BREAKFAST DEALS: GPT shop drop

GPT Group looks to have found a buyer for its Erina Fair shopping centre stake ahead of a potential Australand deal, while UGL shareholders seem eager for a demerger.

GPT Group is set to announce the sale of its half stake in a New South Wales central coast shopping centre, as talk grows of fresh discussions with Australand. UGL’s profit guidance downgrade has underlined just how much shareholders would love a demerger. Meanwhile, James Packer has picked his Barangaroo architects and ANZ Bank is reportedly responding to the scrip battle over The Trust Company.

GPT Group, National Pension Scheme, Erina Fair

South Korea’s National Pension Scheme, a $300 billion powerhouse, looks poised to be named as the winner of GPT Group’s half stake in the Erina Fair shopping centre.

The ASX-listed property group should pick up something like $400 million from the sale if media reports are correct, with the sovereign wealth fund joining Lend Lease’s wholesale APPF Retail Fund as a co-owner of the site on New South Wales' central coast.

Well known US investment giant Blackstone dropped out of the race and ended up pursuing a site in Melbourne.

The extra $400 million or so could well come in handy in regards to GPT’s most prominent play at the moment – a deal with Australand.

Talk has centred on GPT and Australand opening up proper negotiations over the former’s proposal to buy everything of the latter, excluding its residential business.

There’s even been some suggestion that GPT could sweeten its $2.8 billion offer, although given that Australand has had every opportunity to solicit rival interest, and none seems forthcoming, it’s a bit early to say a sweetener is coming.

Particularly when you consider that Australand’s majority shareholder, Singapore’s CapitaLand, has put its stake in 'review' – which means it wants to sell.

When the buyer is the only buyer and the seller wants to sell, that’s not a recipe for a higher price.

However, if a higher price does end up becoming necessary to win the day, GPT at least has a little more in the bank to meet it with Erina Fair out of its life.

UGL

Contractor UGL will know beyond a shadow of a doubt that its shareholder base is baying for a demerger simply by looking at the share price reaction to its second earnings downgrade of the year.

UGL shares tanked 17 per cent to $7.94 after yesterday's announcement. That’s well below the levels they were trading at before the company announced it was conducting a 'review', which put a demerger of the property and engineering arms firmly on the agenda.

Investment bank Goldman Sachs has been conducting the review since then, with managing director Richard Leupen telling shareholders in March that a decision should be in by August, “if not earlier”.

Earlier might be the way to go. UGL now expects to book an underlying profit after tax of $90 million-$100 million for this financial year, down from the $150 million-$160 million guidance issued in February.

The board itself acknowledged yesterday that a demerger appears to be the most likely option.

Given expectations that the mining sector will continue to slow down, dragging engineering firms down with it, they’d be well advised to hop to it.

James Packer, Crown, Wilkinson Eyre Architects

Billionaire James Packer has picked British firm Wilkinson Eyre Architects ahead of two US rivals to build his $1 billion-plus Crown casino site in Barangaroo, Sydney.

According to media reports, the official announcement will be made this morning.

Wilkinson Eyre beat out Chicago’s Adrian Smith   Gordon Gill Architecture, and New York firm Kohn Pedersen Fox Associates, for the $10 million design brief.

While Packer might have picked some sketchers, the real announcement that he wants to make is for the state government to pick his Barangaroo proposal over a rival Sydney casino plan by Echo Entertainment, owners of The Star.

Both players have submitted unsolicited proposals to the New South Wales government, predicated on the other’s being ignored.

ANZ Banking Group, ANZ Trustees 

It appears the bidding war for The Trust Company has got the industry thinking about some more action for trustees.

The Australian Financial Review understands that ANZ Banking Group is reviewing its trustee arm, entitled rather simply ANZ Trustees, with expectations that it’ll try to sell it off in coming months.

Apparently, ANZ Trustees has earnings of about $10 million a year.

The difference between the bidding war over Trust Co between Perpetual and Equity Trustees and ANZ’s musing is that the former is a scrip bidding war. ANZ will be after cash.

Wrapping up

Qantas Airways has received final approval for its alliance with Emirates from the New Zealand government.

The trans-Tasman services of the two airlines was a point of contention for the Australian Competition and Consumer Commission, but the attention kind of died down after their approval, considering there’s a country, and a regulator, one the other side of the Tasman.

It turns out that it all went very well. The five-year alliance has been given the thumbs up.

Meanwhile, Dexus Property Group has offloaded five of its six remaining European industrial properties for a grand total of £16.5 million ($21.7 million).

And finally, Billabong International has lost two more key staff members as discussions about a potential takeover offer, and the accompanying trading suspension, drag even so slowly onwards.

The Australian reports that senior designer Mandy Fry and Sector 9 founder Steve Lake are the latest to exit the group.

This shouldn’t be interpreted as a sign that the talks themselves have gone sour, as it’s unlikely the two have a particular insight into the outcome.

This is symptomatic of two employees working for a company that has had its books open for a year that no one has found a good read in.

Better fortunes can be found elsewhere.

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