grown and grown, Macquarie is said to be staying ahead of the curve with a planned 500 million ringgit ($A170 million) issue in Kuala Lumpur. Speculation on this first surfaced two months ago after HSBC and RHB Islamic Bank conducted a non-deal road show for Macquarie, but the rumour has really heated up since Macquarie announced plans to invest $US100 million in Gulf Finance House, the Bahrain-based Islamic lender that former NAB Australia chief Ahmad Fahour now heads. The National itself is thought to be interested in acquisitions in the Middle East and the bank's Australian lending division was one of the first in the country to look seriously at Islamic finance, one of the fastest growing areas of the industry.

Commonwealth Bank of Australia

Another acquisitive, cashed-up Australian lender, CBA, is a step closer to buying the Asian private banking division of Dutch lender ING Groep. CBA is believed to be one of three bidders for the unit now that Barclays and ANZ have apparently walked from the sale and Credit Suisse has allegedly said that the division does not fit its global wealth management strategy. Reuters however reports that CBA's interest has also cooled, with Switzerland's Julius Baer and Singapore's DBS Group the only "serious" bidders. Julius Baer is also eyeing ING's private banking unit in Switzerland. ING has also been rumoured to be exiting Russia and India, where it runs the ING Vysya joint venture with over 300 branches. It is thus interesting to note that CBA chief Ralph Norris told the ABC's Inside Business last month that the bank was on the lookout for acquisitions in Asia and had obtained an Indian banking licence, something that only about 30 other global banks have, none of them Australian. A Credit Suisse report that CBA, ANZ, NAB or Westpac could buy a stake in Suncorp-Metway is meanwhile doing the rounds, but this is unlikely due to the ACCC's previous comments on competition in the banking sector.

Wrapping up

The ACCC's competition concerns about Caltex's planned acquisition of 300 Mobil service stations seems to be not the only issue dampening downstream M&A activity, with the Australian Financial Review reporting that interest has waned for Shell's sale of its New Zealand retailing and refining operations. While upstream exploration and production deals have certainly been keeping the investment banks and rumour mills busy of late, it is reported that Kohlberg Kravis Roberts, Terra Firma and Blackstone have lost interest in Shell's UBS-advised asset sale process. Having said that, there's been plenty of refining deals coming out of China recently and Essar Group of India is also thought to be on the lookout for such assets and has recently been tipped to be a party interested in Shell's £1.5 billion refinery in Cheshire, and two German refineries. Elsewhere in India, there's talk of an IPO for Reliance Infratel, the country's biggest mobile phone tower builder and there's a lot of other deals in the telco space that we'll be covering in Deals TV later this morning. Activity too in wealth management, with Henderson Group and Plan B eyeing acquisitions and a capital raising for Moly Mines. That will also be covered in our video segment, coming up in a short while.