Telstra, Foxtel, Consolidated Media Holdings
Telstra Corporation chief executive David Thodey left many market onlookers feeling a little foolish – including this column – by ignoring what they had effectively pencilled in for his investor update. Telstra has opted against starting a share buyback of up to $3 billion for time being, despite widespread expectations to the contrary. Shareholders will just have to settle for an unchanged guidance and dividend.
Thankfully, Thodey gave the market something else to talk about – billionaire James Packer. The Telstra boss spoke matter-of-factly about the company’s interest in purchasing the $900 million Consolidated Media Holdings if it were to come up for sale. Packer’s Consolidated Press Holdings owns 49.9 per cent of CMH, while Seven Group billionaire Kerry Stokes has 24.4 per cent.
The idea is that Telstra would get another 25 per cent of Foxtel through the purchase of CMH, while Packer would get some extra cash to take majority ownership of Crown, which is only a few percentage points away, and/or climb up the Echo Entertainment register. However, you’ll find that under both of those scenarios, each company will run into some issues with the Australian Competition and Consumer Commission.
Of course, Foxtel’s other famous shareholder is News Corp, which has 25 per cent. Rupert Murdoch’s empire has struck a spot of bother after discovering it has breached US foreign ownership laws. The media company has been forced to suspend the voting rights of all non-US investors after a routine review of the company’s share structure revealed that foreign ownership in the company’s Class B (voting) stock had reached 36 per cent. The limit is 25 per cent.
Luckily, Murdoch himself became a US citizen 1985, though he has pledged to hold his voting back until this is resolved. Still, the suspension impacts on some very important figures, including crucial Murdoch backed Prince Alwaleed bin Talal. If the suspension lingers, look out for some companies trying to sell out of News Corp.
Rio Tinto, Ivanhoe Australia
Mining giant Rio Tinto has reportedly held discussions with Ivanhoe Australia about divesting a 59 per cent stake in the company. According to Fairfax, Rio has not made a formal decision on the matter, but has pledged to co-operate with Ivanhoe Australia if a selldown does eventuate. After securing 51 per cent of parent company Ivanhoe Mines, based in Canada, it’s been widely anticipated that Rio will drop a lot of Ivanhoe assets to focus on the $10 billion Oyu Tolgoi copper-gold project in Mongolia.
The complicating factor for Ivanhoe Australia is itself in the middle of a sales process. According to The Australian Financial Review, Ivanhoe Australia has set the final offer deadline for a portfolio of base metal projects for some time next month. The question is, if any of these bidders would be interested in winning that 59 per cent stake in Ivanhoe Australia, would it not be better to call off this process and start speaking directly to Rio?
Brookfield Asset Management, Thakral Holdings
Brookfield Asset Management is proposing to put $410 million on the table for Australian listed property developer Thakral Holdings. The target released a statement to the market indicating that Brookfield was happy with a price of 70 cents a share, a 31 per cent premium to the price before the offer was made public.
However, there are a handful of conditions, including due diligence. Thakral shares responded by jumping 8 per cent to 58 cents a share, their highest point in three months. Brookfield is taking its own advice through Brookfield Financial, while also employing the legal expertise of Clayton Utz.
Ellerston Capital, Treasury Wine Estates
Maybe Packer instructed one of his associates to order some celebratory drinks. The Packer-based investment group Ellerston Capital has increased its stake in Treasury Wine Estates, the former wine arm of Foster’s Group. Ellerston has upped its stake in TWE from 5.03 per cent to 6.1 per cent, worth a total of $175 million.
The move comes after a bullish three months for TWE, which has watched its share price increase 22.3 per cent while the market has added a more modest 3.5 per cent. Speculation has been rife that the former Foster’s unit is looking ripe for an international takeover offer, possibly from China, which has a significant grape shortage.
AMP has taken an important step towards Japan’s pension market. AMP, together with Mitsubishi UFJ, has lodged the joint offering documents with the national regulator. The Mitsubishi UFJ-AMP Global Infrastructure Bond Fund is expected to open to retail investors by June 1.
Cooper Energy is reportedly in advanced discussions with a smaller producer called Somerton Energy about a $31.1 million takeover offer. The Australian brings word from two people familiar with the situation, who say shareholders will be offered a cash and scrip proposal.
And finally, data centre company NEXTDC has been thrown into a trading halt ahead of a potential capital raising. The Australian Financial Review is expecting the raising to come in around $50 million.
BREAKFAST DEALS: Thodey surprise
Telstra boss David Thodey throws a curveball with some alternative ideas for his cash pile, while an ownership breach hits News Corp.
Telstra, Foxtel, Consolidated Media Holdings
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free