BREAKFAST DEALS: NAB cornered?

Analysts suggest NAB may struggle to exit the UK market, while GrainCorp comes under the radar of a Canadian giant.

Shareholders in National Australia Bank hoping for a full-blooded retreat in the UK argue that the cost – the loss on the business, would be less than the benefit – avoiding another capital injection. But analysts are increasingly taking the stance that NAB is more likely to slim down the operations and slant it towards the more profitable retail arm. Meanwhile, GrainCorp is back in M&A estimations after investors factored in the speculation about Canada’s Viterra. Elsewhere, CVC Asia Pacific has lost a key executive, Genworth Financial thought about flying to Canada before floating in Australia and it turns out that Gunns shareholders had a bit to do making Richard Chandler go away.

National Australia Bank, Clydesdale Bank, Yorkshire Bank

Instead of asking whether National Australia Bank will completely exit the UK market, it’s more a matter of whether it can. Goldman Sachs analysts have had a look at NAB ahead of its results in May and concluded that selling Clydesdale Bank and Yorkshire Bank would be problematic, given that the market doesn’t rate them particularly highly at the moment, thanks to the depressed nature of the UK banking sector.

It’s not the whole business, however, that the analysts are unhappy with. Goldman Sachs’ Ben Koo suggests that NAB could simply downscale its business lending unit, which isn’t making money, as well as reducing its footprint in central and southern England.

GrainCorp, Glencore International, Viterra

Australia’s GrainCorp has been thrust back into the spotlight as a takeover target thanks to the overtures at Canada’s Viterra. By the looks of it, Glencore International is willing to put up $5.2 billion in order to nab Viterra – while it’s in the middle of an $US80 billion merger with Xstrata, no less – which has got investors thinking about consolidation in the Australian market.

GrainCorp shares jumped 8.6 per cent yesterday on speculation that it could go the way of ABB Grain (now with Viterra) or AWB (acquired by Agrium). GrainCorp is the next in line and given new reports that Cargill could also be interested in Viterra, it just goes to show how much of a craving the market has for grains.

CVC Asia Pacific, Nine Entertainment

If CVC Asia Pacific is to save Nine Entertainment from falling into the hands of US hedge funds, they’ll have to do it without David McWilliam. The CVC director is reportedly leaving the business to take up the managing director's role at Investec. McWilliam has helped work on the Nine transaction and it’s an awkward time for the private equiteers to be losing key personnel.

CVC has already flagged the ACP Magazines and Ticketek arms as potential sale items in order to put a dent in Nine’s $2.7 billion debt burden. Nine also has just under $1 billion in mezzanine debt with Goldman Sachs and one of the bank’s private equity experts is said to be heading to Australia to work on, amongst some other things, the Nine situation.

Genworth Financial

Genworth Financial is the first scheduled headliner IPO for 2012 and investors are understandably interested to see how the float gets away. However, The Australian Financial Review understands that it might never have happened if the company’s US parent company had gotten its way. The newspaper brings word that, rather than floating 40 per cent of the Australian arm, Genworth first leaned on its Canadian-listed vehicle Genworth MI Canada to purchase the business early last year. Talks ended when it became apparent that an agreement on price wasn’t going to be reached and now Goldman Sachs, Macquarie Capital, UBS and CBA are picking up advisory fees on the float.

News Corp

A unit of Rupert Murdoch’s News Corp called Asian Cable Systems Private has offloaded its 17 per cent stake in an Indian cable TV services provider Hathway Cable and Datacom Ltd for $72 million. Documents filed to the Indian stock exchange indicate that the 24.7 million share sale has been picked up by Providence Equity Advisors and Macquarie, valuing Hathway at $508 million in the process.

Meanwhile, we’re still waiting to see how News Corp goes in the pursuit of the media assets of Turkey’s Calik Holdings, the ATV television station and Sabah newspaper. Last week, Reuters reported that a decision on the sale had been delayed until March 21. News is said to be competing with Time Warner and Dubai’s Abraaj Capital.

Cockatoo Coal, SK Networks

Cockatoo Coal should be able to spend less time worrying about the balance sheet after striking a share placement deal with South Korea’s SK Networks. Under the proposal, the once short-funded Cockatoo will place $313 million in shares to SK Networks at 53.5 cents a pop, which is an eye-catching 47 per cent premium to the last closing price. In return, SK Networks’ stake will increase to 40 per cent from 5.5 per cent, with the Koreans promising not to go past 40 per cent unless in special circumstances. Cockatoo can now get on with the business of developing tenements and expanding the Wiggins Island Coal Terminal.

Gunns

Big shareholders in Gunns Limited reportedly played a big role in scuttling the proposed investment from New Zealand billionaire Richard Chandler on the basis that they’d be seriously diluted. The Australian Financial Review reports that many shareholders had misgivings about Richard Chandler Corporation picking up a 40 per cent stake for $150 million as part of a $280 million capital raising. Gunns itself, specifically chief executive Greg L’Estrange, said it wasn’t investor discontent, but environmentalists that brought the deal down. Either one explanation is true, or Gunns has a lot of seriously wealthy Simon & Garfunkel fans on its register.

Wrapping up

Ramsay Health Care probably won’t seriously seek out mergers and acquisitions in France, but it really should. That’s the conclusion of analysts at Merrill Lynch, according to The Australian. Still in international matters, ANZ Bank is expanding its footprint in China by more than a factor of one. It’s more than doubling the number of branches in China, a necessary step given the longer than expected time it’s taken for a once-in-a-lifetime acquisition to come along from Europe’s embattled banking sector.

In the coal sector, Bandanna Energy and Acacia Coal have struck a joint venture deal that will see the former build a train loading facility in return for the latter’s approval of a mining licence application. In mining services, Ausdrill might be having a look at the privately held GBF Mining and Industrial Services, according to The Australian Financial Review.

And finally, speculation is re-emerging about Treasury Wine Estates and the prospect of a Chinese takeover. While the idea has always been close to the surface, it’s been reported that Treasury Wine executives made an appearance at the Reignwood Group, a wine company based in Beijing.

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