Foxtel and Austar get the green light for a merger, while a Russian steel giant is set to take over a fledgling iron ore miner.

After months of waiting, thousands of documents and a background court battle with Metcash that kept everyone guessing, the consumer watchdog is reportedly about to give the Foxtel-Austar merger the tick of approval, as long as the broader industry likes the undertakings they’ve proposed. Meanwhile, Gloucester Coal shareholders have been left disappointed by the revised terms of the Yancoal Australia deal, which won’t be easy to get past the Foreign Investment Review Board. Speaking of which, FIRB has allowed Flinders Mines to be picked up by Magnitogorsk Iron and Steel Works. Elsewhere, Rio Tinto has confirmed its Lynemouth aluminium smelter in the UK won’t be part of any Pacific Aluminium trade sale or IPO, and QBE is close to announcing yet another purchase.

Foxtel, Austar United Communications

The consumer watchdog is reportedly poised to give Foxtel and Austar United Communications the green light to merge their operations, assuming that its consultation with industry over the undertakings the two companies have agreed with goes smoothly. The Australian reports that the Australian Competition and Consumer Commission has 19 pages of detailed pledges that Foxtel and Austar have made relating to the sharing of non-exclusive content with other providers, particularly online players.

The newspaper says the agreement leaves enough room for a significant change in technology and the regulator is focused on making sure Telstra’s power isn’t enhanced. The combination of these two ideas is somewhat amusing given that Telstra was brought undone by a development in technology at rival Optus that rendered its own exclusive mobile distribution deal with the AFL effectively meaningless.

Gloucester Coal, Yancoal Australia

Shareholders in Gloucester Coal have given the revised merger agreement with Yancoal Australia an underwhelming reception, probably because the stage was set for more cash. Under the revised terms, Gloucester shareholders will receive $3.15 a share through a special dividend of 44 cents a share and a capital return of $2.71. In total that’s down 5 cents from the original proposal, while Yancoal – a subsidiary of China’s Yanzhou Coal – will contribute $300 million less debt to the combined entity.

The result is a strange outcome given previous reports had indicated only now that the independent directors of Gloucester had signed on, which normally indicates that there’s something extra for the home team. However, Gloucester indicated that the terms had been revised after due diligence so who knows what was discovered in the books.

Yancoal will have to tread carefully however to make sure it can bring the Gloucester shareholders along. It already faces enough trouble getting the FIRB to relax a number of requirements it agreed to in 2009 in order to acquire Felix Resources. Then again, Gloucester shareholders have just watched the sales process at New Hope Corporation fall over, which offers a stark reminder that coal might be hot, but coal deals are not a lock.

Flinders Mines, Magnitogorsk Iron and Steel Works

Speaking of FIRB, the foreign investment body has given the green light to Russian steelmaking giant Magnitogorsk Iron and Steel Works to takeover iron ore hopeful Flinders Mines for $554 million. FIRB approved the 30 cents per share offer from Magnitogorsk, controlled by Russian oligarch Viktor Rashnikov, which is quite a lot higher than the 16.5 cents the target’s shares were trading at before the offer was announced.

Rashnikov got into a tussle with Eurasian Natural Resources Corp late last year, a tussle that resulted in some of the Russian’s Australian assets, including his stake in Fortescue Metals Group, being frozen.

Rio Tinto, Pacific Aluminium

Mining giant Rio Tinto, just a day after announcing a possible slowdown in output at its Tasmanian aluminium smelter – casting more doubt on valuations of its Pacific Aluminium spinoff – has confirmed its Lynemouth smelter in northern England will be shut down at the end of March. Lynemouth, also in the Pacific Aluminium suite of assets that Rio has flagged for an IPO or trade sale, was nominated for likely closure in November.

We’re still waiting on the outcome of talks between Rio and the UK government about whether the accompanying power plant can be sold. The miner said discussions would be finished "in the coming months”.

QBE Insurance Group

QBE Insurance Group chief executive Frank O’Halloran may be in the twilight of his time as boss of Australia’s largest insurer, but he’s being true to form. QBE says it's in the "final stages” of a number of bolt-on acquisitions that could generate an extra $US500 million ($470 million) in gross written premiums each year. If the transaction goes through, having just raised $450 million from the market, QBE says it will be funded through internal sources. Too right, it will.

This follows on from comments made by O’Halloran last week indicating that up to $700 million in additional premiums could be brought into the QBE tent through bolt-on acquisitions. The question on the lips of investors is whether O’Halloran’s replacement, John Neal, current global head of underwriting, will be as headstrong when it comes to acquisitions. While his comments indicate that this will broadly be the case, we’ll have to wait and see given QBE’s increasingly complex business model and recently damaged reputation with investors.

Woolworths, Dick Smith Electronics

Woolworths ran into some serious market scepticism – some of it appeared in this column – when it announced that its Dick Smith Electronics chain was under "review” after such a long period when onlookers were calling for it to be offloaded as its value deteriorated. But chief executive Grant O’Brien has had a rather upbeat tone when it comes to the potential sale and now we understand why. The Australian Financial Review understands that the Dick Smith management team has delivered 11 or 12 presentations to interested parties who have signed confidentiality agreements.

Crown, Echo Entertainment

Echo Entertainment is unlikely to get any assistance from the corporate regulator in its battle with James Packer and his Crown empire, at least not yet. The Australian understands that the Australian Securities and Investments Commission has had a look at Crown’s derivative-based purchase of a 10 per cent stake in Echo, but it has determined that the market has been fully informed – albeit in a slightly confusing way – about Crown’s intentions, and thus it won’t intervene. Now we wait to see whether Echo lodges a complaint with the Takeovers Panel.

Wrap up

Mining billionaire Gina Rinehart came face-to-face with Fairfax Media chairman Roger Corbett and chief executive Greg Hywood for the first time since taking a stake in the media company, and she's believed to have asked for a board seat. According to The Australian Financial Review, a Fairfax publication, Rinehart asked for the board seat yesterday during a tour of the media company's Sydney offices.

News Limited reports that Ridley Corp could offload its Cheetham Salt business for more than $240 million, according to a person familiar with the situation. In financials, Macquarie Group is getting on the hybrid share raising train, with the silver donut looking to extract $US500 million from investors.

And finally, Goodman Group has opened up its Interlink centre in Hong Kong to serve as a stepping stone into the broader Asian region, Fairfax reports. The company offloaded a 50 per cent stake in the project last year.


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