BREAKFAST DEALS: RBS race

The big four banks line up as RBS offloads some local assets, while Rio completes its Hathor takeover.

Australian banks have been keeping an eye on the now confirmed sale of large chunks of Royal Bank of Scotland’s footprint down under. It looks like ANZ Bank and Commonwealth Bank of Australia are the most interested, but it’s also a reminder that European banks are in a mighty difficult place at the moment. If local players don’t get RBS’s assets they needn’t worry; there will be more to come. Meanwhile, Rio Tinto has officially wrapped up the purchase of Hathor Exploration – now all they have to do is get permission to actually run a uranium mine in Canada. Elsewhere, Nathan Tinkler is in the US talking up the Whitehaven-Aston merger, while the NSW government prepares to consider his port building ambitions, QBE won’t be swayed from its taste for acquisitions and a reason has been uncovered to explain why Orbis Australia hasn’t turned its threat to try to spill the Spotless Group board into action.

Royal Bank of Scotland

Royal Bank of Scotland chief executive Stephen Hester has lifted the veil on his plans to dramatically shrink the size of the effectively UK government-owned bank. In Australia, the businesses up for grabs are the M&A unit, the equity capital markets arm and the cash and equities research team. It’s hoped that a buyer might be found for the whole business, but it’s far more likely that it’ll be hived off in pieces. Lazard is running the show and it’s been reported that all four of Australia’s big banks have had a look – ANZ Bank and Commonwealth Bank in particular. Barclays and Nomura have also been mentioned as potential bidders.

The Australian Financial Review also reports that the Asia-Pacific business, which incorporates offices in Australia, China and India, is receiving quite a bit more interest. It looks like a potential opportunity for ANZ Bank, given Mike Smith’s ‘regional super-bank’ strategy needs an acquisition or two. But Smith’s ambitions for Asia are focused away from investment banking and with a number of global European-based banks looking shaky, he can afford to pass this one up.

Rio Tinto, Hathor Exploration

Rio Tinto has officially won the day in Canada, announcing that it has compulsorily acquired the remaining shares in Hathor Exploration, the owner of the enticing Roughrider uranium deposit. Now the question is how Rio will get the mine going on its own. At the moment, a company that isn’t majority Canadian-owned cannot operate a uranium mine in the resource-rich nation. Rio has stated that it will press Ottawa for a change in policy and chief executive Tom Albanese has said he believes the Canadian government will be responsive to the miner’s arguments.

There is a second way however. Rio could hand over operating duties to rival bidder Cameco, which lost out to Rio’s $C654 million ($A642 million) bid for Hathor. This scenario would not be ideal, as Cameco would no doubt leverage some kind of value away from Rio, which effectively increases the cost of the takeover bid. It’s also thought that for every dollar Rio spent getting the deposit, it’ll have to chip in another to get the project up and running.

Nathan Tinkler, Aston Resources, Boardwalk Resources, Whitehaven Coal

Coal magnate Nathan Tinkler has a lot on his plate at the moment. He’s got a merger to bed down between his public company Aston Resources and his privately held company Boardwalk Resources, with senior rival Whitehaven Coal, as well as a proposal to build a private coal loader at Newcastle. He appears to have enough time for both.

According to the AFR, Tinkler is currently being whisked around the US by UBS to speak to institutional shareholders about the planned $5.1 billion merger between Whitehaven and Aston, which is planned to include Boardwalk Resources if all goes well. If Tinkler is still in the US next week his thoughts will be returning home because the NSW government will be considering his proposal to construct a $2.5 billion coal port at Newcastle, which will be at odds with the planned expansion of Port Waratah Coal Services.

QBE

Veteran QBE chief executive Frank O’Halloran, who has a penchant for acquisitions, won’t be swayed from his international ambitions for the insurance giant. QBE announced yesterday that a string of expensive disasters would reduce the company's 2011 profit by 40-50 per cent and the company slashed the dividend accordingly. But O’Halloran is on a mission to take opportunities when they come along, although onlookers hoping for another tilt at Insurance Australia Group can rest their legs. "It’s definitely not on the radar screen, we have other opportunities we’re looking at and any larger acquisitions would be outside Australia,” O’Halloran said, according to the AFR.

NBN Co, iiNet, Primus, Internode

An increasingly tense dispute over the national broadband network looks to have been effectively settled with a number of internet service providers signing on to wholesale broadband services contracts. Some last minute jostling forced NBN Co to make a few concessions to the telcos because, without their signatures, they wouldn’t be able to sign on new customers to the NBN, which has already delivered disappointing sign up rates. Now, it’s been reported that Primus, iiNet and Internode, along with a number of other ISPs, have put their pens to paper and signed up for the refined agreement. Telstra and Optus are expected to follow soon.

Wrapping up

Brambles is getting significant private equity attention for its US document management business Recall. The Carlyle Group and Apollo Global Management have already made the list, but the AFR says we can add Canada’s Onex and Thomas H Lee Partners from the US city of Boston.

Treasury Wine Estates, the old wine division of the now SABMiller-owned Foster’s Group, isn’t popping the champagne at the moment. The Australian reports figures from ACNielsen showing that the company’s sales in US grocery stores fell by 5 per cent in the lead up to Christmas, which isn’t exactly the most sober time of year. In its defence, major rival Constellation Brands also lost some ground, but the numbers don’t bode well for TWE that has consistently been nominated as a takeover target – the thinking is a Chinese player.

And finally, many have been wondering if Orbis Australia, perhaps the most vocal critic of the Spotless Group board’s handling of the takeover offer from Pacific Equity Partners, will take its 8.3 per cent stake in the target and call a meeting to spill the board. Why doesn’t it just happen now? It turns out that managing director Simon Marais is on holidays until the start of February and a decision of this nature requires his signature, the AFR reports. So that’s one less thing for Spotless chairman Peter Smedley to worry about for now, but it’s hardly reason to relax.