BREAKFAST DEALS: Trusty tender

Equity Trustees makes an offer for Trusty Company, while ACCC comments look like good news for a CBA-Aussie Home Loans deal.

Equity Trustees has lobbed a genuine all-scrip takeover offer for Trust Company. Remember those? Can you imagine launching one of those six months ago? ACCC chairman Rod Sims isn’t so concerned about the banks – what does that mean for CBA-Aussie Home Loans? Elsewhere, PetroChina is moving deeper into Western Australian gas; NewSat is a step closer to its satellite dream; and a peace accord of sorts appears to be emerging at Whitehaven Coal.
 
Equity Trustees, Trust Company
 
Call it bad timing, or unshakable confidence in the market direction. But there was actually some good news for equities to come out of yesterday’s session, even with $35 billion wiped from the market and the ASX200 dipping back below 5000 points.
 
Equity Trustees revealed an all-scrip offer for Trust Company to create a $326 million-plus trustee and financial services provider.
 
The defensive mindset of shareholders has meant that scrip offers have been a rare phenomenon for the last 18 months to two years. If you’re not bullish, you don’t want shares, you want cash. This puts private equity in the box seat, because logical competitors can’t use their register.

The fact that a credible takeover offer that's all scrip has been put to shareholders – not one driven by opportunism – is significant.
 
The suitor’s chairman Tony Killen said that discussions between the two companies, both formal and informal, had taken place but they couldn’t come to a deal.
 
This could be for a variety of reasons. Perhaps the pair couldn’t agree on a price, which of the two should be the acquiring, or if it should be structured differently.
 
Indeed, Equity Trustees has a market cap that’s slightly below Trust, which is a little unusual for the acquirer.
 
But judging by the share price performance yesterday, the market likes the idea. Equity Trustees shares jumped by 5 per cent and Trust shares increased by 10.5 per cent. Now that’s really unusual for both companies to get a bump from an all-scrip bid, particularly when the whole market was down 2.3 per cent.
 
And while we’re talking scrip and financials, Milton Corporation has finalised the acquisition of an unnamed, unlisted investment company with assets worth around $10.7 million… with 521,464 shares.
 
Commonwealth Bank of Australia, Aussie Home Loans
 
Has the competition regulator given us a hint that it might end up approving Commonwealth Bank of Australia’s purchase of a larger stake in Aussie Home Loans?
 
Speaking to reporters yesterday, Australian Competition and Consumer Commission chairman Rod Sims said the regulator is always watching what the banks are up to, but it wasn’t the primary focus.
 
"We've got to make choices. There's four banks, that's more than we've got in a range of other sectors. We've only got three big energy retailers, two big supermarkets,” he said.
 
"The fact Yellow Brick Road could tie-up with Macquarie to offer an alternative in the mortgage market, I think shows the barriers aren't so large.”
 
Now, the fact that Sims believes companies can enter the market doesn’t speak to the ACCC’s specific concerns about the Aussie deal.
 
The competition regulator is wondering just how Aussie could remain an independent lender when the nation’s largest lender owns an 80 per cent stake, which would one day be increased to 100 per cent. The ACCC has delayed its decision on the matter.
 
But if Sims is taken by Macquarie’s deal with Yellow Brick Road to allow them to use the silver donut’s 137 branches, perhaps the burden of proof on Commonwealth is lower than expected.
 
Now steady on. We’ve read way too far into those comments to draw any meaningful conclusions in regards to Commonwealth. But it is instructive that the competition regulator doesn’t believe banking competition its top priority.
 
PetroChina, ConocoPhillips
 
Asia’s largest oil producer, PetroChina, has added to its Australian portfolio by picking up stakes in two gas projects around the top of Western Australia through a deal with US energy giant ConocoPhillips.
 
PetroChina, which already shares equal ownership of Arrow Energy with Royal Dutch Shell, is picking up a 20 per cent stake in the Poseidon gas discovery in the Browse Basin and a 29 per cent stake in the Goldwyer shale project in the Canning Basin.
 
In return ConocoPhillips, which owns 37.5 per cent of Australia Pacific LNG along with Origin Energy (37.5 per cent) and Sinopec (25 per cent) gets to enter into a joint venture with PetroChina for gas exploration in China’s Sichuan province.
 
Both these plays are undeveloped, but the arrival of a major Chinese operator – and China has some serious demand for gas – is a good sign.
 
It’s also a big win for Conoco to get a foothold in China’s gas assets.
 
While we’re talking about gargantuan resources companies and their plays, incoming BHP Billiton chief executive Andrew Mackenzie hasn’t ruled out M&A during his time at the top, but it isn’t his focus.
 
"You would be wrong to say that M&A is completely excluded, but it is not central to the strategy that I am shaping up,” he told reporters. "It is about running what we have extremely well.”
 
That’s a pretty standard line from a new boss, but in BHP’s case it really is about making the most out of what it’s got.
 
NewSat
 
The long slog by NewSat chief Adrian Ballintine to raise capital to turn the telecommunications company into a satellite player is finally coming together.
 
Joint lead managers Credit Suisse and Bailliei will close the bookbuild today to raise $108 million from the issue of 262 million shares.
 
The stock is being sold at 40 cents, which is a 23.1 per cent discount on the last trading price. That’s a pretty heavy discount, but given the lengths that NewSat has had to go through to get its funding in place, it’s not surprising.
 
Plus, the feeling is that the offer will be oversubscribed. The higher the price, the less likely that will be.
 
NewSat has copped a bit of flack for the long, bumpy road it’s been forced to take in order to make Ballintine’s celestial ambitions a reality.
 
It’s a good day for the NewSat boss.
 
Wrapping up
 
Speaking of capital raisings, mining and civil works contractor Maca Limited is raising $56.3 million at $2.50 a share, which is a 10.1 per cent discount to yesterday’s closing price. Elsewhere, waste technology company AnaeCo is raising $21.4 million.
 
Meanwhile, Deutsche Bank is overseeing a bookbuild for Village Roadshow, according to The Australian. Apparently, they’re raising 10.95 million shares at $4.18.
 
And finally, attention is back on Whitehaven Coal with the former boss of Nathan Tinkler’s private company, Paul Flynn, taking the top job following the resignation of Tony Haggarty.

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