BREAKFAST DEALS: Goodman clicks

Goodman looks for commercial property in the US, while Metcash courts a Mitre 10 takeover and Alesco shareholders stay stubborn.

It’s a strong property thread this morning. Goodman Group is looking at a $1.5 billion deal in the US for commercial property deal, while closer to home Metcash has until the end of next year to grab the rest of Mitre 10, but apparently now is the time. Also, Alesco Corporation’s shareholders have proved very stubborn in defending their company against advances from paints company DuluxGroup. Elsewhere, the News Limited wash-up focuses attention on media billionaire Kerry Stokes – will he step in James Packer’s way? And the last piece of the Whitehaven puzzle, while Nathan Tinkler is rousing the troops, is falling into place.

Goodman Group, Birtcher Development

Goodman Group has made some qualified, but nonetheless positive indications about the US industrial property market through an up to $US1.5 billion deal with Birtcher Development.

The agreement, which Goodman describes as "strategic and timely” secures four sites – two in Los Angeles, one in San Fransisco Bay and one in Philadelphia – that cover 900,000 sq ft for $US700 million ($700 million). Goodman is also in final due diligence for a capital partnership totalling $US800 million.

Goodman already has a substantial presence in Europe and the Asia Pacific – it’s the largest provider of logistics facilities to ecommerce giant Amazon.

But chief executive Greg Goodman said the move into North America was the right one for customers, given that it’s the largest logistics and industrial market in the world.

"Over time we also see North America growing to be one of Goodman’s largest markets in terms of assets under management,” Goodman (the chief executive) said in a statement.

We’ll have to wait until later this morning to see if there’s a share price reaction. Goodman’s announcement landed half an hour after the market closed.

Investors worried about the parlous state of the US entire property market – in all its forms – can take heart from the fact that Goodman hasn’t rushed into this. It’s been eight months in planning.

In the end, Goodman says that its partners want to be in the US. It’ll be interesting to look back on this deal when we get another glimpse at how internet retailers are gaining footholds in the US.

Metcash, Mitre 10

Metcash has decided to exercise its right to acquire the remaining half of Mitre 10 it didn’t already own, perhaps revealing something about what its boss thinks about Woolworths push into hardware retail.

Metcash secured a 50.1 per cent majority of Mitre 10 with a $55 million capital injection in 2010. It had until the end of next year to exercise the right to acquire the remaining 49.9 per cent.

Chief executive Andrew Reitzer has chosen to do so, with Fairfax reporting that the remaining half could cost him $80 million.

Backtrack almost six months and Metcash was in no hurry to move on Mitre 10. Reitzer said at the time that the company’s preference was to wait and see what Woolworths did with its own venture into the hardware retail market.

Woolies famously teamed up with US-giant Lowe’s in a bid to take on Coles’ formidable Bunnings chain.

Reitzer was content in January to see how Woolies did in the beginning.

At the time, Reitzer didn’t indicate whether a stronger than expected or weaker than expected performance from Woolworths would be more or less likely to entice him into snapping up the rest of Mitre 10.

Watch out for any hint of how Australia’s largest retailer is going because if it’s particularly good or particularly bad, this might have influenced Reitzer’s thinking.

Or, Reitzer might have spotted a rebound in the housing market; something that pertains to this next story.

DuluxGroup, Alesco Corporation

As a paints company DuluxGroup might consider patience to be a virtue. But this $188 million deal is taking an eternity to dry.

The share price of its target, garage door maker Alesco Corporation, has consistently traded above the offer price of $2 a share as investors anticipate a higher offer.

So it can’t be surprising to hear that since Dulux surprised the market by snapping up 19.96 per cent of the register from a handful of institutional shareholders at $2, that others haven’t been inclined to do the same.

An update notice to the ASX indicated that Dulux has secured just another 1.02 per cent since first securing a fifth of the company in early May.

When Dulux original launched the offer, many onlookers – including this one – were impressed with the boldness of chief executive Patrick Houlihan. You might remember that it came just as the Reserve Bank was slashing interest rates by 50 basis points.

Cheaper mortgages mean more houses and more garage doors and Houlihan was looking to force a bargain. Unfortunately, the target’s shareholders noticed.

News Limited, Consolidated Media Holdings, Foxtel, Australian Independent Business Media

News Limited chief executive Kim Williams combined the media company’s sobering restructure with a proposal to purchase James Packer’s Consolidated Media Holdings, and with it a further 25 per cent of Foxtel, for $2 billion.

The Australian Competition and Consumer Commission (ACCC) says it will examine the proposal, which is one of the conditions that CMH noted the deal is conditional upon – it also needs the blessing of the News Corp board and a period of due diligence.

But at $3.50 a share, Packer said himself in a statement that CMH would support the offer.

Previous media reports have indicated that Packer wouldn’t accept anything less than $4 a share. However, chief rival for CMH, Telstra Corporation, pulled out of the bidding process and Seven West Media is thought to be staring at a potential capital raising. A spare $2 billion might be hard to come by.

However, as explained in this morning’s edition of The Distillery, Seven West chairman Kerry Stokes will have at least something to say about how News proceeds with the bid, through his substantial stake in CMH.

At $3.50, Stokes would collect $480.5 million if he sold into the News offer.

CMH is of course leaning on UBS for advice, Packer’s preferred investment bank, with Ashurst Australia providing legal advice. Meanwhile, The Australian Financial Review reports that News is being assisted by boutique adviser Aquasia, which is closely connected to Williams.

It was also confirmed that News Limited has purchased Australian Independent Business Media (AIBM), publisher of Business Spectator and SMSF subscription service Eureka Report. Editor-in-chief Alan Kohler explains some of the details of the deal here.

Whitehaven Coal, Coalworks

Whitehaven Coal has extended it bid for Coalworks until July 4 after securing 50 per cent of its target. In the terribly unlikely scenario that another proposal emerges, this deal is done.

Whitehaven, recently merged with Aston Resources, is currently awaiting news from major shareholder Nathan Tinkler about his intentions of combining a consortium of partners and financiers to take the company private.

In the background has been the Coalworks deal. Whitehaven sweetened the proposal a little from $1 a share, to $1.025, when an in-specie distribution of the target’s 33 per cent stake in ASX-listed Orpheus Mining is taken into account.

Wrap up

Australian electricity retailer TRUenergy, owned by Hong Kong’s CLP Holdings, mightn’t get much attention for the sale of its Waterloo wind farm. It should, The Australian Financial Review indicates that it could attract $300 million.

However, the market is understandably fixated on the proposed float that CLP is considering and the appointments that will go with it.

In other headline grabbing news, apparently Fairfax Media chairman Roger Corbett has finally held talks with mining billionaire Gina Rinehart.

The Australian indicates that the talks were "cordial” – like when you accidentally drink straight raspberry concentrate?

Jokes aside, the negotiations between the two for her board representation could have dramatic implications for the company’s long-term future and structure.

Meanwhile in construction, Leighton Holdings has picked up some more work through its Middle Eastern arm, Habtoor Leighton Group.

The company said it has won a $300 million contract for engineering and procurement, amongst other things, for the Upper Zakum offshore oilfield in Abu Dhabi.

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