BREAKFAST DEALS: Telstra teaser

Telstra's Rick Ellis denies the telco is looking at Nine, while Leighton's sale of Thiess also disappoints.

Some Telstra investors will be happy to know that the telco isn’t looking over Nine Entertainment (at the moment), but what does that mean for CVC Asia Pacific? Meanwhile, Leighton Holdings has managed to get its Thiess Waste Management business, but not for the price it was hoping. What does that mean for pending asset sales? Elsewhere, Asciano’s boss has foreseen a coming ports sector footprint, Fortescue Metals could have finally lost a founding shareholder and BHP Billiton is buying up exploration permits big time in South Australia.

Telstra Corporation, Nine Entertainment

Nine Entertainment’s private equity owners might be more than a little disappointed to hear that Telstra Corporation isn’t looking at the debt-laden company.

CVC Asia Pacific has been trying to drum up interest in Nine as part of a broad strategy to keep it from the clutches of US hedge funds, Apollo Global Management and Oaktree Capital.

Telstra executive Rick Ellis has emphatically denied earlier reports that the telco is running the ruler over Nine Entertainment.

Appointed managing director of media in January, Ellis has spent the last six months working on the telco’s highly guarded media strategy, which will govern its move into the post-NBN world.

"We are not looking at Nine Entertainment,” said Ellis. "We are not contemplating any acquisitions at this point in time.”

That’s a pretty strong denial given the equally strong reports that Telstra was looking over Nine, amongst other targets, with its investment bank Credit Suisse.

It also made sense, given the fact that Nine has some stellar media assets that everyone from News Corporation to Hollywood legend Harry Sloan has looked at.

When you consider the manifesto of Telstra chief executive David Thodey that the company’s growth will come from content, cloud computing and Asia, why not look over a distressed company?

The "at this point in time” qualifier is an important reminder that Telstra’s strategy is still to move into media and a move via acquisition remains a big option. Perhaps the fact that the media industry as a whole is in upheaval means Telstra needn’t be hurried.

Leighton Holdings, Thiess Waste Management, Remondis AG & Co KG

Leighton Holdings chief executive Hamish Tyrwhitt has taken another crucial step towards reducing his company’s debt and complexity with the sale of Thiess Waste Management.

But the final result appears to be somewhat disappointing.

Thiess Waste Management was ultimately sold to Remondis AG & Co KG – the Germans won out over the French-Singaporean joint venture SITA, which withdrew – for $218 million. The deal, for which JP Morgan acted as financial adviser, will generate about $115 million of net pre-tax capital. JP Morgan acted as financial adviser.

The initial window was for a pricetag of $250 million to $300 million. The decision to sell really underlines Tyrwhitt’s determination to shift away from non-core assets and focus on what Leighton does best…but, less well of late, it must be said.

So what’s next? The Australian Financial Review suggests that the path of least resistance would be selling its stakes in Macmahon Holdings, Sedgman and Devine.

The problem with that is that the share prices are in a poor state and selling otherwise sound assets at the bottom of the chart simply because they’re non-core in order to support troublesome core businesses is a strategy that’s at the very least PR-challenged.

Asciano, Patrick, DP World, Hutchison Ports

Asciano chief executive John Mullen has given an interesting insight into how the Australian ports sector might evolve and what part his company’s Patrick ports business might play.

"All parts of the business are perpetually under review,” said Mullen according to Fairfax. "So if someone comes along and shows they can get an even bigger return out of the business by us hiving it off, demerging it, selling it or whatever, we will be all over it.”

The option of selling off Patrick or divesting it was ruled out last year, disappointing some onlookers. However, Mullen also said it’s entirely likely that the industry will be dominated by one player not far from now. He added that it’s not his belief that Patrick is an underperformer – some would disagree with him.

If Patick were to get a knock on the door, it would likely come from Dubai’s DP World or Hong Kong's Hutchison.

Fortescue Metals Group, Leucadia National

Andrew Forrest’s Fortescue Metals Group is said to have finally waved goodbye to one of its most important founding shareholders, Leucadia National.

According to The Australian Financial Review, Leucadia might have offloaded its final 20 million shares, having slashed its stake by two-thirds in February this year.

If the New York-based investment fund has offloaded the stock, the question is who’s the buyer.

Much of the attention is centring on Canada’s Teck Resources, thought to hold a stake in Fortescue of less than 5 per cent through Quinambo Nominees.

The AFR also says that JP Morgan’s has put Fortescue on its takeover candidate list after Forrest splashed $135 million on the stock.

BHP Billiton

Mining giant BHP Billiton has dramatically increased its exploration program around Olympic Dam as investors wait for a final investment decision to be made on the 100-year mine.

BHP has been quietly picking up exploration rights with four smaller miners around its site in South Australia.

However, according to media reports the miner has also been seeking permission for areas starting north of Olympic Dam and then forming a huge arc down the eastern side of Lake Torrens, heading towards Hawker and Port Augusta.

To put this into perspective, The Daily Telegraph says last year BHP had exploration rights covering 2658sq km of land. This year it’s seeking permits for 22,806sq km. That’s an area the size of a third of Tasmania.

According to media reports, the South Australian government has given approval for five new permits.

While these are small potatoes for BHP, they will prove to be crucial details for if and when BHP gives the green light to Olympic Dam.

Wrap up

Struggling fund manager Austock has agreed to sell its property funds management business to Folkestone for $11 million.

The deal certainly puts some context to the rejection of a $14 million offer for the whole company from Mariner Corporation.

Shares in the company emerged from a trading halt yesterday to jump 4 per cent to 13 cents a pop. Again, given that Mariner was offering 11 cents a share, you can understand their rejection.

Meanwhile in resources, Tigers Realm Coal, which includes Owen Hegarty as a director, has gone into a trading halt ahead of an anticipated capital raising after a tumultuous first 11 months on the ASX.

Speaking of listings, Capilano Honey graduated from the Bendigo Stock Exchange to the Australian Stock Exchange (although given the range trading, graduated might not be the right sentiment) yesterday, but not a single share changed hands.

Elsewhere, Cargill Australia has pulled out of the bidding process for Goodman Fielder’s edible fats and oils business. Unsurprisingly, the stumbling block appears to be the Australian Competition and Consumer Commission (ACCC), which has previously raised objections.

And finally, Ironbridge is in exclusive discussions with Quadrant Private Equity to onsell its furniture retailers Super A-Mart and Barbeques Galore.

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