BREAKFAST DEALS: Packer echoes

James Packer takes on Echo Entertainment chairman John Story, while Gina Rinehart and friends up the pressure on Fairfax chairman Roger Corbett.

Billionaires James Packer and Gina Rinehart are trying to exert pressure on companies they either want outright or want more control over by attacking the chairman. Packer is calling on shareholders to oust Echo Entertainment chair John Story (while building a quiet 4.9 per cent stake in Seek), as Rinehart continues her attack on Fairfax’s Roger Corbett (after securing environmental approval for her GSK joint venture). This morning belongs to this pair. Elsewhere, Air New Zealand has admitted to buying a large parcel of Virgin Australia shares, while Hong Kong’s Wah Nam has finally crossed the Brockman finish line.

James Packer, Crown, Echo Entertainment

Billionaire James Packer looks like he’ll take on Echo Entertainment chairman John Story directly with letters calling for an extraordinary general meeting to be sent to Echo’s shareholders today. The Australian Financial Review reports that Packer is calling for the removal of Story as chairman of Echo due to the company’s financial performance and his handling of the dismissal of former managing director Sid Vaikunta. In his place, Packer is putting up former Victorian Premier Jeff Kennett as a board nominee.

For Story to survive this, he has to make sure that no more than 40 per cent of the register votes with Packer, given that Crown already holds 10 per cent of Echo. The battle will come down to allegations from Packer that Story is unsuitable to continue as chairman, while the Echo chairman will emphasise that this is part of Packer’s attempt to win Echo’s cooperation for his Sydney casino plans without paying for it.

Kennett was crucial in getting the dominant Melbourne Crown Casino up and running that now makes up such a prominent part of Packer’s portfolio. Given that the NSW Liberal government would also have to approve Packer’s plans to build a $1 billion, ultra-luxury casino at the Barangaroo site in Sydney to attract Asian high rollers, the nomination of a widely respected former Liberal leader is a fine strategic move – and it’ll be nice to hear the former Hawthorn president have something else to talk about in the mass media besides football (his chairmanship of beyondblue simply doesn’t get enough attention).

Gina Rinehart, Hancock Prospecting, Fairfax Media, GVK Power & Infrastructure

Mining billionaire Gina Rinehart is conducting a campaign against her own adversary Fairfax Media chairman Roger Corbett, that has all the DNA of Packer’s battle. Rinehart has been baying for two board seats and the person who attended the initial meetings with Fairfax about this issue, Ten Network director Jack Cowin, is in the news today in a big way.

It was strongly suspected that Cowin was whom Rinehart had in mind for one of those board seats and that’s been bourne out in the press today. However, the normally quiet Cowin also expresses his dismay that Rinehart hasn’t been given a directorship in an interview with The Australian. Rinehart herself has also written to the Fairfax newsroom to describe their employer as "ailing”.

Meanwhile, in the more traditional area of interest for the world’s richest woman, Hancock Prospecting has cleared a crucial hurdle to getting the $6.4 billion Alpha coal project in Queensland up and running, after winning state environmental approval. India’s GVK Power & Infrastructure owns 21 per cent of the project, which still requires approval from the federal government.

Seek, Brasil Online, Online Career Center Mexico SA de CV, James Packer

Online jobs advertiser Seek has bumped up its ownership in Brasil Online and Online Career Center Mexico SA de CV (OCM) to the point where it now owns majority stakes in both of those businesses. In a statement to the market, Seek said it had increased its stake in Brasil Online to 51 per cent from 30 per cent, and in OCM to 57 per cent from 41 per cent. It’s part of Seek’s stronger focus on international markets as it has assumed such a dominant position in the local one.

It has been reported that Seek is poised to launch Chinese jobs website Zhaopin, which it owns in conjunction with Macquarie Capital, onto the Nasdaq later this year. Apparently, Credit Suisse has been tapped to be lead manager of the float. The problem for Seek here is that Facebook’s rather uninspiring first days on the Nasdaq have seriously dented appetite for tech floats.

Meanwhile, there is another interesting aspect to these stake increases for Seek. According to the company, five of those percentage points picked up at Brasil Online have come from billionaire James Packer’s Consolidated Press Holdings. Further, The Australian understands that Packer has quietly built up a stake in Seek worth 4.9 per cent, just shy of the point where he would have to report as a substantial shareholder.

We promise that’s the last of the Packer news for this morning.

Virgin Australia, Air New Zealand, Qantas Airways

A large chunk of Virgin Australia shares changed hands yesterday and Air New Zealand has claimed responsibility for it. According to The Australian, a spokesperson for Air New Zealand has confirmed that the neighbouring airline was behind the transaction as part of an agreement to lift its stake in Virgin to 19.99 per cent from 14.99 per cent.

Meanwhile, chief rival Qantas Airways has taken its four directors off the board of Air Pacific following a decision by the Fijian government to assume control of the carrier. While it isn’t an ideal scenario for Qantas, Deutsche Bank analysts think the strategy the airline has employed for seeking joint ventures in growing markets will continue to increase capital efficiency.

Wah Nam International, Brockman Resources, FerrAus

Hong Kong’s Wah Nam International has been rewarded for its patience with its cash-and-scrip offer for Brockman Resources finally hitting compulsory acquisition territory. Wah Nam’s stake in the company has hit 91.83 per cent according to documents lodged to the stock exchange yesterday, meaning that it can now acquire the scraps left over.

The news marks an unlikely and long-fought victory for Wah Nam, which doesn’t have any experience in the mining industry – it’s a limousine company. Attention now shifts to Brockman’s neighbour FerrAus, which Wah Nam is also trying to purchase. The target has flagged that if Wah Nam was successful in winning Brockman that it might re-examine its recommendation that shareholders reject its advances.

If Wah Nam can win both Brockman and FerrAus, the sceptics that argued its ambition was excessive – and there were many – might be well advised to ask those from Hong Kong: "Can I get the passenger door for you, sir?”

Wrapping up

Nomura analyst David Cooke believes that Wesfarmers might be able to find some value in the wake of Hastie Group’s unfortunate collapse. In a research note, Cooke pointed out that Wesfarmers’ would be able to increase the size of its industrial and safety arm, something the WA conglomerate has previously expressed some interest in doing.

Meanwhile, Dart Energy has dealt its way onto the market’s good side by deferring its plans for an IPO. The stock price surged 10 per cent, ironically because the market is too volatile to launch a stock issue. The market will be hoping that Hong Kong’s CLP Holdings doesn’t come to the same conclusion for its planned TRUenergy float. According to The Australian Financial Review, UBS and Morgan Stanley are thought to have secured joint lead manager positions for the float – encouraging news – which leaves Merrill Lynch, Deutsche Bank and JPMorgan to battle it out for the final position.

And finally, the same newspaper understands that CSG has been offered up to $260 million for its technology solutions business from NEC. Apparently the print part of the business will be left behind. Shareholders will be satisfied with the outcome for two reasons. Firstly, the company’s market cap is $80 million less than the offer price for one aspect of the business. Secondly, the share price dived in the wake of a failed sales process for the whole company last year.

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