BREAKFAST DEALS: Telstra talk

Telstra and the NBN Co edge closer to formally finalising their $9 billion deal for the telco to switch off its copper network, a move that will please both Telstra and the NBN Co. Meanwhile, it looks like Lend Lease may not have given up hope of nabbing Centro Properties and may a have a plan up its sleeve, Treasury Wines Estate piques the interest of global wine giant Constellation Brands, Moody's follows through with its warning of downgrading Australia's big four banks and the race for Tully Sugar begins in earnest with a new player joining the field. Elsewhere, Woolworths' incoming boss Grant O'Brien warns that the retailer's move into the hardware sector will hurt at first and a Redflex Holdings investor says the failure of the recent $303 million takeover offer warrants a closer look.

Telstra, NBN

Telstra boss David Thodey has now spent two years as the boss of the telco and funnily enough Telstra's stock is exactly at the same mark today as when Thodey marked his first anniversary. Thodey may have his critics and Telstra may have restructuring challenges but the good news is that after hitting a historical low of $2.56 in August last year the telco's stock is pushing up again. A lot of that has to do with the fact that Thodey has creditably managed to guide Telstra through the contentious NBN negotiations with the Labor government and is reportedly edging closer to formally finalising its $9 billion agreement with the NBN Co to turn off its copper network. According to The Australian, the agreement could be signed as early as next week, which should set the stage for the documents to be examined by the cabinet. That would be welcome news not only for Telstra, which was originally hoping to put the deal up to shareholder vote by July, but also for the NBN Co which is keen to get the rollout moving as quickly as possible. While the first mainland switch-on of the NBN network was carried out in yesterday, the NBN Co's rollout plans will be greatly helped if it finally picks someone to build the entire network. There is apparently some progress on that front after communications minister Stephen Conroy told ABC Radio yesterday that an announcement was on the cards. The rollout tendering processes was suspended in April after the NBN Co accused the 14 companies vying for a contract of price gouging but Conroy's statement would indicate that a viable candidate has been found.

Lend Lease, Centro Properties Group

It would seem Lend Lease may still have its heart set on Centro Properties Group, despite losing out in its attempt to nab Centro Properties' Australian and US assets in March. Lend Lease had joined forces with Government of Singapore Investment Corporation (GIC) and US-based NRDC-Equity Partners last year to lob a $17 billion bid for the assets only to be beaten to the US assets by Blackstone Group and the move by Centro's management to merge Centro Properties and its listed sister trust Centro Retail. However, Lend Lease is now reportedly looking to disrupt that process through an attempt to buy the $7.2 billion portfolio of Centro's local assets. According to The Australian, Lend Lease has approached Centro's controlling hedge fund investors with an offer and there is a feeling that a suitable offer could sway the funds against merging Centro Properties and Centro Retail. The big unknown here is just how Lend Lease will fund an offer that will have to around the $7 billion mark. It could try to rustle up another posse of willing partners to make its pitch, alternatively it could possibly sell some of its pre-existing assets, pick some of Centro Properties best centres and sell the rest to willing buyers. It will be interesting to see if the rumours actually lead to something here but for the time being Centro Properties management will no doubt stay focussed on keeping the proposed Centro Properties/Centro Retail merger on schedule.

Treasury Wine Estates, Constellation Brands

It hasn't taken long for Foster's wine spin-off Treasury Wine Estates to generate some M&A buzz with global wine giant Constellation Brands voicing its interest. Constellation's boss Rob Sands has told Reuters that the company would evaluate an acquisition of Treasury given that some of the elements in the Treasury business may be a good fit for Constellation. One of these could very likely be the fact that both Constellation and Treasury are setting their sights on growth in China. The China growth agenda has already been flagged by Treasury and Constellation has told the Wall Street Journal that it is set to ramp up its Chinese operation, with a senior executive already installed in Hong Kong and new leader soon to run its Asian business.

Moody's, ANZ Banking Group

Credit ratings agency Moody's has come through on its warning of downgrading the long-term debt ratings of the big four Australian banks but the move is neither a surprise nor will it have a major impact on the banks' funding costs. However, some analysts reckon the banks may become a little more cautious about lending growth. Moody's ratings are now in line with the ones assigned to the banks by its peers Standard & Poor's and Fitch Ratings, so again no real signs of alarm here and the outlook for our banks, which are still AA rated, is now stable. The banks were still keen to come out yesterday and say that all is well. In other banking news, ANZ Banking Group has followed Westpac in signing a co-operation agreement with Export-Import Bank of China and also flagged plans to help double its wealth-management business in Asia over three to four years. ANZ Asia boss Alex Thursby has told Reuters that the bulk of the hiring is likely to be in China and Vietnam, as ANZ develops a wealth-management business which is expected to grow 15-25 per cent per year during the period.

Tully Sugar, Bunge, COFCO, GrainCorp, Ridley

The race for Tully Sugar is on in earnest after shareholders in one of Australia's largest remaining independent sugar millers voted almost unanimously to scrap a 20 per cent ownership limit. The move has unsurprisingly sparked an immediate joust for the target with US suitor Bunge, and China's COFCO now welcoming a third challenger. That challenger is French soft commodities giant Louis Dreyfus that has joined forces with local player Mackay Sugar, which already holds a 9 per cent stake in Tully, to fund a $126.7 million offer. Louis Dreyfus has agreed to provide debt funding of $102 million but there is a good chance that it and Mackay may have to lift their games after Bunge fired back with a sweeter offer for Tully. Bunge is now offering $42 a share for Tully, valuing the target at $130 million, and has declared its bid unconditional. In other sector news, Canada's Viterra may not be the only player taking a look at GrainCorp with The Australian Financial Review reporting that US agribusiness giant Cargill and the soon to be listed Swiss commodities trader Glencore could also be potential predators. Meanwhile, there are also rumblings that Australia's biggest animal feed producer, and a former GrainCorp target, Ridley may be in the sights of interested Chinese parties.

Redflex Holdings

Red light camera company Redflex Holdings' former chairman Chris Cooper may have managed to garner enough support within the ranks to scuttle the $303 million takeover offer by The Carlyle Group and investment bank Macquarie Group earlier this month but questions are slowly starting to be asked about just what went on behind the scenes. One major shareholder with a few questions is Thorney Investments' Alex Waislitz who has told The Australian that he may call on the Australian Securities & Investments Commission to have a look at the issue. According to Waislitz, most professional and retail investors were supportive of the new bid and would have probably accepted it. As it turns out the bid failed to secure enough votes for approval and Waislitz reckons someone should have a look at how that happened.

Wrapping up

Incoming Woolworths boss Grant O'Brien has reportedly doing the rounds with fund managers and the man destined to fill Michael Luscombe's boots at the retailer is evidently keen to be as candid and clear about just what the immediate future holds for Woolworths. O'Brien has reportedly warned that the entry into the hardware sector could hurt Woolworth's profit growth in 2012. Meanwhile, pay-TV operator Austar has told the market that talks between its majority shareholder Liberty Global and rival Foxtel are ongoing and it has not received a takeover bid. There is a chance that the market may be getting a little ahead of itself with regards to the merger, but then again one never knows. Meanwhile, Leighton Holdings has restructured its international operations in order to streamline its reporting structure into two divisions. Leighton Asia, Leighton Welspun India and Leighton Offshore have now been put under the one umbrella and will now report to the newly appointed managing director of the unit Hamish Tyrwhitt. Meanwhile, Leighton-Al Habtoor's boss Laurie Voyer will now also be in charge of operations in Africa. Finally, there's another prospective IPO on the go in the retail sector with Gresham Private Equity reportedly looking float its Witchery and Mimco fashion brands.