BREAKFAST DEALS: ClearView brightens

ClearView is snapped up on improved offer from Crescent Capital, while Bain Capital circles Billabong.

As Guinness Peat Group gets out of ClearView Capital Partners, GPG’s former boss Gary Weiss has been brought in by Crescent Capital Partners to take the wheel. Meanwhile, Bain Capital is seen by many as a logical buyer for Billabong International, while Transfield Services is back on M&A lists after the CEO’s departure. Elsewhere, the Alesco Corporation has gone to the Takeovers Panel, the consumer watchdog could be showing reservations about Sonic Healthcare getting those Healthscope assets and Metcash is popping the champagne after signing a 15-year liquor distribution deal.

ClearView Wealth Management, Crescent Capital Partners

Private equity group Crescent Capital Partners has secured mid-tier insurer ClearView Wealth Management with an improved offer of $245 million, or 59 cents a share.

The deal is made up of 55 cents cash and a fully franked dividend of 1.8 cents, plus a special dividend of 2.2 cents once the offer becomes unconditional.

The agreement comes after an initial approach of or $220 million, or 50 cents a share, was rejected by the board. Major shareholder Guinness Peat Group, which holds about 47 per cent of ClearView, made it clear at the time that 50 cents was "wholly inadequate”.

In an interesting twist, CCP plans to install former corporate raider for GPG head Gary Weiss as non-executive chairman of ClearView.

Weiss split from GPG after the company started getting rid of assets and Fairfax understands that it’s Weiss that’s been shopping ClearView around for about a year, basically since his departure.

The headline value falls short of the book value of ClearView and the range offered by independent expert KPMG of 68 cents to 74 cents. Book value matters little in the current climate.

Billabong International

Bain Capital is shaping up as the most likely player to take on TPG Capital in a battle for Billabong International.

Media reports have centred on Bain, with indications that the private equity firm is still going over the latest Billabong results and hasn’t entered the data room yet.

TPG still has the inside line on Billabong with its $695 million proposal. According to The Australian Financial Review, Billabong chief Laura Inman is leading management presentation to TPG today.

But TPG’s proposal sits at $1.45 a share and it’s been estimated that a private equity player could still secure an internal rate of return above 15 per cent with an offer north of $2.

Private equity firms tend not to engage in bidding wars. However, if Bain sees the same field as that calculation, there’s plenty of headroom to draw Billabong’s attention away from TPG.

Whatever the outcome, the conversation has quickly shifted from the turnaround strategy unveiled by Inman just a few days ago.

Transfield Services

The sudden departure of Transfield Services chief executive Peter Goode has got the market thinking about takeovers from two angles, as explained in this morning’s edition of The Distillery.

The first is that Transfield could be a greater target for takeover activity.

Transfield has been on a few speculative M&A lists for some time, in no small way because of reports that UGL spoke with them about a $4 deal a little over a year ago.

That figure is more than twice Transfield’s latest closing price of $1.91 a share, which gives the company a market cap of just over $1 billion. The stock plunged 6.6 per cent yesterday, which always attracts a glance from private equity.

We’ll never know the details of what really happened between UGL and Transfield unless someone write an autobiography, quick.

However, one of the key objections that was raised to the suggestion of a Transfield purchase by UGL is the Easternwell business.

Which brings us to the second M&A angle. Easternwell, a Toowoomba-based oil and well servicing business, was picked up by Goode for $575 million in 2010. The market thought that was fully priced and the private equity seller Ironbridge Capital looked to have done a good deal.

Later that year, it started raining in Queensland, hard. The subsequent flooding that devastated the state hurt Easternwell’s operations and stretched the timeline for which the acquisition would pay off on; it was a timeline that was already stretched from the market’s perspective.

As Business Spectator’s Stephen Bartholomeusz points out, the Transfield story really sticks out as a lesson for the consequences of paying top dollar for assets. Particularly when you put Goode next to CSL legend Brian McNamee, who Bartholomeusz spoke to recently.

Alesco Corporation, DuluxGroup

Garage door maker Alesco Corporation has stared down the ultimatum thrown up by paint making suitor DuluxGroup, but to what end?

Alesco said it would not yield to Dulux’s demand to recommend its existing takeover offer of $2.05 cash and 42 cents per share in fully franked dividends in the even that the Takeovers Panel were to a higher 75 cent dividend proposal that came after Dulux said the words "best and final”.

Not only is the Takeovers Panel likely to find fault with the increased offer, but the Australian Securities and Investments Commission (ASIC) is similarly likely to express reservations.

Alesco told the market last night that it has made an application to the Takeovers Panel. Accordingly, the Panel will release a statement indicating the nature of the application.

Dulux said on Tuesday that unless Alesco gave in to its demands for a recommendation regardless of what the regulators say by the close of business yesterday (Wednesday) that discussions about the 75 cents proposal would be over.

It’ll be interesting to see what the details are of Alesco’s application to the Takeovers Panel. Alesco says it will only accept a proposal from Dulux that might be upsetting to the Panel, but apparently did at 5pm yesterday.

Whatever happens let this be known forevermore as the benchmark for irritating takeover discussions.


Grocery wholesaler Metcash has won a 15-year, $655 million liquor distribution deal with Liquor Marketing Group and Hotel & Tourism Management.

The agreement covers around 1700 stores trading under titles like Bottlemart, Harry Brown and Sip n Save.

The financial details weren’t revealed by Metcash, but the company did say that it represents $655 million in new volume for its liquor wholesaling arm ALM.

To put that in perspective, ALM did about $2.3 billion in sales last year, so this is a big deal.

Metcash said a handful of factors, including the Australian dollar and poor consumer sentiment, were having an impact. But the company is pushing ahead with its growth plan, which includes the purchase of the 49 per cent of Mitre 10 it doesn’t own, as well as the acquisition of Automotive Brands Group.

Metcash weighed into the market for $325 million when these acquisitions came up in early July.

Sonic Healthcare, Healthscope

Heart rates rose yesterday when the consumer watchdog delayed its decision on Sonic Healthcare’s $100 million bid for Healthscope’s pathology business predominantly from eastern Australia.

The Australian Competition and Consumer Commission (ACCC) was due to hand down its findings on the proposal yesterday, but instead the parties got word that it would speak to relevant parties and report back "in due course”.

The competition regulator’s "preliminary view” was that the acquisition could cause some problems for rival operators in Queensland, NSW and Western Australia.

According to Fairfax, Sonic chief executive Colin Goldschmidt has already laid the groundwork with shareholders for the situation that it doesn’t work out.

Goldschmidt has described the deal as "one of those things that we're optimistic it will happen, but if it doesn't happen, then Sonic is big enough that it's not really going to make a whole lot of difference”.

Wrapping up

Qantas Airways could be about to collect a handy $400 million for the sale of its half of the Star Track Express joint venture to partner Australia Post.

According to The Australian, the two boards still need to take a proper look at the proposal. The postal service is set to consider the deal today.

That’ll be a handy injection of cash for Qantas if the deal comes off.

Meanwhile, there are a couple of corporate hot shots that have been trading in their own company’s shares.

iiNet founder Michael Malone has reduced his share of the internet service provider to 11.2 per cent from 8.7 per cent, with the Financial Review believing that the sale is for personal reasons.

Over at Fortescue Metals Group, billionaire founder Andrew Forrest has picked up another $20 million in shares with the iron ore price dragging down the ‘third forces’ stock price.

Elsewhere, Raphael Geminder appears to have axed plans to sell a strategic stake in his private packaging firm Pact Group, according to the Financial Review.

The newspaper understands that the son-on-law of the late packaging tycoon Richard Pratt was only ever testing the waters after private equity approaches. Nevertheless, the AFR has received word that Kohlberg Kravis Roberts, the last party interested, has pulled out.

In media, Allan Gray managing director Simon Marais has prodded at the Fairfax Media board, saying that the company’s shareholders would benefit from some kind of breakup in the company.

You might remember Marais was a frequent critic of former Spotless Group chairman Peter Smedley during the encounters with the service company’s new owner Pacific Equity Partners.

Smedley played real hardball with PEP and was often pilloried by institutional shareholders for doing so. He appears to have had the last laugh.

According to The Australian Financial Review, PEP underestimated the cost of running the company and has been forced to fill a shortfall of $100 million.

Smedley wins!

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