BREAKFAST DEALS: News next

News Limited is set to follow in the footsteps of Fairfax and announce a major restructure, while Optus boosts its artillery for the 4G battle with Telstra.

Business Spectator is in the news this morning as News Limited is reportedly set to acquire the company. Meanwhile, Optus can now take the 4G fight directly to Telstra after winning consumer watchdog approval to acquire Vividwireless from Kerry Stoke's Seven West Media. Elsewhere, DuluxGroup can't quite declare its bid for Alesco Corporation final, one of Clive Palmer's iron ore mines has received qualified backing from a Chinese financial giant and a loyalty reward program is braving the market elements to forge ahead with a float.

News Limited, Australian Independent Business Media, Foxtel

The shake-up of Australia’s newspaper landscape is reportedly set to shift this morning from Fairfax Media to News Limited with the expectation that News chief executive Kim Williams will announce a restructure of his own.

It’s being reported in both The Australian and The Australian Financial Review that up to 1000 people will lose their jobs, with as many as half of those coming from editorial.

Newspaper reports also suggest that News Limited is set to acquire Australian Independent Business Media, publisher of Business Spectator and financial investment subscription newsletter Eureka Report.

According to the reports the price tag is understood to be north of $22 million, perhaps up to $30 million, for full ownership.

Business Spectator readers will be very familiar with the faces of the some of the AIBM shareholders including editor-in-chief Alan Kohler, associate editors Robert Gottliebsen and Stephen Bartholomeusz, managing editor James Kirby and Karen Maley. Shareholders also include former AIBM chairman Eric Beecher, as well as investment bankers John Wylie and Mark Carnegie.

If News does move this morning, many will be watching to see what, if anything, Williams says about talks with James Packer’s Consolidated Media Holdings.

News is said to be keen to secure a larger stake in Foxtel and CMH holds a 25 per cent stake, as well as 50 per cent of Fox Sports Australia, with Telstra ruling itself after clear signals from competition tsar Rod Sims that it probably wouldn't succeed.

Optus, Vividwireless, Seven West Media

Telstra’s chief rival, Optus, is ready to take the 4G battle up to the telco after securing Vividwireless from Kerry Stokes’s Seven Media Group.

The SingTel-owned mobile provider said yesterday that it has received final approval from the Australian Competition and Consumer Commission for the $230 million deal. The terms were agreed to in February.

Telstra has taken the first steps towards developing its own 4G footprint, considered by many as the next crucial battle for all important mobile data users.

But Optus is trying to go with its cashed-up senior competitor, with the Vividwireless purchase providing vital 2.3GHz wireless spectrum, a necessary ingredient for its own 4G long-term evolution (LTE) network in metro areas. These services can be twice as fast as their 3G counterparts, hence an early presence is crucial.

While $60 million will be held back until the spectrum licences are reissued to Vividwireless, Optus will pay Seven $170 million in cash for the deal.

Meanwhile, Communications Minster Stephen Conroy has told mobile phone carriers that the next round of spectrum auctions would be delayed until April next year to give the TV operators, which are struggling in a dour advertising market, a chance to catch up to technological developments.

The original date for the auction was supposed to fall in November.

DuluxGroup, Alesco Corporation

Paints company DuluxGroup gave shareholders – and speculators – at its target Alesco Corporation reason to hope after extending its $188 million offer, without declaring it final.

Dulux said its offer will now expire on July 20.

Alesco’s share price has been dancing above the $2.00 a share offer price and yesterday it crept up a single cent to $2.02. It’s a slight premium to the offer, but a crucial signal from the market that Dulux will need to put more on the table to win over the Alesco board.

Dulux, of course, has extra incentive to hang around. The paints company acquired around a fifth of the garage door maker in the hope of bullying it into accepting its takeover offer.

From Alesco’s perspective, Dulux is going for a low-ball offer when the housing market, crucial to both their fates, is struggling.

Any recovery in our once seemingly unstoppable property market, says Alesco, will result in a lot more garage doors being purchased.

It’s also been intermittently asked whether the unusual nature of the deal – garage doors and paints – is a signal the Dulux is running low on ideas for expansion.

If that’s the case, Alesco has even more reason to wait it out until July 20.

Australasian Resources, Clive Palmer

Clive Palmer’s Australasian Resources has secured some qualified backing from Industrial & Commercial Bank of China for its $3.9 billion iron ore mine in the Pilbara.

"This non-binding letter expresses ICBC’s willingness and interest to finance the project,” said Australasian in a statement to the market. The company added that the support is based on the company’s hiring of China’s MCC Overseas to oversee the project.

The letter is valid until the end of this year, which means the financing is hardly a done deal and an agreement could remain unconsummated for over six months.

But ICBC is China’s largest lender and the mere mention of its theoretical support sent the Australasian share price up over 8 per cent.

Palmer controls almost 70 per cent of International Minerals through his own holdings and associates. If Palmer can convert the letter from ICBC into something binding, Australasian will construct the Balmoral South iron ore project in Western Australia.

Separately, Palmer says that his plans to construct Titanic II are progressing with engineering companies appointed. Breakfast Deals has pledged not to cover Palmer’s stranger proposals until something concrete appears – this is just to reassure you that we’re watching every last one of them.

Wrapping up

Back to media for a moment, former Fairfax Media chairman Ron Walker has made life more difficult for his successor by backing mining billionaire Gina Rinehart’s push for a board seat. Not very sporting of him, although he was effectively forced from the chair – a blessing in disguise?

Additionally, The Australian Financial Review reports that APN News & Media is considering "targeted and substantial” acquisitions in the digital media space. APN and Fairfax are also still in discussions about joint regional printing facilities. The same newspaper also expects PaperlinX to announce more strategic initiatives. Asset sales remain a possibility.

The aforementioned sale at Consolidated Media Holdings is all part of a play for Packer to secure more funds for his Sydney casino proposal.

More media reports have emerged pointing towards Singapore’s Genting gaming billionaire KT Lim boosting his stake in Echo Entertainment to more than 10 per cent.

As explained in this morning’s edition of The Distillery, if the government of NSW allows Packer and Lim to boost their respective stakes beyond the 10 per cent limit to 20 per cent, the Echo board will become spectators as the billionaires carve the company up as they see fit.

The only question remains whether Lim is an ally or adversary. Given the vitriol that Packer was willing to throw at former chairman John Story, one might hazard a guess and say the former.

Air New Zealand has a new chief executive, but apparently not a new acquisition strategy. The cross-Tasman rival to Qantas Airways suffers many of the same ailments of the flying Kangaroo and the new ownership structure at Virgin Australia has prompted much speculation that Air NZ would increase its stake in Sir Richard Branson’s Australian invention.

But Christopher Luxon, who is set to take over from the much respected Rob Fyfe, says the company would not add to its 20 per cent stake. Guess that means more room for Etihad Airways, when the time is right.

Elsewhere, engineering company Downer EDI has picked up a contract with BHP Billiton worth $72 million for electrical work on the Jimblebar expansion. The mining giant approved $US3.4 billion in additional spending at the iron ore site last year, now Downer is seeing a piece.

Meanwhile, the AFR reports that Whitehaven Coal boss Tony Haggarty has briefed UBS clients with news that Nathan Tinkler’s attempts to muster a takeover aren’t doing the company a whole world of good.

According to the newspaper, Haggarty said there could be potential delays and cost blow-outs at the Maules Creek project and lower coal prices from the Narrabri mine.

Previous reports have indicated that Tinkler might be able to get a proposal assembled within two weeks. No doubt, Haggarty would favour such an outcome.

And finally, The Australian Financial Review understands that loyalty reward company Priority One Network Group is heading towards a planned float of $300 million, with a prospectus expected to land with the market regulator in the next few days.

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