Breakfast Deals: Killen Trust

Equity Trustees kicks up a stink over Trust Co’s cold shoulder, while various parties could be keen on Commonwealth Bank’s property assets.

It appears that Equity Trustees is getting a little testy due to being – excuse the pun – perpetually ignored in the race for The Trust Company. Meanwhile, Commonwealth Bank of Australia has indeed pulled a trigger on a push to get out of property management, AGL Energy has reminded Australian Power and Gas shareholders that it has a good hand and GrainCorp’s takeover is looming ever larger as a potential election issue.

The Trust Company, Equity Trustees

Equity Trustees chairman Tony Killen has put the blowtorch to takeover target The Trust Company for continuously favouring a rival proposal from financial giant Perpetual.

In a letter to TTC chairman Bruce Corlett, Killen said that EQT is happy to engage with TTC and independent advisers Ernst & Young further over the cost synergy benefits that EQT believes will be generated by a union between the two.

But, as preparations are made for these discussions, TTC is continuing to recommend that shareholders go with the Perpetual offer. That doesn’t wash well with Killen.

“Before embarking on the next round of discussions with Trust Company, Equity Trustees requires comfort that your board considers there is a reasonable prospect of Equity Trustees acquiring Trust Company, including that the board of trust company would consider recommending our improved offer to your shareholders,” writes Killen.

“Noting that you are continuing to recommend an alternative bid at this time, and with a break fee to Perpetual, without this assurance being received, and understanding on what basis you are making the recommendation, there is a significant risk that your proposed process will be an unnecessary and fruitless exercise for all concerned.”

This column loves it when letters between the chairs are released because the corporate-speak is dialled back just a little. The word ‘fruitless’ for example is positively poetic against most company releases.

The tone of the letter also gives the impression that EQT sees this as a bit of a losing battle. Why would we bother jumping through any more hoops if they won’t listen?

Another improvement to the offer can be ruled out, that’s for sure.

EQT is also demanding that TTC wind back its due diligence request and grant it the same access to its books at Perpetual.

Commonwealth Bank of Australia

It’s confirmed. Commonwealth Bank of Australia is distancing itself from the property management business, apparently in an effort to get itself ship-shape for Basel III.

Business Spectator’s Stephen Bartholomeusz asked the rather pertinent question of why it’s selling the rights to manage its trusts. For the record they are: Commonwealth Property Office Fund, CFS Retail Property Trust Group and Kiwi Income Property Fund.

Once again, the Business Spectator associate editor kind of closed the book on this one so we won’t double up here. Go and read his stuff.

What we can add here is a list of the players that could have a go at Commonwealth’s assets. The usual suspects would be, in no particular order: Dexus Group, GPT Group, Investa, Lend Lease, Charter Hall and Mirvac Group.

AGL Energy, Australian Power and Gas

AGL Energy released its bidder’s statement for Australian Power and Gas with relatively little fanfare because, well, it was all pretty straightforward.

In a letter to the target’s shareholders, AGL chairman Jerry Maycock simply outlined that the 52 cents a share offer is a 33.3 per cent premium to the previous closing price, the target’s directors are recommending it subject to an independent assessment and in the absence of a better offer and it already has a 19.9 per cent stake thanks to sales from Nippon Gas, Cobra Group and Poole Interests.

Or to put it another way: We’ve got this, guys and gals. It is on like Donkey Kong!

Australian Power and Gas shares have been trading almost dead-set flat at 50.5 cents a share since the $100 million offer was announced, which points to expectations that this deal will probably go through, but a higher offer is definitely not anticipated.

GrainCorp, Archer Daniels Midland

It’s been said a few times in this column that the closer and tighter the election gets, the more noise we’re going to hear about the $3 billion offer for GrainCorp from American grain giant Archer Daniels Midland. Well, here we go.

According to The Australian Financial Review, Nationals Deputy Senate Leader Fiona Nash plans to make the GrainCorp offer a big election issue if the regulatory approvals process is not already completed before election day.

Given that the speculation is that an election could be called within a week, that’s a big deal.

“If it becomes clear that the decision will not be made before an election I would certainly be taking [the issue] to both of them,” Senator Nash said.

“If a decision is not made by the current government there will certainly be strong lobbying from both sides [during the election].”

Wrapping up

Brisbane’s Alliance Aviation Services has inked contract extension with major customers Incitec Pivot and MMG.

The fly-in, fly-out specialist’s Incitec deal covers the company’s Phosphate Hill site in North Queensland, while the MMG agreement is for the Century Mine, in the same state’s north west.

Staying with resources, Atlas Iron managing director Ken Brinsden is keen to keep a rail deal with Fortescue Metals Group in the forefront of investors’ minds.

Brisden told investors during yesterday’s quarterly production numbers presentation that a minority stake sale in Fortescue’s infrastructure assets would prevent a third-party access deal. Or at least that was his understanding.

And finally, Norton Gold Fields has announced that it has received approval from the Foreign Investment Review Board to acquire Kalgoorlie Mining Company.

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