BREAKFAST DEALS: Packer the tourism 'saviour'

James Packer has hit the airwaves to extol the virtues of his casino plans, while APA offers to unload assets to win Hastings.

Billionaire James Packer has cleverly used a media interview to emphasise the tourism benefits of big-time casinos, a business he’s trying to get into in Sydney. In order to pay for it he’ll have to get out of Foxtel, which all of a sudden has a new chairman to contend with two M&A moves. Elsewhere, Hastings Diversified Utilities Fund won’t be rushed in regards to the APA Group approach, while AGL Energy reportedly has reason to be optimistic with the ACCC.

James Packer, Consolidated Media Holdings, Foxtel, Telstra

Billionaire James Packer last night sought to portray his battle for Echo Entertainment as a potential saviour of the tourism industry. Speaking to Channel Nine’s 60 Minutes program, Packer said Australia needs to rely less on its natural beauty because that doesn’t bring the tourists in. He made the astute points that Las Vegas – as manufactured a city as possible – draws 40 million people per year, but the nearby Grand Canyon, one of the seven natural wonders of the world, gets just 3 million.

Packer appears to be softening up the market for an eventual push for control of Echo Entertainment, where he’ll seek to build a luxury six-star hotel and casino in Barangaroo, Sydney. He’s looking at offloading his majority stake in Consolidated Media Holdings, which boast a crucial 25 per cent stake in Foxtel.

Over at Foxtel, things are happening quickly. Telstra has named Robert Nason, a current member of the Foxtel board, as the incoming replacement for chairman Bruce Ackhurst. The departing chairman stands down at the end of the month. Nason will have to contend not just with the Austar United Communications merger, approved last month by the Australian Competition and Consumer Commission, but also the potential for Telstra to make a play for CMH’s stake. Thanks to comments from Telstra chief executive David Thodey, we can be pretty sure that the telco will be wanting a discussion about Foxtel with the consumer watchdog.

APA Group, Hastings Diversified Utilities Fund

Australia’s largest natural gas infrastructure company, APA Group, is willing to let go of the Moomba to Adelaide pipeline system in order to win over the consumer watchdog. APA has a $2 billion cash and scrip offer on the table for the rest of Hastings Diversified Utilities Fund that it doesn’t already own, but the Australian Competition and Consumer Commission has expressed concern that the eastern coast could be dominated by one gas pipeline player.

APA says it has made an undertaking to the ACCC to divest the Moomba system once acquiring Hastings Diversified Utilities Fund. It’s part of a range of things APA has promised to do in order to secure the consumer watchdog’s blessing. However, the deal still has to win the approval of the target’s shareholders. The APA board has rejected the proposal and inked a $100 million agreement with Santos involving the Moomba pipeline since rebuffing APA’s advances.

AGL Energy, Great Energy Alliance Corp

Speaking of the ACCC, the consumer regulator’s verdict on AGL Energy’s tilt for the rest of Victoria’s Loy Yang A Power Station is due to be handed down next week. JP Morgan analyst Jason Steed believes the ACCC will waive the proposal through, according to The Australian Financial Review. Steed points to the ACCC’s comfort with AGL and Origin Energy participating in the NSW government’s privatisation of the state’s electricity assets. If they’re happy in NSW, they’ll in all likelihood be happy in Victoria.

AGL is hoping to buy out Tokyo Electric Power Corp and a group of smaller shareholders to increase its stake from 32.5 per cent to 100 per cent. The newspaper says Dealogic values the transaction at $US3.1 billion, once you take into account all Loy Yang’s debt. AGL has had to battle for support for its $850 million renounceable rights issue, which would be conducted by Citibank and Deutsche Bank.

Dulux Group, Alesco Corporation

Directors of garage door maker Alesco Corporation will take a careful look at the $188 million, $2 cash per share takeover bid from paints company Dulux Group before telling its shareholders what to do. The board issued a statement to the market on Friday urging shareholders to ‘take no action,’ echoing much of what was said by a company spokesperson the night before.

The greatest asset Alesco has in its defence is the share price. The premium that the company has consistently traded at allows the directors to point to clear evidence from the market that a higher offer is justified. The board has a little bit less margin to work with, as the share price has fallen from a 5 per cent premium to the offer to a 3 per cent premium. However, it’s large enough to make sure that Dulux can’t exert too much pressure on Alesco through its 20 per cent stake in the target.

Gunns Limited

Timber company Gunns Limited is understood to have offloaded its Heyfield native forest sawmill in Victoria to Hermal Group for less than some were expecting. The Australian Financial Review reports the asset was sold for $28 million, which is a little less than some $35 million valuations floating around last month. Whatever the case is, Gunns is expected to keep the sale price secret.

The timber company is busy offloading as many non-core assets as possible to give it the flexibility to rekindle its $2.3 billion Bell Bay pulp mill hopes. We’re still waiting for Gunns to emerge from its early-March share suspension.

Wrapping up

Investment bank Macquarie Group is reportedly leading a consortium bidding for the gas transmission network of a German utility company called E.ON that’s set to succeed. The Australian reports that the deal hasn’t been signed, but the two sides have come to an in-principle agreement. Speaking of Macquarie, the investment bank is apparently tapping the market for interest in Coalpac, a coalminer that’s 80 per cent owned by CET Resources. Coalpac was on the block in 2010 but things didn’t work out. Now with the Whitehaven-Aston deal getting done and Peabody Energy looking to sell its Wilkie Creek asset, a second attempt could be on the cards.

Meanwhile, Transfield Services has picked up $281 million worth of work across a handful of projects. The industrial services company has secured contracts with the Defence Support Group, NBN Co and the Auckland transport department, as well as an extension to its Austin Health contract in Melbourne.

And finally, Myer looks like it's going to solidify its relationship with former David Jones fashion brand Arthur Galan. The AFR understands that the department store is in talks with Arthur Galan to strengthen the company’s exclusive brands arsenal. Myer has been forking out millions for individual labels in order to build some margin into its business. It’s a strategy that hasn’t just improved profitability, but it’s also helped Myer pinch some labels of DJs.

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