ASX Ltd is still well placed for a foreign takeover, while the London Stock Exchange seeks a controlling stake in LCH Clearnet.

Is ASX Ltd now a firmer takeover target? Some say yes, some say no. Breakfast Deals says… read on and find out. Another government decision from yesterday could make a recently embattled Australian company more attractive. Also this morning, RHG Group, the remnants of RAMS Home Loans, is expected to start dealmaking with non-bank lender Resimac and Lazard Australia Private Equity is offloading its debtor financer provider Scottish Pacific.


Is the Australian Securities Exchange now more or less likely to bag an all-important international deal now that Treasurer Wayne Swan has effectively enshrined its clearing and settlement monopoly for another two years?

That’s the question currently being debated between business commentators and analysts. Here are the arguments for and against.

When Swan sank the $8.4 billion merger deal between ASX and Singapore Exchange back in April 2011, one of his greatest concerns, which emerged late in the piece, was the clearing and settlement monopoly of the ASX.

A merged entity would put the crucial piece of financial infrastructure under the influence of a foreign entity. Preserving that monopoly means that problem remains.

The counterargument is that the precise understanding surrounding the regulatory issues was muddy back in April 2011. The Council of Financial Regulators report has a section entitled ‘minimum conditions for safe and effective competition’. It’s easy to see how this would apply to a foreign suitor.

It’s also worth remembering that clearing and settlements wasn’t the only reason Swan wasn’t impressed by the Singapore proposal. It was also argued that Singapore Exchange didn’t present a gateway to Asian capital flows.

This contestable point came at a time when relations between the ASX and Canberra had soured. It’s clear that chief executive Elmer Funke Kupper has addressed this.

The case for equity exchanges to team up remains. London Metals Exchange shareholders agreed to a £1.4 billion takeover by Hong Kong Exchanges and Clearing in July 2012.

Intercontinental Exchange announced at tilt at NYSE Euronext in December.

And London Stock Exchange is trying to take a controlling stake in LCH Clearnet, the transatlantic clearing house jockeying for an Australian licence, with a report from the Financial Times indicating that Singapore Exchange might take a separate 30 per cent stake, or team up with LSE.

The same consolidation argument applies in Asia. Arguably more so given the potential for regional growth.

But there’s one element of this play that no one has mentioned this morning and that’s price.

At $35.88 a share, ASX’s market cap sits at $6.3 billion, a mere 2 per cent more than the day before the Singapore Exchange deal was announced.

It is absolutely well placed for a deal.

Meanwhile, a former potential takeover target of ASX is making some purchases of its own.

Share registry firm Link Group has picked up superannuation administration business Russell Investments, along with its 400,000 super accounts.

The move comes just two months after Link, an acquisition-happy player, purchased FuturePlus Financial Services, which took its managed assets to more than $100 billion.

Pacific Equity Partners started a process to sell Link back in May last year, with ASX known to be an interested party, along with Bain Capital, Carlyle Group, Hellman & Friedman and KKR.

From what Breakfast Deals can recall, that’s the last we’ve heard of it.

Whitehaven Coal, Nathan Tinkler

There was another government decision yesterday that had implications for a potential play.

Federal Environment Minister Tony Burke gave conditional approval to the Whitehaven Coal Maules Creek project in New South Wales.

This is a little baffling. Just four days ago the federal government deferred its decision until the end of April. This was the third time it had done so.

Questions were being asked about whether the Maules Creek production date would be pushed back into 2015. Hopes are returning that 2014 is achievable.

Of course, this brings attention back to major shareholder Nathan Tinkler. The Australian Financial Review reports word that the coal tycoon has been in New York and Hong Kong meeting with "financial types,” presumably for another attempt to privatise the company.

This smells like mere rumour to Breakfast Deals. But the fact remains that Whitehaven is a much more attractive company with conditional federal approval and the share price is likely to rally during today’s session.

RHG, Resimac

The remains of the RAMS home loan empire at RHG look to be the subject of takeover interest once again.

The $143 million target went into a trading halt pending "a possible transaction,” which media reports indicate involves non-bank lender Resimac.

RAMS was one of the main competitors to the big four banks in the mortgage market until the global financial crisis kicked in, wiping out some of the smaller players. The RAMS brand was sold to Westpac Banking Corp in 2008.

Former RAMS chairman John Kinghorn tried to take the company he founded in 2011. But it didn’t pan out and he sold his stake in the company.

Speaking of Westpac, The Australian Financial Review reports that the lending giant is marketing a $1 billion residential mortgage backed security at just 90 basis points above the bank bill swap rate.

That’s not quite as cheap as pre-crisis levels, in fact not by a long shot. But it’s an important name to join the RMBS train, with Bendigo and Adelaide Bank raising $850 million last week.

Wrapping up

Lazard Private Equity Australia has tapped its own corporate advisory arm to run the sales process for its debtor financier provider Scottish Pacific, according to media reports.

Indicative bids are apparently due on March 4 and the business could well go for $100 million-plus.

Meanwhile, Perpetual has offloaded its loan servicing business to AMAL Asset Management for an undisclosed amount. The Australian reports that the deal should increase AMAL’s funds under management to $7 billion, at least according to chief executive Kent McPhee.

Elsewhere, MPower-owned Tag Pacific has picked up two contracts that will boost the total value the new projects of its power convergence arm to $29.5 million.

The deals aren’t with small fish either – BHP Billiton and Chevron in the Pilbara and North West Shelf, respectively.

Sticking with resources, Alacer Gold has agreed to jettison its 49 per cent stake in the Frog’s Leg gold mine not far from Kalgoorlie in Western Australia, after a strategic review of its footprint.

Binding terms with La Mancha Resources Australia has been agreed upon for the stake, along with two exploration projects, for $US171 million ($165.2 million).

And finally, Sundance Resources has announced the resignation of chief financial officer Peter Canterbury after more than five years of service.

"Mr Canterbury will remain employed by Sundance until May 2013 where he will continue to perform his role for Sundance including on the Hanlong transaction or any other matters that may occur until this time,” Sundance said in a statement.

Thank heavens!


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