BREAKFAST DEALS: Murdoch shock

Rupert Murdoch folds UK's News of the World for good as the media mogul moves to keep the phone hacking scandal from derailing his BSkyB bid. The move may be dramatic but is entirely predictable given the reputational damage for News Corporation, but at worst the scandal will delay the process not kill it. Meanwhile, Murchison Metals' new boss stirs takeover talk, Canada's ATCO picks up West Australia's largest natural gas distributor in a $1 billion dollar deal and Lynas forgets about its Malaysian woes with a joint venture deal with German giant Siemens. Elsewhere, ResMed makes an Irish acquisition, it's full steam ahead for Owen Hegarty's Tiger Realm IPO and Austar hoses down talk that a definitive agreement with Foxtel is done and dusted.

News Corporation, News of the World, BSkyB

Rupert Murdoch's embattled UK tabloid News of the World is set to shut up shop this Sunday after the media mogul's uncharacteristically formal and caustic condemnation of the phone hacking scandal led to the subsequent closure of UK's best selling paper. Given the chorus of disdain heaped upon News Corporation, from the public and politicians, since the phone hacking scandal was revealed, the decision to kill the tabloid cash cow may be dramatic but entirely predictable, given what's at stake on the M&A front. After an arduous regulatory process, Murdoch isn't going to let anything jeopardise the multi-billion pound acquisition of the remaining 61 per cent stake in UK cable TV operator BSkyB. The closure of the tabloid is Murdoch's response to mitigate the reputational damage that at this time looks set to delay the UK government's approval of the acquisition for months, possibly until September. News Corp had the formal approval pretty much sealed before the latest hacking scandal came into the picture and, while the UK government has said that the two issues are not linked, the scandal is just the fodder that Murdoch's critics needed to revive the concerns of giving too much power to News Corp. Apart from the odious charges of hacking into the voicemail of thousands of people, from child murder victims to the families of Britain's war dead, the allegations that the tabloid paid kickbacks to police to go easy on the initial inquiry into phone hacking are threatening to become a political flash point for the David Cameron-led government. So a delay is inevitable but not life threatening for Murdoch, given that any attempt to block the deal in its entirety could spark a legal challenge from News Corp – a challenge that analysts say the media company will most likely win. And it's not just politicians in the UK who are up in arms about the scandal, which is reportedly threatening to further erode the prospects of Murdoch's Sky News operating the nation's $223 million overseas television service. According to Fairfax papers, Greens leader Bob Brown called on the Gillard government to investigate the ''ramifications'' the scandal in the UK may have for Australia.

Murchison Metals, Sinosteel

Murchison Metals' share price may have regained some ground in the last two sessions but the bottom-line is that the miner is in trouble when it comes to funding its share of the $10 billion Oakajee Port and Rail project. And, as the miner's newly-appointed boss Greg Martin has told Business Spectator, selling the miner's assets is not going to fix its funding woes and a full-blooded corporate transaction may be the only way out. Just how things play out will obviously depend on the strategic review underway, but Martin admits that given the size of the funding gap and Murchison's current market cap of $270 million or so, "simply selling parts of the business wouldn't solve the maths that need to be worked through here." As mentioned earlier this week in this column Sinosteel has already had a go at Murchison before and it may well revisit the option.

ATCO, Western Australia Gas Networks, DUET Group

Moving to the local energy sector, Canadian utilities company ATCO has finally signed a conditional agreement to acquire Western Australia Gas Networks, the state's main natural gas distributor, from the WestNet Infrastructure Group in a $1 billion deal. ATCO is paying $356 million to buy a 74.1 per cent stake in WAGN from WestNet and the remaining 25.9 per cent from DUET Group. It will also assume about $644 million in debts, provided the transaction gets the tick from the Foreign Investment Review Board. ATCO, which currently operates three power plants in the country, said it expected the sale to be completed in the third quarter of this year. WAGN serves about 620,000 customers in the state and the Canadian utility said it's a good fit to its existing Australian operations. The sale closes the book on the infrastructure that was held in Babcock & Brown satellite Prime Infrastructure Group after almost a year-long process.

Lynas Corporation, Siemens

Lynas Corporation is back in the news and it's not about the processing plant in Malaysia for a change. Instead, the rare earths miner has teamed up with German technology giant Siemens in a joint venture that will specialise in production of high-powered rare earth magnets used in energy-efficient engines and wind turbines. Siemens, which will own 55 per cent of the JV, is obviously looking to secure a long-term supply of rare earth elements not coming from China, and for Lynas it gives it the ability to deal directly with its end customers. Lynas added that despite the situation in Malaysia, Siemens was quite comfortable with the miner's environmental credentials.

Tiger Realms Coal, Cape Lambert Resources, OM Holdings, Jupiter Mining

Moving to the junior mining sector, it's full steam ahead for Owen Hegarty's Tiger Realms Coal, which is still on track to raise up to $200 million to develop its coking coal projects. According to the AFR, management presentations to potential Australian and overseas investors are in full swing and there have already been some bites from funds keen on taking cornerstone stakes. About a quarter of the company will remain in the hands of investors in Tigers Realm Minerals, an unlisted group backed by Hegarty. Speaking of listings, Tony Sage's Cape Lambert Resources is mulling the possibility of listing its Marampa iron ore asset in Sierra Leone on the London Stock Exchange, in an IPO potentially worth about $500 million. The bullish IPO estimate comes as Cape Lambert confirmed a 680 million tonne resource at Marampa, much higher than the 500 Mt minimum required by the company for a float. However, Sage has not ruled out the possibility of a trade sale. Elsewhere, manganese miner OM Holdings, which this week scrapped its plans for a second listing in Hong Kong, may be in talks with former BHP Billiton boss Brian Gillbertson's Jupiter Mines about a possible merger. The two were in talks last year before Gillbertson walked away but the AFR reports that OM's move to split its mining and smelting business may make the merger a palatable option again.

ASX ripe for higher number of Asian-backed IPOs

With companies streaming to the Hong Kong Stock Exchange for heavyweight IPOs, it would seem there is still hope that the ASX could prove to be a happy home for Asian-backed floats. No surprises that the greater Asian and Chinese investment is going to come via the resources sector and Norman Waterhouse Lawyers partner, Greg English, reckons that the lower barriers to entry, greater liquidity and ease of access makes the ASX the perfect place for listings. Speaking at the annual Australian Resources Chinese Investment Congress in Adelaide, English said that despite some listing hurdles, the ASX's deep liquidity pool and multiple sources of capital in the local market may prove attractive to Chinese resource investors. However, there's a catch, as China-backed listings will have to get their act together when it comes to disclosure and prospectus obligation. English added that listing costs – typically $250,000 to $500,000 for a $4 million to $10 million float – will also be an issue.

Wrapping up

Regional pay TV operator Austar has hosed down talk that the definitive agreement with suitor Foxtel has been reached. There was talk that the parties have reached a formal agreement on the structure of the deal, however Austar has told the market that its discussions with major shareholder Liberty Global and Foxtel were still continuing. Meanwhile, Rio Tinto has named former Barclays chief executive John Varley as a non-executive director at the company. Elsewhere, APN Funds Management is set to replace ING Management Limited as the responsible entity for ING Real Estate Healthcare Fund, after IML entered an implementation agreement with APNFM's parent APN Property Group. Under the terms of the agreement, APN will buy 67.5 per cent of IML, with the purchase conditional on IHF unit holders' approval.