BREAKFAST DEALS: Packer play

Gaming billionaire James Packer copped a lot of criticism during the global financial crisis for his foray into the Macau high rollers in the aftermath of the global financial crisis. Granted, it looked like poor timing, but the Australian heavy-hitter has seen the benefits of attracting wealthy Chinese individuals to the table and has even greater ambitions for Echo Entertainment – an expected larger stake and a board seat if one report proves correct. Meanwhile, the takeover battle for Ludowici is becoming simply breathtaking, with a 214 per cent premium up for grabs, assuming the Takeovers Panel rules favourably. Elsewhere, Air New Zealand is mulling its options with Virgin Australia, names have been put to more faces that have had a look at Billabong, while AGL Energy has formed a team to get a bigger share of Victoria's Loy Yang power station.

Crown Limited, Echo Entertainment

James Packer might have ambitions to lure Chinese high rollers to Australia, but Echo Entertainment chairman John Story won't let that happen without adequate compensation. Crown has doubled its stake in Echo from 4.9 per cent to 10 per cent with a $256 million share raid with plans unveiled to construct an entertainment complex in Barangaroo worth up to $1 billion.

The Australian says Packer is expected to push for 19.9 per cent and a board seat if he can secure government approval for the complex. Story, however, has reservations about Packer's growing presence on his company's $2.96 billion register. "Our concern is that this is a covert way of obtaining control without a full takeover offer or paying a takeover premium,” Story told The Australian Financial Review. He went on to say the synergies could be realised by a proper merger between the companies that would naturally attract a premium, adding that he believes a "other global players” would be interested in taking over Echo.

Ludowici, FLSmidth, Weir Group

The most compelling Australian takeover battle of 2012 so far added another chapter on Friday. Danish bidder FLSmidth lifted its takeover offer for Brisbane-based mining equipment maker Ludowici to $11 a share hours after rival bidder Weir Group, based in Scotland, said it would match a previous $10 a share bid. To put this all into context, Ludowici shares were trading at $3.50 a share the day before the Danish put its initial bid in, which equates to a premium of 214 per cent. Not a bad effort.

Of course, the issue overhanging the process is a pending ruling from the Takeovers Panel. It still has to decide whether FLSmidth can offer anything above $7.20 a share according to Australia's truth in takeovers rules, after chief executive Jorgen Huno Rasmussen said the company wouldn't increase its offer to a media agency. Unsurprisingly, Weir dobbed the suitor in to the panel and will no doubt be watching for a decision with anticipation.

Virgin Australia, Air New Zealand

Air New Zealand chief executive Rob Fyfe says Virgin Australia's decision to change its ownership structure obviously creates some "opportunities”, but isn't sure what its next move will be. Air New Zealand owns a 19.9 per cent stake in Virgin Australia and is standing in the way of Etihad Airways, which also wants to buy in but is blocked by the airline's foreign 49 per cent ownership limit – Richard Branson's Virgin Group owns 26 per cent.

Late last week, Air New Zealand announced a 61 per cent slump in first half profits and was forced to axe 441 jobs. While the rationale behind picking up a bigger stake in Virgin for Air New Zealand – investing in airlines of any description is heresy for many other investors – it's unclear whether the New Zealanders can wisely make the move without neglecting their existing operations.

Billabong International, TPG Capital

Billabong International shareholders might not be surprised to find that a few more players have probably given their embattled retailers the once over. TPG Capital has put a $3 a share proposal on the table and Kohlberg Kravis Roberts has reportedly talked to syndicate banks about a potential offer. Sources have told The Sydney Morning Herald that KKR has actually been having a look at Billabong, while also adding that Archer Capital was on the scene and Solomon Lew was better than even odds to have had a look.

But Billabong chief executive Derek O'Neill only had one proposal to work with and a register of shareholders – founder Gordon Merchant in particular – who don't like the look of $3 a share when the stock was at $4 late last year and $12 just 12 months ago. This is the crucial difference between Billabong and Spotless Group, which is also in the sights of a private equity suitor. Enough powerful Spotless shareholders want to bully the board to engage with its suitor Pacific Equity Partners, while at Billabong there are willing sellers but the wave hasn't broken yet.

Rio Tinto, Vale

Iron ore giant Rio Tinto and Vale are reportedly chatting about sharing rail and port infrastructure at their respective Simandou iron ore projects in Guinea. The Australian Financial Review says sources indicate that the talks are over rail and port infrastructure and are taking place before they sign final infrastructure agreements with the local government.

AGL Energy

The all-star team to manage the push by AGL Energy to buy out its partners in Victoria's Loy Yang A power station is already being assembled. It's thought that Citibank and Deutsche Bank have been recruited to manage the planned $850 million renounceable rights issue, while National Australia Bank will join the pair to work on the $650 million hybrid issue, The Australian Financial Review reports. AGL is hoping to pay $448 million to buy out Tokyo Electric Power Corp and other joint venture partners on the power station to take its stake from 32.5 per cent to 100 per cent. The electricity company will need to get the proposal past regulators.

Hastings Diversified Utilities Fund, APA Group

Hastings Diversified Utilities Fund has pointed to its better full year results as grounds for APA Group to increase its $1.8 billion takeover bid. The pipeline owner booked a $29.9 million loss for the 2011 calendar year, which was an improvement on the previous year's $37 million in red ink. Chief executive Colin Atkin says the company's results are set to improve further still and this should be reflected in the stock price.

Over at APA, management appears to be warming to the idea of an improved bid, if comments from last week are any indication. APA indicated so because HDF's refinancing efforts have met key criteria of its bid and could bring about a higher offer than the current cash and scrip proposal of 50 cents a share and 0.326 APA shares.

Wrapping up

Qube Logistics has picked up Western Australia's Giacci Holdings, a private bulk haulage company for $119 million. The deal comes on the back of Qube's $85 million placement late last year, which coincided with its ascension into the ASX200.

The Australian Financial Review reports that UBS is set to spin off its hedge fund arm, Macro Strategic Trading, within the next three weeks. The new entity will be known as MST Capital and the newspaper understands that a cornerstone investor is close to being booked.

And finally, Pacific Hydro is looking for its own retail energy licence after the renewable generator failed to lock in the $306 million grant from the federal government for the Moree Solar Farm, Fairfax reports. Apparently, AGL Energy, TRUenergy, Infigen Suntech and the Moree consortium have resubmitted their bids to Energy Minister Martin Ferguson – though depending on how today's Labor leadership ballot goes, Ferguson might not be in that portfolio for much longer after leaning towards Kevin Rudd.