BREAKFAST DEALS: Consolidating media

News Ltd has a nervous wait for the regulator's verdict on its ConsMedia bid, while Sundance faces the prospect of a lower offer.

News Limited is set to make its own headlines today as the competition regulator prepares to rule on the company's Consolidated Media consolidation. The odds are said to be in News' favour, and Seven Group might still see a piece of the winnings. Meanwhile, Sundance Resources braces for a lower bid, while Country Road tries to shake Solomon Lew.

Consolidated Media Holdings, News Limited, Seven Group Holdings

News Limited chief Kim Williams will be biting his nails this morning, as he waits for the competition regulator to hand down its decision on the media giant's $2 billion tilt at Consolidated Media Holdings, which owns a 25 per cent stake in Foxtel and 50 per cent of Fox Sports.

The ruling, scheduled for today, is expected to go News' way given that it wouldn't dramatically alter the current pay TV landscape. After all, News already owns the other half of Fox Sports and 25 per cent of Foxtel, where it controls top management. The new arrangement would simply tighten News' already firm grip on the assets.

It has been smooth sailing for News' $3.50-a-share bid so far, especially compared to a separate application from Kerry Stokes' Seven Group Holdings, which wants approval from the ACCC to acquire the 76 per cent on ConsMedia it doesn't already own.

The ACCC recently suspended its timeline for that inquiry while it chases new information about the proposal. The Australian Financial Review speculates the regulator might be concerned about Seven teaming up with Foxtel to acquire programming in a way that might lessen competition for content buyers, which seems to be a valid concern.

Still, Stokes could become a thorn in News' side. The newspaper says News' scheme of arrangement is structured in a way that will likely require the support of Seven, which represents 24 per cent of ConsMedia's register.

Even without the ACCC on side, Stokes may still benefit from a ConsMedia sale.


Another ConsMedia stakeohder, James Packer, has also been busy at the negotiating table furthering the interests of his casino operator, Crown.

In the past week, reports have put Packer in talks with rival gaming company Echo Entertainment, which he apparently convinced about the merits of a joint venture, and Genting, which may be open to splitting ownership of Echo, in which they both 10 per cent stakes.

Now Crown has inked a $60 million deal with the West Australian government, following eight months of negotiations, linked to a $568 million upgrade of his Perth casino.

Under the agreement, Packer will buy a parcel of land from the government on which to build Perth's first six-star luxury hotel beside his existing Burswood casino. In return, the government will not to oppose an application by Crown for 500 extra gaming machines and 130 additional gaming tables at Burswood, including new private gaming salons.

Crown says the new gaming products will be rolled out over five years, as part of an effort to lure wealthy Asian high-rollers to Australia.

Blackwood Corporation, Tinkler Group, Whitehaven Coal

Talk that Nathan Tinkler is struggling to shore up funding for a $5.25 billion tilt at Whitehaven Coal is bound to get louder, after the mining entrepreneur requested an extension on the $28.4 million he owes Blackwood Corporation.

Deal watchers will remember Blackwood's revelation on Monday that it was still waiting for Tinkler to settle his bill, linked to a share placement that was expected to have been settled two weeks ago. Tinkler agreed to buy a 33.85 per cent stake in Blackwood for 30 cents a share – a 50 per cent premium at the time – via his private investment vehicle, Mulsanne Resources.

Now, the smaller miner says Mulsanne has asked for a payment extension to August 13.

Perhaps it's a coincidence, but that's also roughly when Tinkler's Whitehaven due diligence period ends.

Hanlong Mining, Sundance Resources

Hanlong Mining's bid for Sundance Resources apparently has the blessing of Chinese regulators, but things might not be as sweet as they seem.

A source told The Wall Street Journal Sundance is likely to recommend a 12 per cent lower offer from it suitor, worth $1.5 billion. The reduced 50-cents-a-share bid is said to reflect a change in market conditions.

Sundance's shares, which last traded at 33.5 cents, remain suspended while the company prepares to make an announcement about the deal.

Yesterday, there was speculation National Development Reform Commission had offered a conditional seal of approval for Hanlong to buy Sundance. However, it's still unclear what those conditions are, or whether the the central planning body played a part in the lower bid.

Either way, with Sundance board approval the deal is likely to proceed. The next hurdle will be a shareholder vote.

Australia's Foreign Investment Review Board approved the takeover in June.

Country Road, Witchery Australia

There might be a change in control at Country Road, after it agreed to buy fellow apparel retailers Witchery and Mimco from Gresham Private Equity for $172 million.

The headline deal will grow Country Road's retail footprint by 210 stores to a total of 520. It's also expected to lift revenues from $419 million to $660 million, and almost double earnings to $73 million.

As part of the agreement, Witchery chief Ian Nairn will take control of the merged group. Country Road's boss, Howard Goldberg, will step down.

However, just as interesting as the sale itself is the deal's funding: Country Road has launched a one-for-two pro-rata renouncable rights issue at $2.66 per share, to raise $92 million.

The retailer's 88-per-cent stakeholder, South Africa's Woolworths Holdings, plans to take up its full share, which will cost about $81 million. But it's unclear whether Country Road's other major investor, Solomon Lew's Australian Retail Investments, will also buy in.

If ARI ignores the issue, Woolworths' holding will increase to 91.6 per cent. At that level, the Corporations Act would allow the company to compulsorily buy out the remaining minority shareholders.

Will Lew give up an investment he's held for 14 years?

Wrapping up

Intrepid has addressed its problems in Indonesia by bringing onboard one its register the nation's most powerful media moguls, Surya Paloh.

The Australian-listed miner agreed to allocate 27 million shares, or about 5 per cent of the company's stock, to Paloh, who owns television and newspaper assets in Indonesia. If Intrepid's share price climbs above $1 in the net 12 months, and remains there for a month, Paloh is guaranteed another 25.6 million shares.

Existing shareholders seemed to like the deal, despite it being heavily dilutive. Intrepid's stock price closed 32 per cent higher at 29 cents.

Intrepid says Paloh is well-placed to help promote the company in Indonesia, where it is still attempting to resolve a costly dispute with local joint venture partner Multi Niaga.

Also in the resources space, there is increased speculation about a Beach Energy takeover, as the shale gas company's long-standing chairman Robert Kennedy steps down.

Kennedy, who has been with the company for more than 20 years, will not stand for re-election to the board at Beach's annual general meeting in November.

The Australian Financial Review reports former Merrill Lynch energy guru Mario Traviati has been telling institutions a Beach buyout may be brewing. The $1.4 billion company does have some particularly promising shale gas assets in the Cooper Basin.

Finally, Quadrant Private Equity has completed its $170 million acquisition of CQMS Razer, which it bought from company director Thomas Meyes and Macquarie Group.

As part of the deal, CQMS management will also buy roughly 8 per cent of the company, alongside Quadrant.

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