BREAKFAST DEALS: BHP's loco-motive
BHP Billiton, FerrAus, Atlas Iron
BHP Billiton is making headlines again and this time the focus in on its rail infrastructure and while the mining giant's apparent willingness to engage with Atlas Iron over its haulage lines in Pilbara would be seen by some as a win for the junior iron ore miners in the region, there might be a different game afoot here. BHP and Atlas informed the market yesterday that they were involved in landmark discussions to use BHP's Goldsworthy line. However, the mining giant's generosity evidently has its limits given the fact that it is taking another junior miner, FerrAus, to court in a bid to prevent access to its main Mount Newman track. Now this may look like a case of mixed messages but the reality is that the Goldsworthy track is relatively underutilised by the miner but the prized Mount Newman line is out of bounds. It wasn't that long ago that FerrAus and BHP were on track with a similar agreement to the one Atlas is hoping to piece together but things took a turn earlier this week when FerrAus asked BHP's iron ore unit to agree to appoint former Australian Competition and Consumer Commission chairman Allan Fels as an independent expert to make decisions about the haulage agreement. FerrAus said at the time BHP was legally obliged to provide it with rail haulage under the mining giant's 1987 agreement with the WA government but it had been unable to secure a deal. BHP hasn't exactly made a lot of effort to hide its reluctance when it comes to sharing its rail line and it looks like it is hoping to browbeat FerrrAus into backing down and as The Australian points out the miner's sudden bout of charity with Atlas Iron may have more to do with taking the initiative with regards to placating the West Australian government on access agreements.
AMP, AXA Asia Pacific Holdings
AMP has edged closer to nabbing AXA Asia Pacific Holdings (AXA APH) after winning the full support of the target's independent directors. AMP lobbed a revised $6.43 cash-and-scrip offer for AXA APH earlier this week and while most of the target's board was quick to recommend the bid things took an unexpected turn when one independent director asked for more time before making a final decision. While the news raised concerns that AMP may have a fight on its hands despite its better offer it didn't take long for the unidentified lone dissident to fall back in line. The unanimous support is a big step for AMP but the wealth manager's chief Craig Dunn isn't cracking open the bubbles just yet and with good reason. The dissident independent director may have just been looking to cross the I's and dot the T's but the pause did raise eyebrows in some quarters that AMP's bid may not be as attractive as it looks. If those concerns do somehow manage to raise some sort of ire among AXA APH's shareholders things could get interesting. Then there are the obvious concerns about what impact the integration of the business will have on AXA APH's staff. Dunn looks to be playing his cards right on that front, telling the Herald Sun that Melbourne will remain a pivotal hub for the combined business and it was too early to speculate on the extent of job cuts if the takeover proceeded. AMP is expected to carry out due diligence next week and AXA APH shareholders are expected to vote on the merger in the first quarter of next year.
QR National
It looks like overseas institutions have come to the party with regards to QR National's $6 billion float despite the recent wobble in global equity markets, which is good news for the coal hauler and the Queensland government given the fact that local investors are still steering clear for the time being. The final price of the float is reportedly expected to come in around the $2.55 mark but there is still one day to go before the bookbuild is closed. According to The Australian Financial Review, 95 per cent of the demand has so far come from overseas and while domestic institutions have played it safe so far there's a good chance that they will come on board before it's all done and dusted. There are suggestions that many were holding out to see just how keen the overseas players were in the float and with the foreign demand holding up the locals are likely to follow, just don't expect them to bid anything over $2.50
Woolworths, Franklins, ACCC
Grocery giant Woolworths is on the hunt for acquisitions and presumably that would include the Franklins supermarket chain. Franklins is still on the shelf thanks to the Australian Competition & Consumer Commission (ACCC) blocking grocery wholesaler Metcash's proposed $215 million offer to Franklin's South African owner Pick n Pay Retailers. The regulator reckons that the deal would hurt competition in the New South Wales wholesale grocery sector and that there were alternative buyers sniffing around the chain. Metcash's assertions that the decision bolsters the likes of Woolworths and Coles were probably given some validation after Woolies boss Michael Luscombe said that he was interested in buying several Franklins stores, pending its owners and approval from the competition regulator. ACCC boss Graeme Samuel has been quick to point out that the decision to block Metcash isn't a green light for the grocery heavyweights but it looks like the decision has raised the ire of some politicians. According to The Australian, National Party senator Ron Boswell is seeking a Senate inquiry to get Samuel to justify his decision. Boswell has reportedly taken grave exception to the ruling saying that the competition regulator's handling of the issue has been nothing short of extraordinary.
Wrapping up
Media scions James Packer and Lachlan Murdoch may be close to carving up Packer's 17 per cent stake in Ten Network Holdings but it looks like Seek's co-founder Paul Bassat may not have given up hopes of playing a role with the network. Bassat was Packer's chosen man for the third board seat at Ten but the demand was dropped as part of the negotiations between the two parties. However, The Australian points out that there is speculation that a recent move by Smith Barney to pick up some 64 million, or 6 per cent, of Ten shares may have been done at the behest of Bassat. If those rumours do turn out to be true then Bassat will soon have to inform the market and the Packer, Murdoch, Bassat combo could well end up with 21 per cent of Ten. Meanwhile, ERM Power has lodged a prospectus with the corporate regulator for an initial public offering priced at $1.75, to raise $100 million. The IPO is being jointly managed by Macquarie, Royal Bank of Scotland and RBS Morgans. Macquarie is also co-ordination the IPO. Speaking of IPOs it's hard to look past General Motors (GM) and the US automaker's record breaking entry into the market. GM shares gained as much as nine per cent on Wall Street as investors bet that the automaker was on the road to recovery. GM made its debut overnight with quite a bit of fanfare with the tinkle of the opening bell replaced by the grunt and rev of a Camaro engine. The debut not only invigorated Wall Street but should also give hope to Chrysler which is reportedly aiming to launch its own initial public offering in late 2011.
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