BREAKFAST DEALS: NAB painkiller

Yet another report has emerged from the UK about a potential bid for National Australia Bank's troubled UK business. It's Spain's Santander that apparently wants Clydesdale and Yorkshire, after missing out on the Royal Bank of Scotland branches. Macmahon Holdings will put its Leighton deal to its shareholder as Sembawang Australia continues to agitate. Meanwhile, we're still unpacking the Rio Tinto news, the Future Fund is apparently agitating some minority airport shareholders and Nine Entertainment's lenders will vote on the recapitalisation deal today.

National Australia Bank, Santander, Clydesdale Bank, Yorkshire Bank

Spanish bank Santander is reportedly thinking about making a £2 billion ($3.2 billion) for National Australia Bank's UK business, which would offer Cameron Clyne an exit from what has been his largest headache as NAB boss.

The Sunday Times, published by the same company as this website, reports that Santander executives from London and Madrid have been discussing the deal since losing out on 316 branches from Royal Bank of Scotland. The Spanish bank has been pretty unambiguous about its intentions for the UK and has previously been touted as a potential solution to Clyne's problem.

But it remains only potential. The Sunday Times story comes from unnamed sources and no one anywhere is confirming anything.

More to the point, the real question is whether Clyne would realise billions of dollars in losses on the UK business via a Santander deal, made up of Clydesdale Bank of Yorkshire Bank, having previous said that he wouldn't engage in a fire sale.

After previous attempts to sell the business under the veil of a ‘strategic review' came to nothing, NAB sacked 1,400 people across the two banks and shrunk the overall business to get costs down.

NAB has been dogged by the sluggish recovery of the British economy, specifically the property market. Clydesdale and Yorkshire both primarily operate in Northern England and Scotland.

A new report from Deutsche Bank pointing to ongoing weakness in the UK commercial property market, with another anticipated increase in bad loans, is unwelcome news for NAB to say the least.

Macmahon Holdings, Leighton Holdings

Mining services company Macmahon Holdings will entrust its shareholders with the decision of whether to pass off some construction business to major shareholder Leighton Holdings.

Independent expert Ernst & Young has told shareholders that the $25 million deal isn't fair, but it is reasonable. The Macmahon board is unanimous in its support for the deal.

The vote, set for February 26, is further complicated by the up to $38 million rival offer from Sembawang Australia, a subsidiary of Punj Lloyd. Leighton, which owns 24 per cent of Macmahon, has exclusivity. In a sense, the shareholder vote is a referendum on the decision to hand that privilege to Leighton.

E&Y concludes that the assets being sold are actually worth something between $31.3 million and $35 million, although once you take into account the fact that Macmahon is getting cash for the deal, the discount is about half what you'd expect from the headline valuation.

Chairman Ken Scott-Mackenzie urged shareholders not to be "distracted” by the Sembawang proposal and the independent directors have also rejected the idea.

Sembawang has threatened legal action against Macmahon for being shut out, with their case resting on some apparent interactions with Macmahon in November, before a exclusivity memorandum of understanding was signed with Leighton.

The Indian-owned company didn't do themselves any favours with the shareholder base, or the board, by trying to strongarm Macmahon with a rival proposal in January that was conditioned on due diligence and approval from the Macmahon board within a single day.

Rio Tinto

Analysts and journalists are still unpacking the ramifications of Rio Tinto's decision to move Tom Albanese on so iron ore boss Sam Walsh can take the chief executive's chair.

From a deals perspective, most of the attention is centring on what the miner will do with its troubled Pacific Aluminium division, given that the aluminium writedown was such a large reason for Albanese's departure.

The Australian Financial Review believes that an in specie distribution is the preferred option for the miner, with a trade sale looking unlikely.

The other field of speculation centres on Australian mining billionaire Gina Rinehart, thanks largely to her statement expressing her hopes that Hancock Prospecting will develop more of the Hope Downs iron ore project with Rio.

"By far Rio Tinto's best investment in the last decade has been in Hope Downs, which Sam Walsh was intimately involved in. We look forward to Sam providing the leadership and adding to the great success Hope Downs has been for the Rio Tinto group by committing to develop other Hope Downs resources in a timely manner,” Rinehart said in the statement.

So far, two of the six Hope Downs iron ore deposits have been mined.

Future Fund, Australian Infrastructure Fund

The Future Fund is reportedly engaged in a battle with some of the country's largest superannuation funds over the sales process for assets owned by Australian Infrastructure Fund.

The Fund has is gunning for AIX's stakes in the airports of Perth, Melbourne, Launceston, minor airports in Queensland and the Northern Territory and Statewide Roads, along with a 40 per cent stake in Hochtief Airport Capital, which owns stakes on a number of European runways as well as a small share of Sydney airport. AIX gets $2 billion in return.

The Australian Financial Review has learnt that the Fund has valued some of the assets well above book value.

The problem is that there are players with stakes in those assets that have pre-emptive rights over the AIX stakes. The higher the valuation, the less capable those stakeholders are at matching the Fund's offer.

Meanwhile, some of Australia's largest superannuation funds are also behind Industry Funds Management, which has just picked up a 35.5 per cent stake in Manchester Airports Group, one of the United Kingdom's largest airport operators.

Nine Entertainment, Telstra Corporation

Nine Entertainment lenders are set to meet in Sydney today to officially close the book on the media company's near-death experience last year.

Creditors are expected to vote in favour of the $3.4 billion recapitalisation, which will deliver an enormous amount of power to US hedge funds Apollo Global Management and Oaktree Capital.

The plan is to relist Nine on the ASX within the next 18 months, pending an assessment of equity market conditions of course.

Telstra Corporation was once reported to be looking into a tilt at Nine in order to secure all important content, something that was never officially confirmed.

According to The Australian Financial Review, Telstra is pushing to be part of the winning consortium for cricket broadcasting rights, which would probably pair the telco with Nine.

The newspaper reports that Credit Suisse is advising Cricket Australia on the broadcasting deal, where it's hoped the governing body will generate more than the $315 million, seven-year deal in 2007.

It's likely that Nine, the home of cricket for so long, will end up with the broadcasting rights despite the reported interest of rivals Seven Network and Ten Network. The former-Packer network has last rights over the deal, which means it simply has to match whatever the competitors lodge to win the bid.

Wrapping up

Tony Sage's Cape Lambert looks to be thinking about offloading its royalty on future iron ore production from a project in the Republic of Congo, generating up to $135 million.

"Deutsche Bank is looking at assisting us on the sale,” said Sage, Cape Lambert's executive chairman, to Deal Journal Australia, which is published by the same company as this website.

"We haven't signed any formal agreement with them yet, but I believe that will be signed in the next few days.”

Meanwhile, Maple-Brown Abbott has sold more of its stake down in Goodman Fielder. The company's stake, once worth around 12 per cent, is now down to 5.8 per cent.

And finally, printer PMP has jettisoned its analytics business Pacific Micromarketing to market research company Experian for $US6.5 million ($6.2 million).