BREAKFAST DEALS: Carry on Rio

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China appears to be travelling up the Yangtze without a paddle as its tiff with Rio Tinto descends into farce, but elsewhere in the Middle Kingdom, Yanzhou Coal makes a $3.5 billion bid for Australia's Felix Resources. Plus, news on Village Roadshow, ANZ, corporate advisory firms and more.

From Rio to zero

Following the extraordinary and preposterous claims that Rio Tinto had bilked 700 billion yuan ($122 billion) from China due to expensive iron ore, the National Administration for the Protection of State Secrets website, China Secrets On-Line, has been taken offline and the author of the claims has backed away from his report. We'll probably never know how the bureau reached those figures and why the Chinese even have an information portal about secrets, but each day the whole fiasco becomes even more bizarre. Indeed, if it weren't for China's key trading relationship with Australia, its importance to the global economy and the fact that there are four Rio Tinto employees in jail – as well as possibly dozens of officials from Chinese steelmakers – the whole mess of China's current iron ore negotiations would be terribly funny. Slanderous reports nevertheless continue in the pro-Beijing press of chief Rio negotiator Stern Hu's ill-gotten $17 million-plus villas and the Chinese blogosphere is filled with vitriol against perfidious Australian business practices. Even teenage girls are brawling at an under-19s soccer match between Australia and China in Wuhan, though it is not known whether this has anything to do with Hu, Rio or the iron ore benchmark. Over in Australia meanwhile, the Uighur separatist leader Rebiya Kadeer continues to antagonise the Chinese embassy as she meets with members of parliament and speaks today at the National Press Club. None of this is doing Sino-Australian relations any good. And to think that this all apparently happened because of Rio's unconventional poison pill to prevent a bid from BHP Billiton turned into an uncommercial agreement with Chinalco that was later, for good reason, cancelled. Kevin Rudd should ask his "true friends” around for a strong cup of tea and an iced vo-vo.

Felix Resources

While China's iron ore price negotiations get shirty, in the business of carbon, China's state-owned Yanzhou Coal is set to make a $3.5 billion bid for Felix Resources – which will be China's biggest takeover offer in Australia so far. Yanzhou is advised by UBS, while Citigroup and Wilson HTM Corporate Finance are advising Felix. The bid comes soon after Hong Kong commodity trader Noble Group made a takeover bid for Gloucester Coal and once again peers in the industry have been buoyed by the interest. Last week another independent miner, Whitehaven Coal, sold a 7.5 per cent stake of its Narrabri project to South Korea's Daewoo for $136 million. South Korea and Japan are Australia's main coal export customers. The Sydney Morning Herald has listed Whitehaven among Centennial Coal, New Hope and Macarthur Coal as the last remaining big takeover targets in eastern Australia. Amid continuing rumours that BHP Billiton and Rio Tinto could combine their coal operations on the eastern seaboard, more activity can therefore perhaps be expected. Whitehaven, worth $2.3 billion according to UBS, is possibly the most likely target of the group and has indeed already tried to merge with Gloucester, before Noble scuttled that proposal with a counter bid.

Village Roadshow

Tightly-held entertainment group Village Roadshow is working with its major shareholders on a possible privatisation plans amid long-standing criticisms that the company was more a plaything of its owner-managers. John and Robert Kirby and Graham Burke collectively own 61 per cent of Village, which has a market capitalisation of a touch under $300 million. This is roughly a third of what the company was valued at its peak last year so now could be a good time to do the long-expected privatisation – subject of course to the opinions of Village's independent directors and their advisers at UBS and Minter Ellison.

Independent corporate advisory

ASIC is believed to have raided the offices of independent corporate advisory firm Caliburn Partnership as part of a wide-ranging insider trading investigation, BusinessDay reports. But the paper says there is no suggestion the firm has engaged in any wrongdoing. Deutsche Bank and KPMG have also been asked to cooperate with the investigation into 20 suspect transactions, BusinessDay reports. One of those transactions is Lion Nathan's proposed merger with Coca-Cola Amatil, while others involved Santos and Aquila Resources. The development comes as Dow Jones Financial News reports that the average number of advisers on merger and acquisitions work has declined globally. According to data from Dealogic, an average of 4.14 advisers were used in European deals worth more than $US5 billion during the year to August 7, against an average of 4.92 in the previous five years. Big US transactions involved an average of 3.67 advisers in the last 12 months, and globally the number dropped from 4.34 advisers to 3.81.

Australia and New Zealand Banking Group

ANZ may need to show its cards soon if reports in Reuters about the sale of ING Groep's Asian private banking assets are anything to go by. Sources have told the newswire that Swiss bank Julius Ber is in the lead to purchase the assets along with the company's operations in Switzerland. Besides ANZ, HSBC, Standard Chartered and Barclays were thought to be interested but are believed to be no longer in the running. ANZ has also been rumoured to have a sweet spot for Hong Kong lender Hang Seng Bank, which along with Singapore's DBS has been seen as a possible "transformational" merger target for the cashed-up Melburnian, which is seeking to become a "super regional”. But moves may be afoot likewise for Hang Seng, requiring some swift legwork from ANZ boss Mike Smith, who used to live in Hong Kong when an executive for Hang Seng's much bigger rival and 62 per cent shareholder HSBC. Hang Seng is set to increase its stake in China's Industrial Bank Company, according to chief executive Margaret Leung. Hang Seng is viewing mainland China, like ANZ, as a key market for expansion and is considering alliances with mainland asset managers, insurance providers, stockbroking firms and the like.

Wrapping up

Adamus Resources has raised $40 million for its Southern Ashanti gold project in Ghana, while Uranium Exploration Australia has raised $5 million in a placement and has launched a $2 million share purchase plan. It has been a busy time in the capital markets for small and mid-cap listed companies following the $50 million equity raising for manufacturer Hills Industries. Elsewhere, sugar continues its rally towards prices last seen in 1981, while another closely-watched commodity, nickel, has received a further fillip from plans revealed by Jinchuan Mining to buy a 51 per cent interest in Albidon's Munali nickel mine in Zambia. Nickel prices are still well off their peak, but Chinese companies, which are buying back in, could push it up as the demand cycle moves forward. Yesterday it was reported that Jilin Jien Nickel Industry had taken a 14.7 per cent stake in Canada's Victory Nickel. Elsewhere, Valad Property Group's London-listed Advantage Property Income Trust has received a $57 million formal bid from real estate developer Conygar. The fund represents four per cent of Valad's assets under management in Europe. And finally, amid the talk of new Australian IPOs for hot rocks and Chinese gas, Carsales.com.au has swamped them all with the unveiling of a pre-marketing prospectus that would value the company at between $800 million and $850 million, according to the Australian.