BREAKFAST DEALS: Foxtel frown

The ACCC's tough stance on the Foxtel-Austar merger may open the door for rival suitors and while it may be premature to think that the deal is dead in the water, the regulator's incoming boss Rod Sims will have to be ready to face a legal barrage from Foxtel if things turn sour. Meanwhile, CBA boss Ralph Norris passes the baton to the bank's M&A guru Ian Narev, and given the low growth on the domestic front an offshore expansion push can't be ruled out. In other news, James Murdoch faces a tense week over his continued future as BSkyB's chairman, while rumours abound that News Corp may spin off its newspapers, with Lachlan Murdoch seen as the possible boss of the stand-alone listed entity. Elsewhere, CP2 looks to be in the box seat for ConnectEast, while Abu Dhabi's sovereign wealth fund buys a $900 million stake in Transurban. And is Shell losing faith in Woodside's Sunrise project?

Foxtel, Austar, ACCC

The Australian Competition and Consumer Commission's outgoing boss Graeme Samuel is determined to end his tenure with a bang, with his warning that media mergers in a rapidly changing technological landscape, especially with the rollout of the National Broadband Network, require stringent scrutiny to prevent the incumbents from increasing their market power. This stern stance forms the backbone of the ACCC's draft assessment of Foxtel's $1.9 billion bid for its regional peer Austar United, which – unfortunately for the pay TV operators – raises monopoly concerns in the sector. The watchdog was always unlikely to wave through the deal without a few tweaks, but the market is worried that the tough talk from Samuel does not augur well for the merger. The word monopoly may surprise quite a few, given that Foxtel and Austar presently don't compete against each other and are facing more competition through free-to-air digital channels and internet TV. Samuel's focus, however, is on who controls the content as distribution mediums change. According to the regulator, a combined Foxtel-Austar will be far better placed to acquire content because content providers will gravitate towards their large subscriber bases. The merger will also help the two cut expansion costs as they spread them across the subscribers. Then there are concerns that the deal may give too much power to Foxtel's major shareholder Telstra which can outgun its rivals by bundling attractive phone, broadband and television deals. Foxtel and Austar will have to find an answer to these issues and there is talk that the ACCC's stance may encourage other suitors to have a look at Austar. If Foxtel is stopped in its tracks, the likes of Seven West Media could well be inclined to make a move, given that Austar's majority shareholder Liberty Global is keen to get out. That scenario will have to wait until the final ACCC decision is handed down on September 8 and Foxtel-Austar may well have the remedy to the watchdog's gripe by then. Alternatively, there's always the option of going to the courts and it's one that Foxtel may have the wherewithal for.

Commonwealth Bank, Ian Narev, Ross McEwan

It was always on the cards but CBA's long standing boss Ralph Norris' decision to hand over the reins a touch ahead of schedule still gave the market a surprise. Norris will pass the crown to fellow Kiwi Ian Narev, who heads CBA's business and private banking division – and apart from having a stellar law background was also a former child TV star in New Zealand, appearing in Children of Fire Mountain. Narev was the key man behind the purchases of BankWest and a stake of Aussie HomeLoans and with his unit bringing in about $1 billion dollars in net profit, the promotion can be seen as just reward. In fact, the M&A credentials have already sparked speculation that CBA may have more acquisitions, especially in Asia, on its mind given the low-growth outlook for domestic banking. Narev has told the media that he is not going to bring in a radical shift in policy but has vowed to be his own man. We will have to wait and see just how he navigates the waters come December as many will wonder if he is too young for the job. Narev's ascension comes at the cost of the ambitions of CBA's retail chief and career banker Ross McEwan, who was seen as the front runner in the succession race. For now McEwan is not showing any signs of smarting from the loss, telling The Australian Financial Review that he has got his hands full in his current role and he is not going anywhere. CBA's management will be happy to hear that but will no doubt do all it can to ensure that McEwan stays with the bank.

Staying with the banking sector, the AFR also reports that National Australia Bank has poached up to 60 AXA Asia Pacific financial planning businesses recently acquired by AMP. According to the paper, about 26 practices from AXA's financial planning arm and subsidiary Charter Financial Planning have defected to NAB, while a similar number have signed memorandums agreeing to do so within three to six months.

Lachlan Murdoch, Rupert Murdoch, James Murdoch

The UK phone hacking scandal continues to provide a steady stream of speculation with regards to what it means for Rupert Murdoch's media empire. On one hand, heir-apparent James Murdoch is still trying to deflate the renewed focus on just how much he knew about the extent of the hacking utilised by News International papers, and then there is the talk circulating in some quarters that News Corporation's executives have revived the idea of rolling the UK, US and Australian papers all under one listed stand-alone entity. So who's going to run this business? Well, Murdoch's biographer Michael Wolff had told The Sunday Age that hopes are pinned on bringing the prodigal son, Lachlan Murdoch, back into the fold. Lachlan, who is currently running the show at Ten Network, has a soft spot for papers like his father does and Wolff adds that Murdoch senior has already made overtures to him in an attempt to offload the Australian papers to him. If News Corp executives are serious about the spin-off they will need to do something to convince Lachlan to rejoin the flock and that may yet prove to be a tough job. Back to James Packer, UK's The Independent newspaper reports that his continued role as BSkyB's chairman is under review, with investors divided on the issue. James has no plans to step down and for the time being has the support of leading BSkyB shareholders and directors. However, that could easily change if more dirty laundry is uncovered between now and BSkyB's annual results on Friday.  

ConnectEast, CP2, Transurban

Toll road operator ConnectEast Group's chairman Tony Shepherd has pretty much ruled out any chance of a rival bid coming out of the woodwork to scuttle the $2.17 billion bid by its largest shareholder CP2. Shepherd said that ConnectEast has had talks with other potential suitors – Canadian pension funds as well as local ones – to no avail, and CP2 has put good money on the table. ConnectEast shareholders stand to collect 55 cents a share in cash, a 22 per cent premium to the company's closing price before the bid was launched. Alternatively, they can choose to take a stake in an unlisted registered managed investment scheme that will maintain an interest in the EastLink toll road. All in all, investors and analysts seem pretty happy and Shepherd has told The Australian that he reckons that single-purpose infrastructure projects are better off in private hands. This is a view supported wholeheartedly by CP2, which has put together a coalition of the willing investors in Horizon Roads. The eight investors in Horizon are Universities Superannuation Scheme from the UK, APG of the Netherlands, National Pension Service of Korea, China's Leader Investment Corp, ATP of Denmark, Teachers Insurance and Annuity of the US and Mirae Asset Maps on behalf of the Korean Teachers Credit Union. Together they manage assets worth around $1.6 trillion. There are some who reckon that Transurban, which felt the embrace of CP2 last year, may have a tilt here, but with a 35 per cent stake in the target and a bevy of sovereign wealth funds by its side CP2 will be hard to beat.  

Meanwhile, the AFR reports that the Canada Pension Plan Investment Board has sold almost its entire stake in the company over the weekend. The line of stock is worth almost $900 million and the trade was executed by UBS, which has sold the stake to Abu Dhabi Investment Authority.

Wrapping up

Royal Dutch Shell's move to take a 30 per cent stake in Inpex's Abadi floating LNG project in the Arafura Sea has raised some concerns that the oil major may be losing faith with regards to when Woodside Petroleum will be able to get its Sunrise project on the Timor Sea up and running. The Abadi project is similar to Sunrise but Woodside is yet to resolve the long-running dispute with the government of East Timor. Meanwhile, Xstrata has picked up the Meteor Downs cattle station from Australian Agricultural Company for $21.6 million. The miner has bought the station ahead of the expansion at its Rolleston coal mine. The sale will also let AAco pay down debt and build its new abattoir in Darwin. Staying in the resources sector, there is talk that Owen Hegarty's Tiger Realm Coal has reduced the size of its planned IPO from $200 million to around the $80 million to $100 million range. Elsewhere, the AFR reports that fund manager IOOF Holdings has come under the gaze of private equity operators, with two firms recently running the ruler over the business. Finally, it looks like Lazard, Goldman Sachs and Merrill Lynch have all reportedly made the final shortlist to advise the New South Wales state government on the $1.9 billion sale of the desalination plant on the Kurnell peninsula.