BREAKFAST DEALS: Infrastructure stir

With the action heating up in the local infrastructure space, there's talk that MAp Group and Transurban could become takeover targets, while ConnectEast's shareholders may be able to squeeze a sweetener out of suitor CP2. Retail sector woes hit home for veteran rag trader Solomon Lew's Premier Retail but his latest recruit, Mark McInnes, may have the goods to ride out the storm. In resources news, BHP's $11.3 billion bid for Petrohawk gets the tick from the US FTC and Fortescue Metals looks to Export-Import Bank to help fund its Pilbara expansion. Elsewhere, ConsMin renews its assault on OM Holdings, things seem to be falling into place for NAB with regards to Lloyds, and Toll Holdings' outgoing CEO Paul Little says he's not going anywhere.

ConnectEast, MAp Group, Transurban

Australian infrastructure assets are back in the frame, with plenty of action in the sector. ConnectEast Group has welcomed a $2.1 billion offer from a consortium rustled up by its largest shareholder CP2, while the Future Fund has taken a 5.05 per cent stake in airport operator MAp Group and Transurban has bid farewell to another major shareholder and erstwhile suitor Canada Pension Plan Investment Board, which has sold its 12 per cent stake in the toll road operator for $903 million. The move by the Future Fund into MAp can be seen as a tick to the former Macquarie satellite's plans to become a single-asset entity. Interestingly, MAp has also proved to be attractive for another sovereign fund, the Abu Dhabi Investment Authority, which has also taken a five per cent stake in the company. With MAp's signing off on the asset swap deal with Ontario Teachers Pension Plan Board, there is talk that the operator of the Sydney Airport may become a takeover target, with speculation that the Future Fund and the ADIA could join forces to make a joint acquisition. The timing of the move is open to conjecture – any potential suitor may choose to sit tight until MAp gets its hands on all of Sydney Airport. The swap deal gives MAp an 85 per cent stake in the airport and the company has hosed down talk of any immediate moves to pick up the remaining 15 per cent, choosing instead to return money to its shareholders. The other key piece to the puzzle is Macquarie Group's 22 per cent stake in MAp. There is always a chance that the investment bank may choose to engage with a potential suitor once the asset swap is set in stone.

Moving to ConnectEast, the chances of a counterbid for the toll road operator are very slim but that doesn't mean it's going to be smooth sailing. According to The Australian Financial Review, about 15 per cent of the target's registry is looking to squeeze out a higher price from the CP2-led consortium. There's no real competitive tension here that will warrant a sweetener from CP2, and ConnectEast's board has given the deal its blessings. However, the target's shareholders can take heart from a past precedent, set by CPPIB's $1.4 billion purchase of Macquarie Communications Infrastructure Group in 2009. It was a similar scenario that time, with the board backing the deal and no counter-bidders in sight. But shareholders struck to their guns and were duly rewarded with a sweetener. Finally, on Transurban, CPPIB's move to sell its 12 per cent stake took the wind out of the company's share price yesterday, but the Canadian pension fund has told the media that the sale had nothing to do with bad blood over the failed takeover bid last year – it was rather a move to cash in its chips at an attractive price. The move is actually a good thing for Transurban, which will now welcome a far more diverse set of shareholders, in contrast with the previous situation where three shareholders – CPPIB, OTPP and CP2 – held over 42 per cent of the stake. OTPP sold its 14 per cent stake last year, and now CPPIB has dumped its stake, leaving CP2 with its 13 per cent stake. The three launched two failed takeover attempts on Transurban last year but news that around four per cent of CPPIB' stake has gone to ADIA has sparked speculation that the sovereign wealth fund and CP2 could at some point come together to have a tilt at Transurban.

Mark McInnes, Premier Investments, Solomon Lew  

The move by Solomon Lew's Premier Investments' retail arm to slash its 2011 profit downgrade is a clear sign that no one is safe from the ill effects of the consumer malaise sweeping through the country. Fingers have already been pointed at a number of factors, including the rise of online retailing, a two-speed economy and even the carbon tax, but as Lew's high-profile recruit Mark McInnes said yesterday people just aren't in a mood to spend their cash, even with rag traders dumping merchandise at bargain basement prices. This was McInnes' first major outing as the boss of the retail arm since coming on board in March and the former David Jones boss certainly looks like the man with the plan to turn things around. The way forward is mainly based on managing the existing retail assets in the best possible way, and while that will see the loss of around 50 of the worst-performing stores, there is an ambitious offshore expansion plan and possible acquisitions are on the cards. McInnes has the cash for acquisitions but as he pointed out to Business Spectator's Stephen Bartholomeusz yesterday, Premier Retail's war chest will only come into play if brands that are unique and are a fit to the group's central platform are identified. Of course, just how all of this pans out will depend on whether the retail environment will get any worse; Lew and McInnes reckon we have hit the bottom of the barrel but time will tell.

BHP Billiton, Fortescue Metals Group

BHP Billiton and its latest shale gas play Petrohawk Energy Corporation have received notice from the US Federal Trade Commission of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act in relation to the miner's $11.3 billion offer for Petrohawk. The offer is scheduled to expire on August 19. Meanwhile, Fortescue Metals' new CEO Neville Power has kick-started his second week in the job by sinking the boot into the Gillard government and its apparent disregard for the business community. However – political invective aside – he has shed some light on Fortescue's growth plans, telling The Australian that the miner was looking at Export-Import Bank to help fund the 50 per cent of the expansion in the Pilbara that the miner does not plan to finance in cash, with development director Peter Meurs aiming to line up financing for up to $US1.5 billion of equipment purchases. There might also be some love headed for Power's former employer, Thiess, with Fortescue reportedly set to use contract mining for its Solomon deposit. According to The Australian, one prospective recipient of the $500 million-a-year contract could be Leighton Holdings' subsidiary Thiess.

Consolidated Minerals, OM Holdings, Tigers Realm, Aston Resources

In other mining news, Ukrainian mining magnate Gennadiy Bogolyubov's Consolidated Minerals has launched a fresh assault on manganese miner OM Holdings and is calling for the heads of OM's top management. ConsMin, which holds an 11.3 per cent stake in OM, has been trading blows with the miner for a while now and things got really heated when OM announced plans to list in Hong Kong. That plan was eventually scrapped but OM has obviously not done enough to placate ConsMin which yesterday, in a strongly-worded statement, called for a special general meeting to replace OM executives Low Ngee Tong and Tan Peng Chin with former Grant Samuel senior adviser Malcolm McComas and former NSW Liberal leader Peter Debnam. Meanwhile, Owen Hegarty-backed Tigers Realm has had a reality check with regards to just how the IPO game is right now, with the AFR reporting that the miner now stands to raise only up to $45 million from its listing – a far cry from the $200 million it had originally envisioned. Elsewhere, Nathan Tinkler's Aston Resources has secured $350 million in revolving credit facilities, with ANZ and Macquarie Bank co-underwriting a $175 million corporate loan facility and a $60 million bank guarantee facility.

Wrapping up

National Australia Bank may still be in with a good chance to pick up Lloyds' 630 or so branches with things just not going according to plan for the British banking giant. The expected list of suitors has now been whittled down to two, with Richard Branson's Virgin Money now reportedly more interested in Northern Rock. There is a chance that Lloyds may postpone the sale process and revise its expectations and conditions, all of which should suit NAB just fine. Meanwhile, Toll Holdings' outgoing chief Paul Little has made it clear that he is not going to take a back seat at the company. Little has told The Australian that he intends to take up a nine-month consultancy position at Toll, when he steps down at the end of the year, and is eyeing the chairman's seat. Toll is yet to announce Little's replacement, with a decision due in a couple of weeks. In other local news, the AFR reports that more than 80 per cent of the holders of Babcock & Brown Infrastructure's old convertible notes have voted against the sale of Prime Infrastructure's five energy assets (better known as AET&D) to Canada's ATCO Group. Finally, GrainCorp has entered into a binding agreement to buy GermanMalt GmbH & Co for an enterprise value of €58 million ($83 million). Graincorp said the acquisition would help it grow as an "end-to-end" grain supplier and processor. In overseas news, US online broker Etrade Financial is looking for a buyer after hiring Morgan Stanley to complete a strategic review, even despite JP Morgan carrying one out earlier this year. There is talk that rival online brokerage TD Ameritrade Holding might be preparing a bid for Etrade, which is valued at around $US4.4 billion. Any potential takeover action will have no impact on Australian Etrade operations, which are fully owned and operated by ANZ.