BREAKFAST DEALS: Billabong countdown

Sycamore Partners' exclusivity period for its Billabong bid ends this week, while Archer Daniels Midland attempts to woo critics over its GrainCorp offer.

After more than a year of uncertainty and dashed hopes, Billabong investors might finally learn the company's fate this week. However, murmurs out of the US don't inspire confidence. Elsewhere, Archer Daniels Midland goes on the defensive over GrainCorp, Qantas reveals it's in talks to sell at least one of its airport terminals, and investment bankers are boarding planes for New Zealand as two major utility deals progress.

Billabong International, Sycamore Partners

The long-running Billabong International saga could come to a head this week when suitor Sycamore Partners' exclusivity period comes to an end.

Sycamore, which is backing a tilt by former Billabong director Paul Naude, has until May 8 to consider formalising a 60-cents-a-share offer for the surfwear retailer. The proposal, reduced from $1.10 in December, would be worth about $600 million.

However, investor hopes aren't running too high.

Sycamore's lender, Jefferies Group, enlisted PricewaterhouseCoopers in April to assess Billabong's quality of earnings before it would commit to financing the deal. Sources close to the investigation tell The Australian Financial Review there is still no certainty the cut-price offer will get off the ground.

It's hard to believe it was just over a year ago that Billabong was rejecting $3.30 as too low.

Archer Daniels Midland, GrainCorp

Archer Daniels Midland has stepped up its defence of its $3.4 billion offer for GrainCorp, attempting to win over farmers and politicians with a weekend media assault.

The sell comes amid backlash from growers concerned they might be charged higher fees to make the deal pay off. Nationals leader Warren Truss, who could be a senior government figure if the Coalition wins the September election, is the latest to express that view, demanding that the Foreign Investment Review Board "interrogate" the proposal.

In an interview with the Australian Financial Review, Archer Daniels Midland chief operating officer Juan Luciano dismissed Truss and other detractors as being "confused" about the deal.

“We have been very disciplined with pricing [the takeover],” Mr Luciano told the newspaper, adding that the $13.20 a share bid included $1 a share to be paid by GrainCorp’s retained earnings. He also repeated a promise to farmers that GrainCorp's storage and port facilities would remain open to third party users.

Separately, ADM Grain Group president Ian Plimer was talking up the prospect of better returns for growers as a result of the suitor's access to a global supply chain.

"What I think we can do is bring the destination and the global market presence to that, and bring some value through that supply chain, to make us a competitive bidder on the storage system and hopefully bring some more value to the farmer," Mr Pinner told The Australian.

He also said ADM would have formal contact with the Australian Competition and Consumer Commission about future wheat arrangements.

Glencore International, Joe White Maltings

Meanwhile, GrainCorp has also been named as a possible buyer for Glencore International's Australian malt business, Joe White Maltings, which has just been put on the market.

The Australian Financial Review reports Glencore and advisor Bank of America Merrill Lynch have released a flyer for JWM, which is being marketed as the largest maltster in the Asia-Pacific region. It reported $36 million in earnings before interest, tax, depreciation and amortisation last year, built on $286 million in revenue.

While GrainCorp could be distracted by ADM, the AFR notes there's no shortage of other potential contenders for JWM. CBH Group, COFCO, Malteurop and Sumitomo are all likely to take a look.

Qantas Airways

Qantas Airways has finally confirmed something deal watchers have suspected for some time: the carrier has been in talks regarding the possible sale of its Terminal 3 in Sydney Airport.

The news, however, comes with a caveat. Chief executive Alan Joyce says any transaction would be "very complex", which suggests it might be some time before any agreement is inked.

"Part of the transaction involves us making sure that we have a very economic and viable operation," Joyce told a business gathering in Sydney. "We would love to move our international and domestic operations together (but) there are costs and complexities associated with the split between T1 and T3."

If the deal progresses, expect more talk about Qantas selling other long-term leases for terminals at Melbourne, Perth and Brisbane, as has been speculated. 

Wrapping up

There will be plenty of deal action in New Zealand this week, as Powerco nears the end of a $NZ400 million ($331 million) stake sale process and the Kiwi government progresses the initial public offering of Mighty River Power at between $NZ1.6 billion and $NZ1.9 billion.

The Australian Financial Review reports there is healthy demand for the Mighty River float, with pricing expected to be in the mid to top end of the offer range. Australian fund managers will have access to about 20 per cent of the offer, with the remaining shares reserved for New Zealanders.

Powerco, another major New Zealand utility company, is also understood to be shortlisting bidders for a 42 per cent stake in the business.

According to the AFR, parties in the running are thought to include AMP, advising itself, State Grid Corporation of China, advised by Macquarie Capital, and the Canadian Pension Plan, advised by Goldman Sachs.

Goldman, Macquarie and Credit Suisse are running the show at Mighty River.

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