BREAKFAST DEALS: SGX x-ray
ASX-SGX
While the proposed merger between local exchange operator ASX Ltd (ASX) and the Singapore Exchange Limited (SGX) has so far managed to rouse a hornet's nest of political opposition in Canberra it looks like the transaction may now have to contend with some regulatory scrutiny. The Australian Competition and Consumer Commission (ACCC) is set to review the planned takeover with the regulator preparing to run its eye over how the deal may affect competition between exchanges and trading platforms in Australia. The review is a bit of an about turn from the competition regulator especially after ACCC boss Graeme Samuel played down any competition concerns when SGX and ASX revealed their plans. However, given SGX's link to ASX's number one competition in the local space, Chi-X, the ACCC's concerns are understandable. SGX has a joint venture with Chi-X, Chi-East, which plans to offer a dark pool for brokers and fund managers to place and match large buy and sell orders anonymously for stocks listed in Australia, Hong Kong, Japan and Singapore. Chi-X is set to make its Australian debut in the middle of next year but as the ACCC now points out a combined SGX-ASX will be in direct competition with Chi-X Australia. ASX has made no secret of the fact that its decision to join forces with SGX was linked to countering the entry of Chi-X Australia but there is a chance, albeit a slim one, that SGX's decision to have its fingers in both pies may work against the deal. But don't expect SGX boss Magnus Bocker and ASX's Robert Elstone to lose too much sleep on the matter, they have got the much more urgent task of getting Canberra to play ball.
Woodside
West Australian premier Colin Barnett did a pretty good impersonation of Saskatchewan's premier Brad Wall the other day telling foreign suitors to keep their hands of Perth-based oil and gas producer Woodside Petroleum but the federal government has moved to play down concerns that this sort of political grandstanding is not an indication of where Australia stands when it comes to foreign investment. With Royal Dutch Shell's move to offload a 10 per cent stake in Woodside making the company a clear target, federal resource minister Martin Ferguson has told Bloomberg that any application to acquire a stake in Woodside would be considered through the normal channels. Ferguson's words will probably give some comfort to Woodside's former boss John Akehurst – the man who fended of Shell's $10 billion takeover bid in 2001. While Akerhurst was a fierce defender of Woodside nine years ago he certainly has a different take on the issue now, telling The Australian that a foreign takeover of Woodside should only be blocked if it posed genuine concerns to national interest. Akehurst, who is a member of the RBA's board, said that was the case in 2001 but conditions have changed since then and he has a point. Peter Costello's rejection was based on fears that a Shell takeover would have stymied the development of the North West Shelf, especially as the oil major was busy selling the gas out of its facilities in Russia's Sakhalin Island. But that was then and this is now and Akehurst says the last thing Australia needs is "obstructions to the free flow of investment capital into this country.”
AMP/AXA
There may be a new twist in the long-running carve up of AXA Asia Pacific Holdings (AXA APH) with talks that AMP and AXA APH's French parent AXA SA may have a solution at hand that keeps all parties happy. Here's a couple of things we already know – AXA APH's boss Rick Allert is unlikely to accept anything lower than the $6.43 a share offered by National Australia Bank (NAB), AMP is still keen to tip in more scrip than cash and AXA SA would just like to get on with things in Asia. Taking all that into account, one of the key things on Allert's mind has been ensure that his shareholders are not exposed to any risk of AMP's share price falling between announcement and completion of a scheme of arrangement and it looks like Goldman comments made at an AMP roadshow last week have provided a glimpse to a possible solution. According to media reports, there was a mention of AXA SA thinking of collaring AXA APH's stock and guaranteeing the target's shareholders will be protected once AMP lobs a revised bid. This guarantee will remove a key hurdle and could be just the thing to breathe some life into the whole affair.
Port of Brisbane, QR National
Queensland government's $16 billion privatisation plan received a boost yesterday with the sale of the Port of Brisbane for $2.3 billion to the Q Port Holdings consortium led by Global Infrastructure Partners, Industry Funds Management and the Queensland Investment Corporation. Under the terms of the agreement the consortium will run the facility while the Queensland government will retain ownership of the port land and key infrastructure. The auction process for the port didn't really send pulses racing and Q Port was widely tipped to beat a rival Morgan Stanley-UniSuper Infrastructure Partners consortium to take the prize, especially after New Zealand's Infratil and HRL Morrison pulled out of the race and India's Adani Group also failed to lodge a bid citing its distaste for the landlord model offered by the state. The $2.1 billion cash offered by Q Port is also a fair way off the $3.5 billion originally envisioned by the Bligh government but as state treasurer Andrew Fraser points out it's still within the government's expectations. With the auction done and dusted the focus will now return to the more pressing matter of the QR National float and the coal hauler's chairman John Prescott has reportedly played down talk that the $6 billion IPO may have to be repriced. Prescott has told the media that the float will be priced between the forecast range of $2.50 to $3 a share and if the price for Port of Brisbane is anything to go by it will probably be near that $2.50 figure. The Bligh government will also be getting ready to put the $1.5 billion Abbott Point coal terminal for sale but the asset sale will not be enough to get the state's budget into black with a $1.75 billion deficit expected this year.
Wrapping up
It hasn't taken PBL Media's newly installed boss David Gyngell long to ring the changes at the media group executive ranks, with new managing directors for Nine Network and ACP Magazines. Gyngell has installed Jeff Browne as the the managing director of the Nine Network, while Phil Scott will be the new managing director of ACP Magazines. Other appointments include Pat O'Sullivan as PBL's new chief operating officer and finance director, and Brett Dickson, who will report to Browne as the new chief operating and finance officer of the Nine Network. ACP Magazine chief operating and finance officer Matthew Stanton will also oversee the ACP New Zealand, Asia and trader businesses. Meanwhile, grocery wholesaler Metcash's plans to take the Franklins chain from South Africa's Pick n Pay for $215 million may be teetering. According to The Australian Financial Review, fears are growing that the ACCC is set to reject the deal. The regulator was expected to hand down its final decision today but that announcement has been delayed until next week. Elsewhere, Canada's Brookfield Asset Management is reportedly eyeing a float of a $4 billion portfolio of Australian office assets in 2011. In the mining sector, Xstrata's $520 million play for Sphere Minerals is finally on the home stretch with more than half of the iron ore minnow's shareholders set to back the Swiss miner's $3 a share offer. The final coup for Xstrata came after UK's Genesis Investment Management agreed to sell its 7.98 per cent stake to the suitor. Elsewhere, Karoon Gas shares are in a trading halt amid speculation that the company may delay the closure of pricing on its planned spin-off of South American assets as it awaits exploration results from its Maruja exploration well, the AFR reports. Finally, professional services company Towers Watson is set to buy insurance consulting and software company EMB to expand its offerings to property and casualty insurance clients. Terms of the deal were not disclosed.
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