BREAKFAST DEALS: Packer perplexes

Crown keeps the market guessing with its 'arms-length' Echo play, while News Corp switches its focus, and James Murdoch, to TV.

Australian gambling billionaire James Packer has recently had some kind words for media baron Kerry Stokes and his ability to secure control of companies (without paying a takeover premium). Stokes has a number of tricks up his sleeve, so questions must necessarily be asked about what Packer is doing with Echo Entertainment by claiming a 10 per cent interest, only to clarify that the 'interest' is held at arms length. Meanwhile, one time News Corp heir apparent James Murdoch has stepped down as News International executive chairman to spearhead the media company’s push into television. Elsewhere, more potential Billabong International suitors are apparently counting their chips, Visy Group is still in the consumer watchdog’s bad books and Pacific Equity Group is reportedly looking to offload share registry major Link Group.

Crown, Echo Entertainment

Crown has reportedly created some serious confusion about its apparent 10 per cent stake in Echo Entertainment. The Australian says a statement from the casino company last night seem to indicate that it’s not a stake, but an "interest”. Specifically it’s a derivative through Deutsche Bank. "Crown is not a substantial holder of Echo for the purposes of the Corporations Act and therefore has no obligation to lodge a notice,” Crown chief financial officer Ken Barton said, according to the newspaper.

This might be the best time to check out a Crown blackjack table because apparently the casino company doesn’t know how many chips it has. In reality, it means that Crown has not assumed control of the shares that Deutsche has set aside.

News Corp

News Corp has signalled that it’s still very much interested in expanding its international television footprint while James Murdoch it seems is now unlikely to succeed his father Rupert Murdoch as chief executive of the family media company. Last night, News Corp said James would be stepping down as News International executive chairman – the branch that’s been responsible for all the phone hacking controversies – to concentrate on expanding New Corp’s international TV division.

News Corp is said to be competing with TPG Capital and Time Warner for the ATV-Sabah media units of Turkey’s Calik Holdings, which includes a TV station. TPG is seen as its main competition. Given that Murdoch pulled his bid for the remaining stake in Britain’s BSkyB because of the growing furore over the phone hacking scandal last year, something that his son and once heir apparent has been significantly damaged by, moving James to concentrate on the TV division is a sure sign that he’s not contemplating a renewed bid in the near-to medium-term.

Billabong International, TPG Capital, Blackstone, Kohlberg Kravis Roberts

Billabong International founder Gordon Merchant might have said he wouldn’t sell the company for less than twice the amount the company was trading at before takeover speculation broke out, but that hasn’t stopped yet more potential suitors being called out. The Financial Times reports that Blackstone and Kohlberg Kravis Roberts are considering bids of their own. The KKR news isn’t necessarily new, because reports have previously indicated that it’s been talking to bankers, but the Blackstone news is.

The whole thing started when TPG Capital sent Billabong a proposal of $3 a share, a 68 per cent premium, valuing the company at $762 million. Billabong rejected the offer as it was already in the process of offloading half its Nixon accessories business to Triatlantic Capital Partners for $US285 million. It has now emerged that TPG was interested in the Nixon unit itself and received an information memorandum, The Australian reports.

But TPG’s $3 proposal was rejected; along with its subsequently improved $3.30 proposal that values Billabong at $838 million. Now, as more private equity firms reportedly count their pennies for a possible tilt, Merchant says they’ll need to front up at least $1 billion.

Visy Group, Pact Group

It appears that the consumer watchdog will never quite trust the Pratt family. The Visy Group, controlled by Anthony Pratt, son of the late packaging billionaire Richard Pratt, is hoping to purchase the plastic packaging business of HP plastic, which went into administration last month. But the Australian Competition and Consumer Commission has called for industry comments on the issue amid concerns that Visy’s primary competition in the sector, Pact Group, owned by the late Pratt’s son in law Raphael Geminder, "may not provide an effective independent constraint on the merged firm”.

The move stirs up memories of the last chapter of Pratt’s life, where the ACCC laid charges against the then ailing billionaire for giving false and misleading evidence in regards to the inquiry into an alleged cartel arrangement between Visy and chief rival Amcor.

Pacific Equity Partners, Link Group

Private equity firm Pacific Equity Partners is reportedly poised to see how strong the market is with a possible $1.5 billion sale of global registry giant Link Group. The Australian Financial Review reports that PEP is looking at a sale process – probably through a trade sale – to start around the middle of the year, although the newspaper says this timeline could be brought forward.

Wrapping up

Japan’s Hanwa will pick up a 4.1 per cent stake in Australia’s OM Holdings, a manganese miner, as part of a $20 million convertible notes issue and a $9.7 million raising. In iron ore, Atlas Iron has booked an 80 per cent fall in half year profit thanks to writedowns, but the company remains just as opposed to opportunistic suitors as it ever was. Brokers on the other hand are beginning to wind back their buy recommendations on the stock. Also in iron ore, Rio Tinto senior executive Sam Walsh says the company’s Simandou joint venture with Chalco in Guinea is progressing well, with trucking expected to commence sometime next year.

And finally, lenders have given the thumbs up to Ironbridge’s rescue plan for broadcasting company MediaWorks, The Australian Financial Review reports. Some good news for the media sector, at last.

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