BREAKFAST DEALS: Pacific bunker

Pacific Brands boss Sue Morphet has battled hard – often in the face of undue public criticism – to fortify the walls of the clothing company in the face of a shifting manufacturing landscape. While the unsolicited offer from Kohlberg Kravis Roberts is welcome after a prolonged share price slump, Morphet isn't going to give the company away and has reportedly declined to give the private equity suitor exclusive discussions. Meanwhile, Spotless Group chairman Peter Smedley might be destined for a showdown with shareholders after Pacific Equity Partners gawks at the standards he's set for due diligence. Elsewhere, Andrew Michelmore is sticking with his bid for Anvil Mining (with Minmetals extending its offer for a third time), all of the big four banks are reportedly looking at Royal Bank of Scotland's local investment banking assets and Murchison Metals has been given a crucial green light ahead of a shareholder vote on the Oakajee Port & Rail Project deal.

Pacific Brands, Kohlberg Kravis Roberts

Pacific Brands is hunkered down with its advisers Flagstaff Partners and Minter Ellison to consider the "unsolicited approach” from private equity player Kohlberg Kravis Roberts – thought to be in the vicinity of $600 million. The share price responded accordingly, jumping 14.2 per cent to a two-and-a-half month high in yesterday's trading. The last time Pacific Brands shareholders were able to say something like that was quite a while ago.

But the target's chief executive, Sue Morphet, has spent the last few years boldly restructuring the company – often facing unfair criticism from onlookers in the process – and she won't be giving the company away at a price that doesn't recognise progress currently masked by high cotton prices and the worst retail conditions in recent memory.

The Australian Financial Review, which broke the story yesterday, understands that KKR had sought exclusive discussions but its retail target has so far declined. This is pretty reasonable, given that a price doesn't appear to have been settled on, let alone a firm offer, and Pacific Brands has had a few parties sniffing around over the years that could be coaxed back into the fray. Chairman James Mackenzie has been leading an investment committee to consider the situation since the approach was made last year.

Further, analysts are starting to think about which companies could be in the sights of other private equity players. Retailers are especially vulnerable and City Index chief market analyst says David Jones, Myer and Harvey Norman are possibilities, while also saying Ten Network could be attractive.

Spotless Group

Spotless Group chairman Peter Smedley is known as being a crafty, resilient operator. Pacific Equity Partners won't move from its $711 million, $2.68 per share cash offer without due diligence, but Smedley has put both board support and due diligence at $2.80.

Smedley might believe that Spotless, which is being advised by Goldman Sachs and Clayton Utz, is worth $2.80 a share – maybe more – but he's always been at the behest of his shareholders. The Australian brings word from Orbis Investment Management analyst Simon Mawhinney who says an extraordinary general meeting for a board spill vote is "always an option”. Investors Mutual senior portfolio manager Simon Conn was more emphatic: "We either get a higher bid or we go to an EGM.”

So far, Smedley has balanced the desire that shareholders naturally have for the takeover premium with the need to make the case to PEP, which is being advised by Citigroup and Investec, for a higher price by increasing transparency. First, Spotless delivered a management presentation to PEP highlighting the value of the business – a kind of ‘due diligence-lite' – and released it to the public. Now he's nominated $2.80 as the Spotless price.

While the strategy has boosted the initial offer of $2.63 a share to the current $2.68, things are reaching the stage where shareholders might have to watch a second private equity suitor walk away in eight months without anything to show for it. All frustrated stakeholders need is 5 per cent of total issued shares to force an EGM. The aforementioned parties hold 8.5 per cent and 3 per cent, respectively.

Anvil Mining, Minmetals

Minmetals Resources boss Andrew Michelmore still isn't giving up on securing an African presence for the Chinese-owned company. Minmetals has extended its $HK10 billion ($1.3 billion) takeover offer for dual-listed, Africa-focused, copper producer Anvil Mining yet again. Now, the offer is set to expire on February 16. The two companies have been in talks since spring but the deal is hardly glowing white-hot as we enter the peak of summer.

The stumbling block is Gecamines, a state-owned mining body in the Republic of the Congo, where Anvil's prized Kinsevere copper and Mutoshi copper-cobalt projects reside. Gecamines contests that the Minmetals takeover triggers a review of the leasing arrangements for the two projects. To make matters more complicated, Anvil holds 95 per cent of the Kinsevere project, with a private Congolese company Mining Company Katanga SPRL (MCK), holding the last 5 per cent. Anvil says MCK is claiming it also needs to approve the deal and further alleges that its rights under the Kinsevere agreement have not been respected.

Anvil contests that it needs neither the approval of Gecamines or MCK to proceed with the Minmetals takeover. But here we are, in a new year without a deal and another five weeks of talks.

While we're in the Republic of the Congo, Exxaro Resources is reportedly in advanced talks to purchase Western Australian-based African Iron. The Australian reports that a deal worth more than $300 million could be announced as early as this week, according to two people familiar with the discussions.

Royal Bank of Scotland, ANZ Bank, Commonwealth Bank, National Australia Bank, Westpac

Previously it was thought that ANZ Bank and Commonwealth Bank would be willing to have a look at the local investment banking assets of Royal Bank of Scotland. Now it appears they have some company as RBS British boss Stephen Hester, with Lazard advising, is preparing to announce to the market what's on the chopping block.

The Australian Financial Review believes that it's not just ANZ and CBA, but National Australia Bank and Westpac Bank running a ruler over the sale items. It's thought that the M&A division, equity capital markets and cash equities will be up for grabs, with the newspaper saying that some could be handed away for nothing to save RBS closure costs.

Murchison Metals, Mitsubishi

Murchison Metals has received environmental approvals for the Jack Hills iron ore project just in time for its shareholder vote on the sale of its stake in the project, along with its 50 per cent share in the all-important Oakajee Port & Rail Project. The two projects are worth a combined $10 billion and having failed to pony up its share of the funding, Murchison was forced to hand over the stakes to joint-venture partner Mitsubishi for $325 million.

The Japanese giant has stoked the idea of finding a new joint venture partner to share the burden – possibly from China or South Korea – but for the meantime, the environmental approval from the Western Australian government sets the scene for a tension free Murchison meeting to approve the deal on February 13. The Foreign Investment Review Board gave the deal the all clear on December 28 and the legal dispute with Chameleon Mining, which could have tripped up the deal, was settled for $25 million.

Wrapping up

Resources Minister Martin Ferguson says Inpex and Total have bedded down sales agreements with Japanese and Taiwanese customers for the proposed Ichthys gas project. Japan's Chubu Electric Power and Toho have signed up for some LNG, along with Taiwan's CPC Corp, with a final investment decision on Ichthys expected within the next week or so.

Still in resources, Fortis Mining has hit a snag in its attempt to pick up some potash tenements in Kazakhstan. The company has forked out $30 million and staked its future on the projects, but the vendors have sought legal avenues to escape the agreement.

ANZ Bank has diversified its wholesale funding picture by issuing €1 billion ($A1.24 billion) in 10 1/2-year covered notes, following similar moves from Commonwealth Bank and National Australia Bank in recent weeks.

And finally, Navis Capital Partners has reportedly offloaded its Dunkin' Donuts and Au Bon Pain business in Thailand to Sub Sri Thai Public Company, a listed player, for $40.5 million. The Australian reports that the private equity firm, an Asian firm with a base in Sydney, picked up the business for $US24.4 million in 2006.