BREAKFAST DEALS: SABMiller success

The takeover tussle for Foster's ends with honours for both sides, as a process that started with hostility ends amicably. While both parties are keen to portray the transaction as a victory for their negotiation strategy, there are still question marks over whether SAB has spent too much on its quarry or Foster's has sold itself too cheaply. Meanwhile, New Limited eyes a makeover as Rupert Murdoch cops a serve from fellow media baron Ted Turner and tempers flare again between Rio Tinto and Ivanhoe Mines. Elsewhere, Wesfarmers hoses down talk of a move on whitegoods retailer The Good Guys, Asciano director and former ANZ executive Bob Edgar is appointed chairman of the new Centro Fund and Hewlett Packard shares rise on talk that CEO Leo Apotheker is on his way out after a torrid 11 months in the job.

Foster's Group, SABMiller

The takeover tussle for iconic Australian brewer Foster's Group has finally been resolved and the process that realistically began once the company split its beer and wine divisions in May has delivered a result. Foster's chairman David Crawford informed the market last night that the company had agreed to a "compelling" $5.5325 a share offer from SABMiller and urged Foster's shareholders to vote in favour of the deal in December. SAB's revised offer, which was always on the cards, offers a 13 per cent premium to its original $4.90 a share offer and comprises $5.10 in cash, a 30 cent capital return and the 13.25 cents per share final dividend that the suitor had originally said would be stripped out of the bid price. The merger will be executed via a scheme of arrangement and will require the approval of a 50 per cent majority of shareholders by number with at least 75 per cent of the company's stock. So, a takeover process that saw its fair share of hostility has ended amicably despite both parties exchanging fierce volleys. It wasn't that long ago that Crawford and Foster's CEO John Pollaers were touting the future of an independent Foster's and defending its position after SAB went to the Takeovers Panel, claiming that the target made misleading statements when it reported its annual financial results in August. A different sentiment was on display last night with both parties full of praise for each other and Pollaers saying that Foster's is set to thrive under SAB's management. There will also be a fair deal of chest thumping on both sides with regards to who got the better deal, with SAB boss Graham Mackay keen to impress upon his shareholders that the equity component of the bid has only been raised a paltry 20 cents, while Crawford and Pollaers will celebrate the fact that they have managed to squeeze out a sweetener from the suitor. As it turns out, both parties have their own take on the price, with Foster's spruiking an enterprise value of $12.3 billion, while SAB is touting the value as $11.5 billion. Mackay has been under pressure in London from SAB's institutional investors to desist from paying too high a price for Foster's and he has been spruiking the deal as an example of astute wheeling and dealing. However, there will always be those who reckon putting that sort of cash on the table for an asset – albeit one that offers a a high margin – in a mature market is worthwhile, especially when all the action has been in the emerging markets. SABMiller's share price closed down 1.62 per cent in London overnight. On the flipside, questions will no doubt be asked as to whether Foster's should have held out for more and Fairfax's Ian McIlwraith perhaps hit the nail on the head with his view that the deal isn't a bad one for Foster's, but not great either. At the end, it's fair to say that it's honours even for both management teams but kudos to SAB's advisers JP Morgan, RBS and Moelis for pulling off the biggest domestic deal of 2011 and Foster's advisers Goldman Sachs and Gresham Partners for successfully navigating the deal through hostile waters. While there will be a lot of commentary on whether Foster's has sold out on the cheap, and perhaps the loss of another Australian icon isn't something worth celebrating, the Foster's/SAB deal will also have ramifications for other parties. On a positive note, SAB will pay up to $380 million to buy out Coca-Cola Amatil's 50 per cent share of their Pacific Beverages alcohol joint venture. The money will be put to good use by CCA with quite a lot of it earmarked to buy Foster's spirits and pre-mixed alcoholic and non-alcoholic beverages businesses, as well as its Fijian operations, from SAB. The other interesting thing to note will be the reaction of Grupo Modelo, the owner of Foster's key import Corona, which is unlikely to be happy to see the Australian rights of its beverage in arch-rival SAB's hands.

News Limited, Rupert Murdoch, Ted Turner

The local division of Rupert Murdoch's News Corporation empire, News Limited, is set for a makeover and the nitty gritty of it was laid out in a briefing document first leaked to Crikey. While the document makes no reference to the phone hacking scandal in the UK there is little doubt that the re-branding exercise, which will see the division reportedly re-christened as News Australia, is an exercise in shedding some of the negative perceptions that have rightfully or wrongfully been associated with the media organisation. The document also reveals that News will launch an online "digital pass" across all its mastheads beginning in November, when The Australian newspaper and sections of its other publications will be placed behind a paywall. Under the plan, one account would provide access to all of News' Australian websites. The new brand is reportedly set to officially hit the stands in February but News Limited executives have played down the move describing it as "incomplete" and very much a "work in progress". Meanwhile, Murdoch's position at News Corp has come under fire from fellow media mogul and old antagonist Ted Turner, who has told Bloomberg that Murdoch should have known about the hacking perpetrated by News of the World and should step down. Turner, who founded the CNN cable news network before selling it to Time-Warner in 1996, also said that the hacking scandal is perhaps the gravest threat ever faced by Murdoch and at 80 years old he should think about letting younger hands clean up the mess. Murdoch has copped a lot worse from Turner in the past – a challenge to televised fistfight in 1983 springs to mind – so the latest comments will hardly draw any attention from the News Corp boss.

Rio Tinto, Ivanhoe Mines

Moving to the mining sector, tensions between Rio Tinto and its Canadian partner at the $US6 billion Oyu Tolgoi project in Mongolia, Ivanhoe Mines, have again ramped up a touch with Ivanhoe's boss Robert Friedland apparently taking exception to the recent statements made by Rio concerning the project. Friedland has accused Rio's senior management of incomplete information concerning the project at a briefing to investors this week, however he hasn't specified what bit of the information has raised his ire. The two points made by Rio at the briefing referred to talks underway regarding a review of the investment agreement with Mongolia that governs the mine's development and potential delays at the project because of power supply issues. Ivanhoe said in a statement that it will provide further details "following communication directly with Rio Tinto on the specifics of its concerns". Meanwhile, Gina Rinehart may have sealed the long-awaited deal with India's GVK to get the ball rolling on her coal ambitions in the Galilee Basin but The Australian Financial Review reports that the mining magnate may need to make another deal before the rail infrastructure to carry the coal to Abbott Point is laid out. According to the paper, Central Queensland graziers John and Jan Burnett are holding out for a sweet deal before letting Rinehart and GVK build the line through their Frankfield Station. With GVK finalising the landholder negotiations, it does have the option of calling in the state co-ordinator to compulsorily acquire the property, given that the infrastructure is of state significance, or simply decide to build the railway around it. However, one hopes that there is a chance that the Burnetts end up getting a fair price for their land. Finally, Murchison Metals has admitted that it's going to miss the December 31 deadline to proceed with the $5.9 billion Oakajee port and rail project in Western Australia and said that it was considering revising the tariff structure for the project. A revision to the structure could see a shift from charging miners haulage fees to encouraging equity participation from them instead and will go a long way in placating the foundation customers who had baulked at the rates originally proposed to them.

Wesfarmers, The Good Guys, David Jones, Kathmandu

Now to news in the retail sector, where diversified conglomerate Wesfarmers has reportedly played down suggestions that it is poised to pounce on whitegoods and consumer electronics franchisor The Good Guys. According to the AFR, Wesfarmers did take a look at the business 12 months ago but decided against a move, while private equity firm Blackstone Capital offered up to $700 million before negotiations were put on hold. The paper adds that Blackstone may still be sniffing around for a deal but any imminent action is unlikely. Meanwhile, sales at David Jones show no signs of improvement with the department store revealing a 4.4 per cent slump in full year sales. Perhaps even more galling for DJs is the fact that with online the buzzword in the retail sector, it's still having a tough time establishing its web presence. Nine months after the department store chain rebooted its retail website, less than 0.2 per cent of its sales were made through it last financial year. On the flipside, Kathmandu Holdings seems to be growing from strength to strength with the company not only posting a 25 per cent jump in sales, to $306.1 million, but also saying that it was going to stick by its business in the UK, where sales tumbled 7.1 per cent, and potentially make a push into North America in the next three to four years.

Wrapping up

Asciano director and former ANZ Bank executive Bob Edgar has been appointed chairman of the new Centro Fund, which will be formed when Centro Properties Group and Centro Retail Trust are merged and simplified. Meanwhile, with the ConnectEast takeover set to go down to the line the AFR reports that one of the major shareholders against the CP2 bid is trying to get its hands on a large line of ConnectEast shares, reportedly close to 4 per cent. Chinese-owned Tully Sugar is still fighting to get its hands on Proserpine Sugar with Tully director John Amies calling on rival Sucrogen's CEO Ian Glasson to put into practice his comments about encouraging full transparency regarding the sale of Proserpine Sugar by allowing the Proserpine board to negotiate openly with other parties without restriction. Finally, in overseas news, Hewlett Packard shares pushed up overnight on rumours that the company's chief executive Leo Apotheker may be on his way out after a troubled 11-month stint. According to tech blog AllThingsDigital, former eBay chief executive Meg Whitman is being considered by the HP board of directors as a possible replacement for Apotheker. HP shares gained 6.72 per cent to close at $23.98. Apotheker, a veteran of German business software giant SAP, took command at HP last November after Mark Hurd resigned following a sexual harassment accusation. HP shares have fallen more than 40 per cent since then.