BREAKFAST DEALS: Rio surprise

Rio Tinto surprises the market by giving bigger a slice of its profits pie to shareholders through an expanded and accelerated share buyback. Macarthur Coal's suitors take aim at the miner's management in their bidders' statement to shareholders. Meanwhile, the heavyweight investors behind Global Aviation Asset Management count the cash after sealing a $1.4 billion deal with former Babcock & Brown air leasing business Fly Lease and turn their attention to new pastures, Leighton Holdings' Victorian desalination project woes claim a high-profile casualty and Seven West Media's David Leckie may be headed for a non-executive role. Elsewhere, Collins Foods' ASX debut fails to sizzle, Archer Capital may be looking for a MYOB exit and Woolworths may have a replacement for outgoing supermarkets boss Greg Foran.

Rio Tinto

Rio Tinto's record first half profit may not have quite stacked up to analysts expectations but the mining giant did have some good news for its shareholders, announcing plans to boost its current buyback program to the tune of $US2 billion, from $US5 billion to $US7 billion, and also bringing forward the completion date by a full nine months. So far Rio has bought back 44 million shares through its London listing at a cost of $US3 billion and the buyback boost comes despite fears that the situation in US and Europe could potentially lead to a broader global economic crisis. However, Rio is sticking to its bullish China story and that's good news when it comes to selling commodities. However, Rio maintains that the expanded buyback scheme isn't a sign that it's not interested in acquisitions in the short term. As the miner's chief financial officer Guy Elliot points out, buyback schemes are subject to market conditions and could be suspended if an opportunity cropped up. There are a number of places that Rio could make a move, although Macarthur Coal is probably not in its sights. The one potential acquisition that has the market buzzing is the possible takeover of its joint venture partner in Mongolia, Ivanhoe Mines. That could come into frame in 2012 and there is talk that Ivanhoe may be cleaning up its corporate structure to prepare for such a move. The share buyback is expected to be completed by the end of the first quarter of 2012. The thing that has really got analysts worried is that the weakness in Rio's result was to a great extent a result of escalating costs. While sales have been in line it's the rampant inflation in input costs and higher labour costs that seems to have taken some of the shine off Rio's results. At a time when bearish sentiment seems to be holding sway over the markets those issues along with fears of a severe global slowdown, as evidenced by the precipitous drop in Wall Street overnight, will make everyone nervous.

Macarthur Coal, Peabody Energy

Meanwhile, Macarthur Coal boss Nicole Hollows may have given the impression that there was no hostility between it and its suitors Peabody Coal and ArcelorMittal, but that's not the impression one gets reading the bidders' statement lodged by the two suitors. Both Peabody and Arcelor have taken aim at Macarthur's management, telling shareholders that the coal miner's share price has significantly lagged behind its peers over the 12 months prior to their indicative proposal. They point out that Macarthur's share price declined by 17.3 per cent over the period while the S&P/ASX 200 Resources Index rose by 12.8 per cent. The suitors add that so far Macarthur has pretty much failed to deliver on most of its original production guidance, falling short of its original production guidance for four of the past five years and tackling ongoing delays reaching first large scale production from Middlemount, which was originally planned for late 2009, but is now expected in 2012. The offer is set to open to Macarthur shareholders in two weeks and it will be interesting to see if Hollows and Co decide to return fire through their target statement.

GAAM, Fly Lease

Now to some fancy flying by a stellar cast of local investors who have been the force behind the country's second-biggest aircraft leasing business Global Aviation Asset Management and have now managed to sell it to US-listed FLY Leasing for $US1.4 billion. FLY is the former Babcock and Brown aviation leasing business and boasts former B&B execs Trevor Lowensohn and Phil Brown as its advisors. The merry cast at GAAM cashing in on the deal include former Qantas boss Geoff Dixon, his former CFO and former Leighton CFO Peter Gregg, former Allco boss David Coe, John Singleton and private equity investor Mark Carnegie. This team is now looking at multiple investment opportunities and Dixon has told The Australian Financial Review that they are looking to put together a bid to take over the management of the $6 billion portfolio of RBS Aviation Capital, the fourth-largest aviation leasing company in the world.

Toll Holdings, Leighton Holdings, Seven West Media

It was a fairly active day yesterday when it came to executives coming and going at major companies and there is talk of another major corporate move potentially in the making. Firstly, Toll Holdings has finally put current CFO Brian Kruger on Paul Little's throne and the focus has justifiably turned to whether Kruger can forge his own path at Toll or remain under Little's shadow. It's not that the market doubts the capability of Kruger, but there is an overwhelming feeling that given Little's looming presence at Toll, which is expected to remain for some time to come, Kruger may not get a chance to show his chops. Well the proof will be in the pudding as Kruger takes over the reins next year. Meanwhile, Leighton Holdings may have narrowly avoided a damaging net profit downgrade, just weeks before it reports its full-year results, but the market's focus is very much on the ongoing problems at the Victorian desalination plant. Leighton has warned of a fresh $278 million hit on the project and the news has claimed a high level scalp, with the head of Leighton's Thiess unit, David Saxelby, set to exit the company later this year. Now to the potential corporate move in the media sector, The Australian Financial Review reports that Seven West Media chief executive David Leckie may be on his way to taking a non-executive role at Kerry Stokes' media empire. According to the paper, Stokes has reportedly told a handful of senior Seven executives that Leckie will be replaced as the head of Seven's TV business by director of programming and production Tim Worner.

Collins Foods' weak ASX debut

Fast-food group Collins Foods made a less than stellar debut on the ASX yesterday and things don't look that bright this morning given the carnage in overseas markets. Collins dropped eight per cent in yesterday's session to close at $2.30 after the IPO offer of 80.7 million shares at a price of $2.50 per share last month. There was also surprisingly low volume in trade, with only two per cent of stock changing hands. So not quite the sizzle some had been hoping for from the operator of KFC and Sizzler restaurants and not the best news for the local IPO market.

Wrapping up

In private equity news, there is talk that accounting software provider MYOB's owner Archer Capital may be mulling the sale of the business after a deal to potentially add New Zealand's BankLink business to MYOB fell over yesterday. With that transaction out of the picture, Archer has reportedly hired UBS to help evaluate its strategic options to exit MYOB. Meanwhile, the AFR reports that New Zealand's Freightways may be a potential suitor for Brambles' Recall business. Elsewhere, with final bids for Independent Liquor now on the table, it looks like neither Woolworths nor Coles have decided to have a bite. There was talk that Coles might take a look as it looks to expand its liquor business but the race is now between Japan's Suntory and Asahi, and a few private equity operators. Speaking of Woolworths, the AFR adds that there is speculation the retailer has found a replacement for Greg Foran with former Tesco heavy hitter Colin Holmes in the frame for the job. In more retail sector doom and gloom, women's fashion house Brown Sugar has entered voluntary administration. The company has appointed Deloitte Corporate Reorganisation Group as voluntary administrators. In other news, DUET Group has launched a fully underwritten accelerated non-renounceable 1 for 5 pro rata entitlement offer at $1.52 a share to raise about $277 million. Spotless Group has confirmed that it is hanging on to its hangar business Braiform after receiving unsolicited approaches for the unit. And rural property investor PrimeAg's board has managed to fend off the challenge by its substantial holder, with Australian Food & Fibre withdrawing its request for general meeting to dump the existing board.