BREAKFAST DEALS: Coles tipple

Wesfarmers' supermarket arm Coles plans to take the liquor fight to its rival Woolworths with an ambitious expansion plan that may see the retailer join the race for Independent Liquor. Meanwhile, Kathmandu shows its bigger rivals how to make money despite downbeat retail conditions and Australia Post joins forces with Rural Bank to extend its presence in the local banking sector. In other news, Macarthur Coal stays mum on the identity of potential suitors, Kerry Stokes' Iron Ore Holdings gets closer to selling its assets and Yanzhou Coal snaps up a private thermal coal miner in Queensland. Elsewhere, Telstra may have to amend its structural split plan, HSBC rules out job cuts in Australia and Mark Bouris joins the board of a small biotech outfit.

Coles, Woolworths

Wesfarmers' supermarket arm Coles may have outperformed its rival Woolworths when it came to sales in the fourth quarter but there was one sore spot, the liquor division, which lost market share to its rival. Throwing down the discount gauntlet to Woolworths may have helped the performance of the supermarkets but the liquor division still needs to catch up and Coles is reportedly moving to rectify the issue. According to The Australian, the supermarket giant is planning a major expansion of its liquor business, which could see it join the race for private equity-held New Zealand brewer Independent Liquor. Final bids for the business are due this week and, for the moment, Japanese giants Asahi Breweries and Suntory are leading the pack. A possible move on Independent Liquor is just one of the things on the agenda and The Australian reports, citing internal Coles documents, that the retailer has negotiated $130 million in annual discounts from its suppliers to fund the expansion, which includes a restructuring of its stores portfolio and a rebranding exercise. The plan will reportedly see the closure of 10 loss-making 1st Choice stores and potentially change the 1st Choice brand to Coles Liquor Superstore. The paper adds that Coles is keen to secure a stake in a brewery to underpin supply of private label beers and that's where Independent Liquor may come into the picture.

Kathmandu

The other big retail story so far this week has been the surprisingly healthy numbers released by outdoor retailer Kathmandu, at a time when other retailers are licking their wounds. So what's its secret? Well, severe cold weather always helps send the heavy-duty jackets fly off the shelves, however analysts have also highlighted a couple of other factors. Firstly, a stronger Australian dollar has helped the company source its goods at a better price; the other factor is that since coming out of the clutches of private equity owners, through its $335 million 2009 float, the retailer has had greater flexibility in terms of getting its inventory, pricing and product right. The combinations seem to have worked given that Kathmandu is currently trading at $1.86, about 9 per cent higher, than its original listing price of $1.70. However, as The Australian points out, the key thing to keep an eye on when Kathmandu releases its results next month will be to see just how well it fared in June and July, when the likes of David Jones took a particular beating.

Australia Post, Rural Bank

Australia Post has taken another step in expanding its presence in the banking sector through a deal with Bendigo and Adelaide Bank's subsidiary Rural Bank. Under the terms of the arrangement, the companies will join forces to distribute Rural Bank's services via Australia Post's 1400 strong network of regional and rural post offices. Australia Post has been seen in some quarters as a potential "fifth pillar” in the local banking landscape and the talks have especially intensified since former NAB man Ahmed Fahour came on board as the managing director of the postal service in February last year. This deal is unlikely to impact the major banks in the competition stakes but that's not to say that it's without its benefits. It allows Rural Bank to make good use of Australia Post's extensive regional network and in turn provide the postal service with a handy new source of revenue.

Macarthur Coal, Iron Ore Holdings, Yanzhou Coal, Carabella Resources

Macarthur Coal boss Nicole Hollows' conference call with investors yesterday was curiously devoid of any juicy snippets on the identities of the possible suitors willing to challenge Peabody Energy and ArcelorMittal's $4.7 billion offer. Instead the emphasis was very much on highlighting the fact that the coal miner was ready to engage with any interested party while keeping its channel of communication open with Peabody. Mining giants Vale and Anglo American are seen as possible rivals to Peabody but one can't discount the entry of former suitor Noble Group. BHP Billiton and Rio Tinto are unlikely to have a go at the miner. Macarthur is confident that talk of a counter-bidder will keep its shareholders from jumping on board Peabody's current offer and presumably has entertained some approaches given its reluctance to agree to a "no talk” and exclusivity clause with Peabody. Interestingly, Hollows said that the miner was not aware of the position of its largest shareholder CITIC, which is surprising given that it could play a key role in any potential rival bid. Meanwhile, the sale process of the six tenements of Kerry Stokes' iron ore minnow, Iron Ore Holdings, is reportedly entering the final stages. According to The Australian Financial Review, the lack of infrastructure in the region has kept overseas suitors out of the game, with BC Iron and Atlas Iron seen as likely local contenders. In other news, Carabella Resources is reportedly close to selling a 10 per cent stake in its Grosvenor West deposit in Queensland, while China's Yanzhou Coal has snapped up Queensland-based thermal coal outfit Syntech Resources for $202.5 million.

Telstra, NBN, ACCC

Telstra is most likely going to have to make some modifications to its structural separation plan, which may delay the shareholder vote on the NBN deal but should have a negligible impact in the overall scheme of things. The plan has drawn fire from Telstra's rival Optus and there is talk that the Australian Competition and Consumer Commission will seek greater concessions from the telco with regards to access to its wholesale network. However, there is little or no chance that the regulator will impose the sort of punitive measures that could sink the entire NBN deal. So expect to see some token changes that won't affect Telstra's prospects in the least. Meanwhile, NBN Co has shortlisted a joint venture between Lend Lease and Service Stream, Syntheo, Leighton Holdings' Visionstream and Transfield for a $1 billion construction contract to build the network in Victoria and Western Australia.

Wrapping up

European banking giant HSBC's decision to axe 30,000 jobs is apparently going to leave Australian shores untouched, with the boss of the bank's local arm, Paulo Maia, saying that there are no cuts on the drawing board. However, he admitted that staff growth will be toned down a notch until things improve. Toll Holdings' board could reportedly decide on the successor for outgoing CEO Paul Little this morning, with current CFO Brian Kruger the hot favourite. However, The Australian reports that there are some who would rather see an external appointment. Whatever the decision, Toll's new CEO better be prepared to work under the larger-than-life shadow of Little, who is likely to return to the board at some point. In other news, listed biotech Anteo Diagnostics (formerly Bio-Layer Corporation) has appointed Mark Bouris as non-executive chairman. Bouris is founder and executive chairman of recently listed financial advisory firm Yellow Brick Road and is the chairman of technology company TZ Limited, and a director of Eastern Suburbs Leagues Club. Meanwhile, Novogen has completed the sale of its consumer products business to Pharm-a-Care Laboratories for $10.1 million. Novogen said that the unit was non-core to its core competency of drug development and the proceeds from the sale will be funnelled into its two majority-owned subsidiaries, Marshall Edwards and Glycotex. Novogen was advised on the sale process by Tony Charara from Spark Capital, while legal advice was provided by Corrs Chambers Westgarth. Finally, the war of words between OM Holdings and its largest shareholder Consolidated Minerals continues to rage with both sides firing broadsides. OMH's board has hit back at attacks from ConsMin to dethrone directors Low NgeeTong and Tan Peng Chin and replace them with Malcolm McComas and former NSW Liberal leader Peter Debnam. However, that hasn't deterred ConsMin from continuing its agitation. OMH, which posted a positive June quarter result last week, has said that directors Low and Tan have the full support of the board, but ConsMin has again urged OMH shareholders to rally for the change, reminding them that ineffective management from the top has led to the loss of close to $130 million in shareholder value since March 2011.