BREAKFAST DEALS: TRU love

TRUenergy's owners will insist on a majority stake if an IPO progresses, while Goldman questions Dulux's Alesco move.

TRUenergy’s Hong Kong parent, CLP Holdings, has clearly indicated that if the Australian energy company is headed for a float, it’ll hold on to a majority stake. Meanwhile, Dulux Group’s move on Alesco Corporation has one investment bank re-examining its assessment of the paint company. Elsewhere, SingTel has secured another advertising company – this one a mobile specialist from Silicon Valley – Coalworks’ chairman and chief executive are fighting back against an investment bank that’s seeking their expulsion and Foster’s has lost two rounds to Coopers.

TRUenergy, CLP Holdings

Power generator CLP Holdings appears to be distancing itself from a full float of Australian power retailer TRUenergy. The Wall Street Journal brings word from CLP boss Andrew Brandler that the company has not confirmed plans for TRUenergy, but if an IPO were sought, it would maintain a majority stake in the company.

The Hong Kong-based company has been toying with what it might do with TRUenergy for some time. The local market has been watching with anticipation because it was shaping up as potentially the largest float since QR National and after the backflip at Genworth Financial, the biggest likely IPO of 2012.

Dulux Group, Alesco Corporation

Paint company Dulux Group, which has had an impressive run over the last year, is getting some scrutiny from an investment bank for its decision to throw $188 million at garage door maker Alesco Corporation. Dulux shares have put on 11.7 per cent in the last year, compared to a 9 per cent decline on the benchmark index. Goldman Sachs has had Dulux on its "Structural Leaders Focus List” for some time, but Fairfax reports that its position has come under review since the Alesco move was announced.

The report indicates that Goldman hasn’t removed Dulux from its list of admired stocks, but has questioned whether the incentive schemes for its management encourage too much risk taking. The share price of Dulux’s target is still trading at a 5 per cent premium to the offer. So if the Alesco bid is risky in your book, it’s going to have to get a little riskier to please those speculators.

SingTel, AdJitsu

South Asia’s largest telco and owner of our very own Optus, Singapore Telecommunications (SingTel), has secured a mobile advertising start-up based in Silicon Valley. AdJitsu has been acquired by advertising solutions company Amobee, which is now a SingTel subsidiary after it was acquired in March for $321 million. The financial details of this latest deal, however, are not being disclosed.

The acquisition is part of a growing trend in the telecommunications industry to make mobile advertising more enticing for the user. SingTel is also acutely aware that the rise of Apple, Google and Facebook is a potentially threatening development for the business model of telcos. In order to survive, they need new revenue streams and advantages over competitors more than ever.

Coalworks, Whitehaven Coal

Coalworks chairman Wayne Mitchell has pleaded with shareholders not to oust the company’s chief executive Andrew Firek and himself from their positions. The push for their removal is coming from Macquarie Bank, which has been angered by the allocation of 6 per cent of the company’s issued capital to Hong Kong’s Noble Group. The company’s shareholders are set to meet on June 15 to decide the fate of Mitchell and Firek.

The timing of the upheaval is brilliant for Whitehaven Coal, which is currently pursuing Coalworks with a $142 million takeover bid. Trouble for upper management can only encourage the register to accept advances from a suitor.

Coopers Brewery, Foster’s Group, SABMiller

SABMiller has lost another two brands from the Foster’s Group portfolio. Carlsberg and Kronenbourg will now be produced and distributed by Australia’s largest locally-owned beer company, Coopers Brewery, after Foster’s lost Corona and Stella Artois to rival Lion Nathan earlier this year.

The timing of the contract losses after the takeover suggests that the owners of the brands had "change in ownership” provisions in their contracts with Foster’s. If someone else buys them, the contracts can then be moved elsewhere. It’s a challenge for SABMiller to make the Foster’s transaction work, given that recent research indicates Australians are drinking less beer today than we were at the end of World War II.

Wrapping up

Leighton Holdings has picked up almost $700 million worth of work in Indonesia, a much-needed boost given the ongoing questions for the company’s cost blowouts at the Victoria desalination plant and the Brisbane Airport Link. Thiess Indonesia, a subsidiary of Leighton, has won a five-year, $US393 million mining contract with PT Tamtama Perkasa. Additionally, Broad Group Holdings, another Leighton vehicle, has secured a $300 million deal for major construction projects across Western Australia, Queensland and the Northern Territory, with players like Rio Tinto, Perth Airport and the Northern Territory government.

Meanwhile, Karoon Gas Australia is apparently closing in on a much anticipated exploration partnership deal in Brazil. The Australian Financial Review understands that executive chairman Bob Hosking (not to be confused with top-shelf, hard-nosed British actor Bob Hoskins) will spend two months in Rio de Janeiro to negotiate the farm-out deals.

And finally, the value of global mining M&A deals in the first quarter of 2012 was sharply lower than the same time last year, according to a report from Ernst & Young. The firm’s quarterly mining-transactions report indicates that the total value of deals in the first quarter fell from $US31.6 billion to $25.3 billion, with volumes falling by almost half.

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