BREAKFAST DEALS: Murdoch tilt?

Rupert Murdoch looks to start 2012 with an acquisition, while shareholders needle Spotless to engage with PEP.

Within the eight decades that Australia’s most famous billionaire Rupert Murdoch has been around, 2011 was one of his worst years. But the octogenarian might be about to start off 2012 with one of the things he likes most – acquisitions. News Corp is reportedly looking to bid for some media assets from Turkey’s Calik Holdings for up to $US1 billion. It could amount to a little comfort for Murdoch who watched his bid for the rest of the UK’s BSkyB fall apart amid a headline-grabbing phone hacking scandal that also claimed one of his newspapers, the News of the World. Meanwhile, Spotless chairman Peter Smedley is likely to face an ultimatum from shareholders as soon as today over his refusal to engage fully with suitor Pacific Equity Partners. Elsewhere, QBE’s Frank O’Halloran is said to be making a play for HSBC’s non-life insurance assets, APA Group is mighty annoyed at target Hastings Diversified Utilities Fund for failing to get an independent expert’s report and the African Iron board has flung its arms open to suitor Exxaro.

News Corp, Calik Holdings

News Corp chairman and chief executive Rupert Murdoch looks like he could be starting 2012 with a bang. According to The Wall Street Journal, a News Corp publication, the media company is considering a tilt for the media assets of Turkish company Calik Holdings, ATV and Sabah. Sabah is a popular Turkish newspaper and ATV is a television station. Originally Calik had set a deadline of January 18 for interested bidders – which are said to include private equity players TPG Capital and Kohlberg Kravis & Roberts, as well as media giants Time Warner and RTL Group – but the WSJ says that’s been pushed back in part to let News Corp throw a hand in. The assets have been priced at up to $US1 billion combined.

Spotless Group, Pacific Equity Partners

Spotless Group chairman Peter Smedley is determined not to sell the cleaning and venue services provider for less than $743 million, but that devotion could be put to the test this week. Major shareholders Orbis Investment Management, Investors Mutual and Lazard have been needling Spotless to engage with suitor Pacific Equity Partners, but to no avail. In conjunction with a group of wealthy individual shareholders, these three are expected to write to the Spotless board indicating their intent to call an extraordinary general meeting to try to spill the board unless the board changes its tune, the Australian Financial Review reports.

Smedley has been trying to ease tension among investors who are chomping at the bit for a $698 million pitch, or $2.68 cash per share, from PEP, despite the chairman’s demand for $2.80. In a letter to shareholders on Friday, Smedley again spruiked the company’s turnaround strategy and path to big-time profitability in an effort to smooth things over, but it drew some criticism from shareholder and Spotless former chairman Brian Blythe. "It's unwise for a company to project three and four years forward on detail in such an uncertain environment,” Blythe said, according to The Australian. "I think there is a serious credibility gap.”

QBE

QBE chief executive Frank O’Halloran left investors in little doubt less than two weeks ago that he intends to continue pursuing acquisitions even though the insurance company has been struggling of late. They didn’t have to wait long 'til word was brought forth about what O’Halloran might have his eye on. According to Bloomberg, QBE is considering a bid for the non-life insurance operations of HSBC. Sources reportedly told the newswire that QBE is up against AXA AS, Europe’s second largest insurer, and Zurich’s Ace Ltd. Apparently, the UK’s Bupa Insurance is just having a look at the medical insurance arm.

APA Group, Hastings Diversified Utilities Fund

APA Group chief executive Mick McCormack is putting the heat on target Hastings Diversified Utilities Fund, which released its target statement on Friday without an independent expert’s report. APA is offering HDF shareholders 50 cents per share along with 0.326 APA shares, which values the target at about $1.8 billion. It should be pointed out that HDF is under no legal obligation to release an independent expert’s report, but that didn’t really wash with McCormack. "We can only assume no independent expert's report has been provided because HDF feared the report would confirm APA's offer was within the value range," Mr McCormack said.

African Iron, Exxaro

Things are a little more harmonious over at ASX-listed African Iron, where directors have recommended shareholders accept a $338 million takeover offer from South Africa’s Exxaro. The cash offer of 51 cents a share and 31 cents an option has won the board’s approval after the target’s largest shareholder Cape Lambert formally accepted the deal from Exxaro. Unless a better offer emerges, and that’s unlikely with a 19.9 per cent stake from Cape Lambert already in the bag, Exxaro looks like it’ll get its minimum acceptance level of 75 per cent without much trouble. The prize is African Iron’s 92 per cent stake in the Mayoko-Lekoumou project in the Republic of the Congo.

Telstra

All eyes are on Telstra Corporation this week to sign one of the most important National Broadband Network documents this week, the Wholesale Broadband Agreement. All the other major telcos have signed up to the NBN deal with Telstra’s main rival Optus putting pen to paper last week. The telcos were supposed to have until January 12 to sign up for the agreement otherwise they wouldn’t be allowed to stitch up customers to the NBN. However NBN Co pushed the deadline back a bit because of widespread unrest that now only appears to reside in Telstra.

Speaking of Australia’s telco giant, Telstra International will become the first customer to benefit from Huawei Technologies’ new underwater cable between Perth and Singapore. Telstra signed up to purchase one of the four "fibre pairs” in the cable, known quite simply as the Australia Singapore Submarine Cable (ASSC-1).

Wrap up

Many onlookers have been thinking for some time about what Woolworths could do with its underperforming consumer electronics business, Dick Smith. The speculation has been that the supermarket giant would try to sell it off, but CLSA suspects that Woolworths will hold on to Dick Smith but close a sizeable number of stores, The Australian reports.

And finally, the same newspaper also reports that APN News & Media has taken up a 25 per cent stake in online start-up Friendorse, a business recommendations website based on neighbourhoods. The newspaper says it's one of two investments that APN has made in conjunction with technology company Pollenizer.

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