BREAKFAST DEALS: New Hope race

The race for one of the last independent coal operators in the country is now officially open, with New Hope Corporation now on the block, and a successful bid may well have to be around the $6 billion mark. For now, the list of contenders contains all the usual suspects, with Xstrata, Yanzhou Coal and New Hope shareholder Mitsubishi seen as frontrunners. The other interesting thing about the deal is that a successful sale of New Hope could well provide the trigger for the miner's major shareholder, Washington H Soul Pattinson, to finally unwind its 40-year old cross-shareholding structure with Brickworks. Meanwhile, Coca Cola Amatil may be out of the beer game for the next two years but its boss, Terry Davis, evidently has big plans for when the company returns. In other news, Perpetual and Macquarie seal a major platform outsourcing deal, Charter Hall rebuffs a Macquarie-led consortium's $1.7 billion pitch for the second time and Centro's restructure moves a step closer. Elsewhere, former Treasury head honcho Ken Henry joins National Australia Bank and Microsoft may be in the mood to have another go at Yahoo.

New Hope Corporation, Xstrata, Yanzhou Coal

Cashed-up thermal coal miner New Hope Corporation is now officially on the block and after months of speculation a formal process is finally underway. New Hope chairman Robert Millner has told the market that the miner has received a number of informal pitches from interested parties and kick-starting an official auction process was the best way to flush out a viable offer. That offer could well need to be close to the $6 billion mark because nabbing New Hope would give the successful suitor access to the miner's Acland and Rosewood operations and an export terminal in Brisbane. New Hope has also been steadily expanding its coal acreage and beefing up its coking coal reserves, as evidenced by its recent takeover of Northern Energy Corporation. Throw the $1.5 billion New Hope has in cash and its solid management into the mix and, all in all, here's a pretty strong package at a time when continued Asian demand is expected to push thermal coal prices higher. For the time being, the list of prospective suitors contains all the usual suspects, including Xstrata, US-based Alpha Natural and Peabody, Glencore and a host of Asian entities. Swiss giant Xstrata is seen as a strong contender mainly because it already has operations around Acland but China's Yanzhou could also be in the hunt here through its local arm, Yancoal, which recently picked up Wesfarmers' Premier coal business and is led by former New Hope chief operations officer Murray Bailey. The $6 billion price tag will probably prove to be too rich for Indian parties but New Hope's Japanese shareholder Mitsubishi Material Corporation could also be interested. New Hope shares rose sharply on the news, climbing over 15 per cent to $6.10, and lot of that confidence in the market stems from the fact that the success of any proposal hinges on acceptance by New Hope's largest shareholder, Washington H Soul Pattinson (Soul Patts), which is also chaired by Millner. New Hope has appointed in-house financial advisor Pitt Capital Partners and Baker & McKenzie as legal advisers.

Unwinding the Soul Patts-Brickworks cross-shareholding

While Millner said that the auction process has been primarily initiated by the high level of interest from suitors, The Australian Financial Review speculates that another factor behind the move may have been pressure from New Hope and Soul Patts shareholder Perpetual, which has been agitating for Soul Patts to unwind its cross-shareholding with Brickworks. Soul Patts owns 44.6 per cent of Brickworks, which in turn holds 42.85 per cent of Soul Patts. The arrangement, created 40 years ago, has proved to be a solid defence against corporate raiders but Perpetual has argued that ditching the cross-shareholding will release some $1.5 billion in value. The potential sale of New Hope could provide the spark needed to make that happen. According to the AFR, Millner has held open the possibility of unwinding the structure but the main priority now will be on finding the best suitor for one of the last independent coal operators in Australia.

Coca Cola Amatil, SAB Miller, Foster's

Coca Cola Amatil has emerged as a substantial beneficiary of SABMiller's $12.3 billion takeover of Foster's. Under the terms of the agreement reached between SAB and CCA, the global giant will pay CCA at least $300 million to exit the Pacific Beverages joint venture and get a chance to buy Foster's spirits, ready-to-drink mixed spirits and non-alcoholic brands. The other important feature of the agreement is the CCA's decision to step out of the beer game for two years, however CCA boss Terry Davis evidently hasn't ruled out making a comeback into the sector once the stipulation is lifted. Speaking at a business lunch in Melbourne yesterday, Davis said that CCA was keen to pick up Foster's assets provided that the SAB-Foster's deal is approved by Foster's shareholders and CCA gets access to due diligence. At this stage, it's highly likely that CCA will push through with the acquisition, however the really interesting part of Davis' speech yesterday were his comments on the beer market and CCA's desire to re-enter that market. Davis extolled the virtue of CCA as an alternative distributor to international brands in a clear nod to the maker of Corona, Grupo Modelo, which faces the prospect of seeing its brew sold in Australia by its arch rival SAB. So forging a deal with Grupo looks to be very much on Davis' agenda, as is his intent to potentially launch a manufacturing arm in two years' time.

Perpetual, Macquarie Investment Management

Wealth manager Perpetual Limited has outsourced its third-party provision of portfolio and fiduciary administration services to Macquarie Investment Management. The deal will see Perpetual save a lot of money because rather than upgrade its platform administration system the wealth manager will hand over the IT development requirements to Macquarie. According to Perpetual, Macquarie will add specific functionality to an existing third-party system and administration solution, with additional features and infrastructure. The integration of the platforms is expected to take 18 months and Perpetual expects the deal to be revenue positive from 2014.

Macquarie Capital, Charter Hall, Centro  

Speaking of Macquarie, the consortium led by the investment bank has increased its offer for Charter Hall Office REIT only to see it rebuffed for a second time. Macquarie joined forces with Singapore's GIC Real Estate and Canada's Public Sector Pension Fund to lob a conditional, non-binding, indicative $1.7 billion bid to grab COQ's undervalued local portfolio in August and things went pretty quiet after that until yesterday, when news emerged that the consortium had revised its original offer price by four cents a unit to $2.43. Charter Hall's independent directors said the revised offer was still inadequate, however the game might just be getting interesting because the directors have now allowed the consortium to undertake full due diligence. The revised offer price represents a 7.6 per cent discount to COQ's June 30 pro forma net tangible asset backing of $2.63 a unit. Meanwhile, Centro's $3 billion revamp has taken a significant step towards fruition after the New South Wales Supreme Court dismissed the objections raised by the property group's former auditor PricewaterhouseCoopers, clearing the way for Centro to put its restructure proposal before senior lenders, security holders and creditors.

Wrapping up

There was plenty of moving and shaking on the appointments front with former Treasury secretary Ken Henry, who also happens to be charged with leading Julia Gillard's review of Australia's engagement with Asia, set to join the board of National Australia Bank as a non-executive director. The move has already sparked speculation that Henry could eventually be in line to take over as the chairman of the bank. Meanwhile, Woodside Petroleum is reportedly having trouble holding onto its executives, especially the ones who failed to nab the throne of former chief executive Don Voelte. According to The Australian, the local oil major's head of international oil and gas, Jeff Soine, has stepped down and his departure has sparked speculation that others might follow. Soine was one of the five internal candidates considered as Voelte's replacement and his exit follows that of one of the other five executives, Kevin Gallagher, who resigned in June to become Clough's chief executive. Elsewhere, Metgasco shares have pushed up on expectations that the company could be a takeover target. Queensland-based ERM Power recently picked up a 6 per cent stake in the company and there is talk that LNG Limited, which is 20 per cent owned by China National Petroleum, might be a likely suitor. In other news, the Foreign Investment Review Board has issued an interim order extending its review of Foxtel's proposed takeover of Austar United. Nine Entertainment and Microsoft have reportedly shelved their plans to sell their jointly owned group buying website Cudo. Speaking of Microsoft, the tech giant has resurfaced as a potential suitor for Yahoo, with Reuters reporting that the company may be on the lookout for a partner to lob a bid for the ailing web pioneer, which is valued at around $US18 billion and is preparing its books for prospective suitors. Providence Equity Partners, Hellman & Friedman, Silver Lake Partners, Chinese e-commerce giant Alibaba.com and Russian technology investment firm DST Global have all been touted as possible buyers and whether or not Microsoft does indeed join the fray, we can be sure that it won't be paying anywhere near the $US33 a share it offered to Yahoo in 2008. In the retail sector, Wesfarmers has poached the chief executive officer of Canadian retail giant Sears, Dene Rogers, to replace Laura Inman as Target Australia's new managing director. Meanwhile, former Woolworths supermarket chief Greg Foran is set to join Walmart.