Breakfast Deals: Kangaroo hunt

Virgin Australia's Tigerair Australia deal turns up the heat on Qantas, while Atlas says it's on track in the search for a Pilbara infrastructure partner.

As the local aviation war heats up again, Virgin Australia's latest deal pits a Tiger against Qantas Airways' flying kangaroo. Elsewhere, Atlas Iron is looking for a transport deal after partnering on a new mine with Altura Mining, while Service Stream looks for a way out of its NBN joint-venture with Lend Lease. And is Archer Daniels Midland finally winning over wheat farmers?

Qantas Airways, Tigerair Australia, Virgin Australia

Qantas' discount arm, Jetstar, will be bracing for greater competition at the lower end of the travel market, as Virgin Australia completes its partial acquisition of Tigerair Australia.

Virgin has taken a 60 per cent share of Tigerair, formerly Tiger Airways Australia, installing John Borghetti as chairman of the budget carrier. 

The new six-member board will also include Virgin chief financial officer Sankar Narayan, Richard Branson's former right-hand man, David Baxby, the chair of the Singapore-based Tigerair, Joseph Yuvaraj Pillay, Tigerair chief executive Koay Peng Yen and independent director Maurice Newman, who previously headed the Australian Broadcasting Corporation.

The shake-up comes a week after Tigerair's rebranding, designed to remake an airline that had been dogged by poor service and safety concerns. The next step will likely involve increasing capacity by boosting the carrier's fleet.

Qantas Airways may also be gearing up to make some top-level changes in an effort to become more competitive.

Fairfax reports the airline has hired a team of consultants to scrutinise its senior executive team, in an overview expected to address management structures and any potential overlaps in the wake of the split of the airline's domestic and international operations.

Sources tell Fairfax the review is not about succession planning, despite Qantas chief executive Alan Joyce being set to notch up five years as boss in November.

Altura Mining, Atlas Iron, Breakaway Resources, Minotaur Resources

Atlas Iron will be stepping up its search for a rail-and-port infrastructure partner in the Pilbara, as the junior iron ore player partners with Altura Mining to develop a $146 million Mt Webber mine in the region.

The Mt Webber agreement, which awards Altura a 30 per cent stake in the project, will help Atlas reach its 12 million metric tonnes annual production target by the middle of next year.

But the fast-growing miner will need access to a rail line if it is to expand beyond 15 million tonnes a year.

Atlas chairman David Flannigan appears confident the company will strike a deal with one of the big transport players in Western Australia, including Fortescue Metals Group, Aurizon and Gina Rinehart's Hancock Prospecting.

“I don’t think Atlas’s position on infrastructure has ever been stronger than what it is right now,” Flanagan tells The Australian Financial Review. “We are in discussions with the parties that are up there [the Pilbara]; the dialogue is being maintained.”

At the smaller end of town, Minotaur Resources is also poised to strike a deal with fellow minnow Breakaway Resources, according to The Australian.

Breakaway's shares were halted yesterday pending the announcement of a "significant corporate transaction involving a change of control".  The newspaper understands that Minotaur is the party in talks with Breakaway, with the pair set to announce an agreed deal in the coming days.

Breakaway, which had less than $800,000 in cash at the end of March, is said to be pursuing the tie-up with the cashed-up Minotaur to avoid a highly dilutive equity raising. 

Lend Lease, Service Stream

Telco construction firm Service Stream is apparently searching for a way out of its troubled joint venture Syntheo, after revealing the NBN-building partnership will incur a "material loss" this year.

The news comes as Service Stream again extends its voluntary suspension from the ASX, which began early in June when the company flagged a possible profit downgrade due to troubles with its fixed-communications division - including Syntheo.

The Australian understands Service Stream has been using its suspension from the ASX to cut costs and negotiate an exit from joint venture. Half-owner Lend Lease is eventually expected to take full control.

The partnership has faced questions since March, when NBN Co took back a Northern Territory contract worth up to $341 million after blaming the contractor for a downgrade in premises passed.

Archer Daniels Midland, GrainCorp

Archer Daniels Midland's proposed takeover  of GrainCorp finally appears to be winning key support in the wheat industry.

As grower lobby group NSW Farmers, National MPs and some Liberal MPs rally against the deal over concerns it would transfer a substantial amount of market power to the US suitor, one of the nation’s biggest wheat farmers has called for growers to get behind the portal.

Rob Greentree, who farms 90,000 hectares of grain near Moree in the key NSW wheat growing region, argues in The Australian Financial Review that farmers should embrace the chance to access more markets. 

The former GrainCorp chairman also says ADM would be more likely to continue investing in the business during drought years because it could offset weaker Australian earnings from its substantial global operations.

“It is my belief that the opportunity this presents for Australian growers to become more competitive and to achieve sustainable growth by tapping into ADM’s global network of resources, markets and buyers should be embraced,” he writes.

GrainCorp and ADM still needs to gain support from the Foreign Investment Review Board, which will make a recommendation to the government.

Wrapping up

Elsewhere, New South Wales has tapped Morgan Stanley to examine whether it makes commercial sense to sell the Port of Newcastle, valued at up to $700 million, according to The Australian.

The bank has also been tasked with finding a buyer for the coal-export terminal - the world's largest - if a sale emerges as the best option.

And finally, the board of RHG' - formerly RAMS Home Loans - has backed a full takeover bid from a syndicate including Resimac and Australian Mortgage Acquisition Company.

The cash buyout, priced at 44.1 cents a share plus a fully-franked 3-cent dividend, represents a 17.8 per cent premium to RHG's closing price on July 5. It's also 13.5 per cent higher than the syndicates May 22 offer of 41.5 cents a share, including a 3.5-cent franked dividend.

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