BREAKFAST DEALS: Nufarm's new face

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While Nufarm directors celebrate the Sumitomo deal, Credit Suisse has cut the company's price target, describing the new deal as a 'face-saving' measure.

Nufarm, Sumitomo Chemical

Management from Sumitomo Chemical Company will start 2010 with a trip to Australia, The Australian reports, as the Japanese agricultural chemicals group looks to nut out its recent cornerstone investment deal with Nufarm. And we have an answer on whether Nufarm directors will sell their shares to Sumitomo for $14 each, with a spokesman quoted as saying that interests around the board table will participate in the tender offer. Managing director Doug Rathbone has an 11 per cent stake in the agrichemicals company, making for a jolly start to the new year. But the folk at Credit Suisse are less enthused. The broker has cut the company's price target to $10.80 from $12, describing the failed Sinochem bid as a "clear disappointment” and 20 per cent investment by Sumitomo as a face-saving measure by the Nufarm board.

Tiger Airways

Fears about the future of debt-laden Japan Airlines might be dominating aviation news, but there's still some caution about the proposed Singapore listing of budget airline Tiger Airways. According to The Australian Financial Review, an investor roadshow will begin on January 6, as Tiger looks to raise $S200 million to help fund capital requirements. The paper says investors have baulked at the pricing, particularly Tiger's comparatively expensive 12-16 times' earnings figure. Also at issue is how long major shareholders Singapore Airlines and state-owned Temasek Holdings will be required to hold on to their stakes, with suggestions the pair could be permitted to sell down a half-stake each within six months of trading. Singapore Airlines owned 49 per cent of Tiger, Temasek 11 per cent and both were expected to maintain their holdings. Still, the concept of a culled float is nothing new: over in New Zealand, three companies in the past six weeks have failed to reach the minimum required target for an IPO, according to Bloomberg, including US-focused sweetener group BioVittoria.

Foster's

A recent JPMorgan report has poured cold water on talk Foster's could be a takeover target, The Australian reports. According to analyst Stuart Jackson, the likely suitors – Molson Coors, Asahi and a joint venture between Coca-Cola Amatil and SABMiller – each face difficulties in making a bid for the Foster's beer business. North American brewer Molson Coors, which has a near 5 per cent stake in Foster's, might not have the size to carry off the acquisition, Jackson says. Coca-Cola Amatil could face opposition from its British JV partner or major shareholder, The Coca-Cola Company in the US. As for Asahi, Jackson says currency movements and the need for a rights issue to fund a massive acquisition could prove an effective deterrent for the Japanese giant.

Domino's Pizza Enterprises, Pizza Company

From beer to pizza, Domino's Pizza Enterprises has eschewed its favoured organic growth route with a foray into Belgium. The purchase of the dryly named Pizza Company and its 15 stores will leave Domino's as the nation's largest pizza delivery company, and has been hailed as a step forward for its European operations. The purchase price has not been disclosed but will not have a material impact on its FY2010 earnings.

Westpac Banking Corp

It's not strictly this column's fare, but a bit of speculation to end the year never goes astray. According to the Herald Sun, a relaunch of the Bank of Melbourne brand might be on the cards for Westpac Banking Corp. The thinking is that Westpac could use the moniker for its online deposit business as the bank aggressively targets retail deposit growth to offset expected increases in wholesale funding over the next couple of years. A Westpac insider has told the paper that the Sydney-based bank could use the Bank of Melbourne as an "online deposit store with price-leading offers”. The big banks have been promoting online savings accounts and fixed-term deposits of late through attractive interest rates, putting pressure on smaller financial institutions which rely more heavily on deposits for funding. Westpac got rid of the brand in 2000, after promising to retain it during its 1997 takeover.

Australia Post

Time will tell whether it's simply silly-season talk, but there's some traction to an idea that the appointment of former National Australia Bank senior executive Ahmed Fahour as managing director of Australia Post could signal the creation of a 'People's Bank' via Australia Post. While the newly appointed chief has talked down the prospect of the government-owned corporation applying for a banking licence, the Sydney Morning Herald has suggested that several ideas – applying for a deposit-taking licence, setting up a JV with an overseas financial institution, using the government's AAA credit rating to raise funds, establishing an online banking division – might be on Fahour's thoughts.

Wrapping up

Administrators have placed the last two operational assets – Great Southern Timber Holdings and Great Southern Infrastructure – of the collapsed Great Southern agribusiness up for sale. Meanwhile, hopes for less acrimonious iron ore pricing talks between miners Rio Tinto, BHP Billiton and Vale and China's steel industry association have taken a knock. China Iron and Steel Association vice chairman Luo Bingsheng has spoken of a "large degree of difficulty” in talks because the mining giants are seeking an increase of between 20 and 30 per cent, a figure that largely matches industry expectations, but nonetheless an unattractive premium for CISA. Suggesting some room to move, Luo added that all global resources, including iron ore, are "currently in a situation of price increases.” Finally, here's some food for thought on the last day of 2009: Morgan Stanley has tipped a "gentle recovery” for M&A, following on from a bumper fourth quarter this year. The head of European M&A, Dieter Turowski, expects deal volumes will rise 10 to 30 per cent, well below 2007 peak levels, according to Bloomberg.

Thank you for reading throughout the year and for all the tips and rumours sent to Business Spectator. Breakfast Deals will return on Monday, January 4.