BREAKFAST DEALS: Elders juncture

Investors will hope for a Ruralco update in Elders' results, while Nine's talks with WIN could influence its Cricket Australia pitch.

Elders is expected to hand down its first-half results today with some big takeover issues hanging over the company. Nine Entertainment goes into the weekend with some lingering uncertainty about whether it will match Ten’s bid for the cricket. Meanwhile, Brockman Resources has found a possible partner that could deliver it to Fortescue’s infrastructure.

Elders, Ruralco

There is nothing quite like timing, with Elders due to report its first-half earnings today.

Yesterday, the consumer watchdog said it has no objections to the idea of Ruralco buying the rural services business of rival Elders, a company it once hoped to merge with.

The Australian Competition and Consumer Commission said following investigations into the agribusiness sector, it believes that small rural towns services by both Elders and Ruralco would be able to lean on alternative suppliers, meaning little drop-off in competition.

“In the small number of towns where the merger parties face limited competition from alternative agri-product retailers, the ACCC considered that existing or potential new retail suppliers of agri-products could readily enter or expand into these markets,” the watchdog said.

Ruralco is a 12 per cent shareholder in Elders and the most logical buyer of its rural services business. Whether or not it can compete with a large Asian buyer – assuming one comes knocking – is a different matter.

Elders is also trying to flog its Futuris automotive parts business, which when last we heard had received some non-bindings proposals.

But just last week, as we’re all well aware, Ford Motors announced its withdrawal from the Australian market as a manufacturer. While some of Futuris’ global sales to Ford end up being thrown into Focuses in Thailand, the announcement will have an impact on the business.

It’s an undoubtedly frustrating time for Elders chief executive Malcolm Jackson and his chairman John Ballard who are trying to conduct a stable, considered asset sales process that will effectively wind the company down.

It’s safe to say that Ballard was left rather unimpressed – probably seriously pissed off – when details of a merger proposal from Ruralco somehow wound up in the papers.

Ballard responded by sending his reply to Jackson that began with, “Thank you for your confidential letter,” to the not-so-confidential Australian Securities Exchange.

Nine Entertainment, Ten Network, Cricket Australia

There’s movement afoot at Nine Entertainment to hold onto Australia’s cricket broadcasting rights for another five years.

Media reports indicate that Nine will in all likelihood wait until Monday’s deadline where it has to decide whether to match Ten Network’s $500 million offer for the next rights agreement.

However, Nine boss David Gyngell is continuing to negotiate with WIN Corporation billionaire Bruce Gordon about the regional broadcaster’s television stations in Adelaide and Perth.

It’s a condition of Cricket Australia that whoever wants the rights has to guarantee some degree of nation-wide coverage.

Nine doesn’t have to purchase the stations in Adelaide and Perth in order to secure the rights, but it makes sense to sort out this deal before the decision on whether or not to match Ten is made.

Brockman Resources, Tianjin Port Group

Brockman Resources has signed a non-binding memorandum of understanding with the main operator of China’s giant Tianjin Port that could help it get its iron ore on Fortescue Metals Group’s rail line.

The memorandum of understanding with Tianjin Port Group relates to a possible strategic investment in Brockman’s mine, port and rail infrastructure for its proposed Marillana project in the Pilbara.

The ASX-listed Brockman, which is also listed on the Hong Kong Stock Exchange, is talking to rival Atlas Iron to develop a 50-millon tonne a year port facility at Port Hedland.

The pair is also leading partners in the investigation with haulage giant Aurizon to build a brand spanking new Pilbara rail line for the smaller operators.

The fact that both Brockman and Atlas have in recent months sought access to Fortescue’s infrastructure, even while Andrew Forrest’s company is trying to sell it, is indicative of the tighter parameters with which all resources players are having to work in.

The thing is you can’t just put your hand up and say, ‘Let me onto your infrastructure, Forrest’. Players need some coin.

Wrapping up

AGL Energy has forked out $52.9 million in stamp duty to the Victorian government for its multi-billion-dollar purchase of the Loy Yang power station.

The result is better than the original $82 million it originally put aside for stamp duty.

Staying with resources, it looks like South Korean giant POSCO has traded its stake in Cockatoo Coal to get a bigger slice of the Hume Coal project, of which Cockatoo is a leading partner.

Cockatoo said yesterday that it has sold a 30 per cent stake in Hume Coal to POSCO Australia for $16.1 million. To pay for it, POSCO has given Cockatoo $9.74 million in cash and POSCO's 13.26 per cent stake has been cancelled out.

Elsewhere, developer Devine Limited has extended its core debt facility until October 2015 with ANZ Banking Group.

And finally, The Australian’s fine M&A mind Bryan Frith has a great story this morning about the pitfalls that Australian investors can fall into when backing an ASX-listed company that’s based and incorporated elsewhere.

It’s about the battle between the independent directors of Miclyn Express Offshore and the company’s majority shareholders.

“Miclyn is listed on the ASX, headquartered in Singapore, incorporated and registered in Bermuda and subject to Bermudan law,” writes Frith.

“Australia's takeover provisions, which require a bid before a party can acquire more than 20 per cent of a company, and the investor protection measures of the Corporations Act, do not apply.”

SEA6 and CHAMP Marlin, the Singaporean arm of Australia’s CHAMP Private Equity, have gone from 59.2 per cent to 75 per cent of the Miclyn Express Offshore register and have announced the possibility of forcing a buyout of minority shareholders at a price beneath the $2.20 a share they just paid.

That just ain’t cool!

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