Breakfast Deals: Gouda deal

Bega cheese takes a tilt at Warnambool Cheese & Butter and Macquarie Group raises over a billion dollars for a US infrastructure project.

Australia's resurgent agriculture sector has spawned yet another deal, with Bega Cheese ambushing Warnambool Cheese & Butter — but the bidder may have some competition. Elsewhere, Macquarie Group raises more than $1 billion for infrastructure investment in the US, while AGL and Crown celebrate regulatory victories at home and abroad. And Rio Tinto may finally develop Rhodes Ridge now that Gina Rinehart has been booted from the iron ore project.

Bega Cheese, Warnambool Cheese & Butter

As companies rush to capitalise on Asia's growing demand for Australian dairy, there are suggestions Bega Cheese isn't the only suitor eyeing Warnambool Cheese & Butter.

Bega surprised the market with yesterday's $320 million tilt at Warnambool, even though the dairy stalwart has been the subject of takeover talk for some time now.

Bega, which already owns an 18 per cent stake in its target, is offering 1.2 of its own shares plus $2 cash for each Warnambool share it doesn't already control. That's $5.78 a share — or a 28 per cent premium — based on Wednesday's closing price.

The approach comes after another rival and former suitor, Murray Gouldburn, increased its stake in Warnambool to 16.3 per cent earlier this year — sparking speculation it might return with another takeover proposal.

There are also rumours about interest from Canada's Saputo and Asian buyers searching for a strategic foothold.

For now, Warnambool is calling for calm while it examines the bid, which was apparently also a shock to the target's board.

Macquarie Group

Macquarie Group's has reportedly raised an initial $US1.3 billion ($1.4 billion) for its latest US venture, the Macquarie Infrastructure Partners III fund.

American pension funds and insurance companies, as well as a small number of Australian fund managers are understood to be among the major investors to commit money to the fund, according to the Australian Financial Review.

The newspaper says the fund is expected to invest in a range of infrastructure projects in North America, including a $US1.5 billion toll bridge in New York.

The MIP III fund is said to be targeting $US2 billion from investors by the time the fund closes permanently.

AGL Energy, Australian Power and Gas Company

Back in Australia, the competition watchdog has cleared AGL Energy's $100 million takeover of Australian Power and Gas Company.

The Australian Competition and Consumer Comission say the acquisition, worth 52-cents-a-share, was unlikely to substantially lessen competition in Victoria's energy sector, where APG primarily supplies electricity and gas.  

It expects second-tier retailers in the Victorian energy retail market to continue to drive competition.

If the deal closes, AGL will take more than a 75 per cent stake in APG and win the right to appoint a majority of directors to the smaller energy player's board.

The bid, which expires on October 11, already has the unanimous support of APG's board.

Crown

In another regulatory triumph, James Packer has received a key approval for Crown to build a $380 million hotel and leisure resort in the Sri Lankan capital of Colombo.

Sri Lanka's investment promotions minister, Lakshman Yapa Abeywardena, tells Reuters the government's cabinet has given a green light to the development by Crown and its local partner, Rank Entertainment Holdings.

The cabinet deal is said to lock in generous tax concessions and Crown's preferred two-tower design. 

However, the deal still requires approval by Sri Lanka's parliament.

As a Crown spokesman tells The Australian Financial Review: "There is still a way to go before the project is approved."

Cathay Pacific Airways, Hong Kong Airlines, Hong Kong Express Airways, Jetstar Hong Kong

Meanwhile, Jetstar's Hong Kong joint venture is doing all it can to convince authorities there that there is room for a new low-cost carrier in the city.

Jetstar Hong Kong chairman Pansy Ho Chiu-king tells The South China Morning Post the new budget airline would complement the existing services rather than result in "vicious competition".

Her comments come after Cathay Pacific attacked JHK's bid for regulatory approval in HK, claiming it would violate the city’s constitutional law because its principal place of business is in Australia. 

Hong Kong Airlines and its sister carrier, Hong Kong Express, have also lodged filings with HK authorities opposing the arrival of JHK — a joint venture between Qantas, China Eastern and Shun Tak Holdings.

Ho, the daughter of Macau gaming tycoon Stanley Ho Hung-sun, argues the Jetstar board is composed of seven members, of whom five are Hong Kong permanent residents, including herself, and two mainlander representatives of China Eastern.

"It is inevitable an incumbent service provider will defend its interest, which was what we did when Macau opened the gaming market for foreign players about 10 years ago," she tells the SCMP. "But we faced the reality of change, and changed our stance."

"The fewer the players, the easier it is for the existing operators to work out their numbers.”

"But Hong Kong needs more players to balance the market, and we know how to manage capacity and efficiency."

Ho says the opposition of existing players meant Jetstar's debut would be delayed for "a few months", from the original target of the end of this year.

Wrapping Up

Rio Tinto is free to develop the giant Rhodes Ridge iron ore project, after Gina Rinehart lost a final appeal to win back a significant stake in the Pilbara development.

The court ruling forces Rinehart's Hancock Prospecting to relinquish its 25 per cent holding in the project, increasing Wright Prospecting's interest to 50 per cent.

Rio, which owns the remaining 50 per cent, had been waiting for the ownership battle to be fully resolved before making any firm development plans, according to The Australian.

Finally, Optus owner SingTel has won a five-year extension to a communications contract with ANZ Banking Group worth more than half a billion dollars.

The $530 million deal will see SingTel and Optus supply domestic and global data network services, mobility, collaboration, contact centre services and managed services for the bank’s business operations.

It expands on a $500m contract the two companies signed in 2009.

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