BREAKFAST DEALS: Murdoch moves

News Corp allegedly lobs a bid for Turkish media company Calik, while Woolworths could shed some weight.

Rupert Murdoch must have spotted something very special in the media assets of Turkey’s Calik Holdings, because Europe isn’t exactly known for its rosy outlooks at the moment. Still, crisis creates opportunity and News Corp has reportedly put in a bid for ATV-Sabah of around $1 billion, with signs that its major media rival isn’t as keen on the assets. Private equity appears to be the biggest competitor. Elsewhere, investors will have their eye on Woolworths' results to see just how badly Dick Smith is deteriorating, as well as Cape Lambert for an expected share sale. Meanwhile, Slater & Gordon has won a British takeover, Gunns has secured a reprieve from its bankers, and media mouths remain shut about billionaire Kerry Stokes’ apparently lightning-fast purchase and sale of Ten Network shares.

News Corp, Calik Holding

It looks like News Corp’s Rupert Murdoch has not been wasting the time of Calik Holding executives. Earlier this month it was reported that the Turkish company had pushed back the January 18 deadline for interested parties to register their interest in its ATV-Sabah media unit so that News Corp, which had shown some late interest, could assemble a bid.

Patience has paid off. Sources have indicated to Reuters that News Corp has put in a bid in the vicinity of $1 billion, along with TPG Capital and Time Warner. Private equity player Kohlberg Kravis Roberts was originally named as interested, but has since dropped out of the race, with no word from media giant RTL Group.

Sources have also told Reuters that Time Warner’s interest in the assets – Sabah is a popular Turkish newspaper and ATV is a television station – is waning, which means Murdoch’s main rival in this tussle is TPG.

Woolworths, Dick Smith

Many investors will be running over the Woolworths numbers closely as a guide to what the rest of the retail sector did over Christmas. However, there will be another select group that reach straight for the numbers from its embattled electronics retailer Dick Smith. Woolworths announced a review of the business in November, with faint hopes that a buyer could be found for some of the unwanted stores. Nothing seems to be emerging from that front, so the wide expectation is that Woolies will shut down up to half its Dick Smith stores across the country. If you need a cheap laptop, Christmas sales could be returning soon.

Cape Lambert

Cape Lambert chairman Tony Sage has started off the first month of 2012 with a bang. Cape Lambert went into a trading halt yesterday pending an announcement of a "significant” sale of shares. According to media reports, the iron ore miner will declare a secondary sale of 65 million shares, or almost 10 per cent of its shareholding, to five investors from the UK. Cape Lambert is of course in the middle of developing the Marampa iron ore project in Sierra Leone, with an expected $1.5 billion in development costs over two stages.

Gunns Limited

Trouble-prone timber company Gunns Limited has been given a reprieve by its syndicate of banks. Gunns has had its $340 million in senior debt and $200 million in working capital facility extended until the end of this year. They were supposed to mature today. ANZ Bank and nine of its other lenders have extended the olive branch as Gunns struggles with tough industry conditions and a drawn out process to get the Tasmanian Bell Bay pulp mill up and running. One of the company’s lenders will have a board meeting in mid-February to approve the extension.

Slater & Gordon, Russell Jones & Walker

Australian law firm Slater & Gordon has announced the takeover of British firm Russell Jones & Walker after 12 months of planning and talks. It’s a cash-and-scrip deal worth £53.8 million ($80 million) in total that will merge two largely personal injury and compensation firms, with S&G supplementing with corporate and commercial arms and RJ&W bringing along law practice and family law.

The cash component is £36.4 million, of which £8.8 million will be deferred for up to two years subject to performance benchmarks and £10.3 million will be used to pay down RJ&W debt. The other £17.4 million will be covered by S&G stock, though this will come with some restrictions again.

S&G is tapping into its debt facility which has been increased to $160 million to make room for this transaction and more expansion efforts. This is a more typical Australian law firm merger, as local firms have tended to focus on partners in the UK and US. Mallesons Stephen & Jacques of course broke this trend in spectacular fashion late last year through its merger with Hong Kong firm King & Wood.

iiNet, Internode, Optus, NBN Co

The third force in the ISP market hasn’t emerged quite yet, but technical work has already begun for the merger of iiNet and Internode. The two providers agreed on the $105 million takeover just before Christmas and, according to The Australian, iiNet chief executive Michael Malone says the IT, development and engineering teams of the two firms have already met up to discuss what needs to be done to create the most compelling competitor to Telstra and Optus in the NBN world.

Speaking of which, NBN Co has been forced to wind back the controversial provision in its agreement with Optus preventing the Singapore-owned company from criticising the project for 15 years. As part of the $800 million deal, Optus was not allowed to attack the NBN when marketing its own in-house wireless data services in areas where customers could be migrating to fibre. But this provision has been axed.


We may have finally discovered the identity of the mystery bidder for PaperlinX that divided the company’s stakeholders firmly into shareholders and hybrid holders. The Australian Financial Review understands that it was Platinum Equity that PaperlinX chief executive Tony Marchant was talking about just before Christmas that has put up an incomplete, conditional proposal for the paper company. However, hybrid holders are digging in for a better deal and the chances of this proposal going through remains uncertain.

Wrap up

Seven Network and Ten Network are remaining curiously quiet about the purported sale of just 2 per cent of the latter’s register by Australia’s last true media billionaires. Both networks are keeping quiet about a report claiming that Kerry Stokes, just two months after picking up his stake in Ten – which includes James Packer, Lachlan Murdoch, Gina Rinehart and Bruce Gordon on the register – has sold them. Was this for a bit of a laugh?

Singapore Airlines’ low-cost offshoot Tiger Airlines could be about to inject another carrier into Australia’s northern airspace. Tiger has picked up a 33 per cent stake in Mandala Airlines, which kissed goodbye its operating licence due to financial issues. However, its new proposed coverage area does start to encroach on Australia’s north from its base in Indonesia.

On more grounded modes of transport, Cabcharge boss Reg Kermode has curiously offloaded almost half his stake in the company less than a month before the company’s half-year profit result. Keep your eye on those numbers.

In mining news, engineering company Monadelphous Group has picked up contracts with Rio Tinto and Chevron for more than $180 million. Leighton Holdings has also won a bit of work through its joint venture with Belgium company Besix, picking up a $260 million development deal, again with Chevron, at the Wheatstone gas export project in Western Australia.

And finally, still in WA, iron ore play Rico Resources is raising $5.5 million to keep the development of its Monmunna project ticking over as it considers whether to take a partner.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles