BREAKFAST DEALS: Visy packs up

Amcor and Visy look set to close the book on the long-running price fixing scandal after the packaging giants reach a $500 million settlement with angry customers. However, there's still a few loose ends that need to be tied up. Elsewhere, Rio Tinto's uranium ambitions take an unexpected turn, with Extract Resources now facing the prospect of a full takeover by a Chinese giant, and Telstra's move to streamline its call centre operations leads to more job losses. Elsewhere, Xstrata shareholders aren't impressed by the miner's latest appointment, the head of UBS' Australasian operations joins the highest echelon of global investment banking and Ross Garnaut in the running for a spot on the RBA's board.

Amcor, Visy, Richard Pratt

The long-running price fixing scandal involving Amcor and Visy is finally on its last legs with news that the packaging giants have reached a $500 million settlement with law firm Maurice Blackburn, which was spearheading a class action on behalf of the companies that were burned by Amcor and Visy's cartel. The class action, filed in April 2006, alleged that between January and April 2000, Amcor and Visy entered into a cartel to fix corrugated fibreboard packaging prices and reduce competition for each other's customers. The agreement came just as the six-week trial was set to get started and after both Amcor and Visy had already been found culpable by the Australian Competition and Consumer Commission (ACCC) about three years ago. Visy and its billionaire founder Richard Pratt came under intense fire when the ACCC launched its investigation in 2005 and the case was finally settled in 2007 after Amcor handed its partner to the competition watchdog on a platter in exchange for immunity. However, Pratt was further hounded by the ACCC despite the civil settlement and at one point faced the prospect of a four-year jail term. The billionaire's failing health ensured that the criminal charges were eventually dropped but his legacy of entrepreneurship and philanthropy had been irreparably damaged. While the $500 million settlement closes the book on the scandal, there is the issue of whether the customers of the companies fleeced by the Amcor-Visy cartel will put forward their own claim of damages. Amcor said last month that it was up for $321 million in damages, while Visy was facing damages of around half that amount, but it will be interesting to see if the packaging giants will need to loosen the purse strings a little further to placate all the affected parties.

Meanwhile, the settlement has reportedly given a former Visy employee fresh ammunition to resurrect his $100 million claim against the company. According to The Australian, former senior executive Alan Hancock, who levelled cartel allegations against the company in 1993, said that he may renew his bid to win the equity promised to him by Pratt. Hancock took his case to the Trade Practices Commission in 1993, alleging that Visy and Amcor were in cahoots since 1987, but it didn't get anywhere. Hancock has always maintained that he was promised equity shares and that promise had been documented. The paper adds that Hancock was approached by Maurice and Blackburn in 2009 to join the class action but decided against the move. However, it looks like he may be ready to dig up the books again and hope that Amcor and Visy are willing to tie up all the loose strings and finally put this sorry scandal behind them. Putting the legal issues aside, Amcor was also in the news yesterday after pulling off the first European corporate debt issue by an Australian company this year. Amcor has raised €550 million ($A761.4 million) in eight year bonds to refinance its existing European debt.

Rio Tinto, Extract Resources, Kalahari Minerals

Rio Tinto's ambitions to boost its uranium exposure in Namibia have taken an interesting turn with an unexpected guest entering the picture. Rio has been in talks with Extract Resources with regards to combining Extract's wholly owned Husab project and the mining giant's neighbouring Rossing uranium mine in Namibia. Rio already owns 14.7 per cent of Extract but with the mining giant currently focusing on it bid for Riversdale Mining, the feeling was that it was keen to work out an arrangement by which it could get its hands on Husab without making a full bid for Extract. That may not be a possibility anymore after Extract's major shareholder, UK-listed Kalahari Minerals, informed the market yesterday that it was in talks with China's CGNPC Uranium Resources, after it lobbed a £756 million ($1.2 billion) offer for Kalahari at a 11 per cent premium to Kalahari's last trading price. Extract shares jumped over 7 per cent on the news on expectations that CGNPC will now have to make full bid for Extract as it moves to engage with the Australian Securities and Investments Commission (ASIC). If CGNPC wins Kalahari it would acquire its 43 per cent stake in Extract, and that's a no-no according to the Corporations Act, unless CGNPC makes a full offer for Extract or it gets an exemption from ASIC. The exemption comes into play if the original takeover target, in this case Kalahari, is listed on the ASX or in an exchange approved by the ASIC. Unfortunately, Kalahari is listed on the AIM and the NSX, both of which are not on ASIC's list. So for the time being Extract is in play and it will be interesting to see Rio's response to the news: it can choose to go toe-to-toe with CGNPC for Kalahari or opt to block the deal. Rio has a 10.8 per cent stake in Kalahari so it does have the ability to block compulsory acquisitions of both Extract and Kalahari. Then again, there is a good chance that Rio and CNGPC may have already worked out an arrangement with how they will carve up the uranium assets, before the offer dropped on Kalahari's lap.  

Telstra, Vertex, Salmat, NBN

Telstra's move to streamline its call-centre contracts has reportedly led to more job cuts, with Melbourne-based call centre operator Vertex joining Salmat in falling out of favour with the telco. News of the 250 or so job losses at Vertex came into picture yesterday afternoon even as the prospect of 740 or so redundancies at Salmat were settling in. Both Vertex and Salmat have failed to make the cut for Telstra, with Vertex reportedly missing out on a tender to continue supplying Telstra with sales and support functions and Salmat losing its existing call centre contract with the group. The moves are all part and parcel of the new Telstra, which as Salmat pointed out yesterday is now focused on reining in its dependence on local labour-hire call centre contracts and switching to providing hosted call centre technology and outsourced capabilities. Meanwhile, the telco has again given Communications Minister Stephen Conroy a helping hand against his opposition counterpart Malcolm Turnbull and his push for a cheaper wireless alternative to the $36 billion NBN project. According to IT and telecom industry magazine ARN, Telstra has made it clear where it stands when it comes to wireless technology being a suitable substitute to the NBN, with the telco's executive director of network and access technologies, Mike Wright, saying that wireless technology is best placed to sit alongside the NBN and not as a replacement. Wright adds that the two technologies will work in tandem to meet the future internet needs of consumers. Fourth generation (LTE) wireless is capable of delivering speeds comparable with the NBN in areas with good mobile reception and Telstra's recent announcement that it plans to upgrade its network capabilities with 4G technology by the end of 2011 had raised question marks about the viability of the project. However, Telstra's latest assertions should go a long way in putting the 'wireless only' alternative to bed.  

Equinox Minerals, Sandfire Resources, Xstrata

The copper sector is hitting the headlines in a big way, thanks to Equinox Minerals, which formally put its $4.8 billion bid for Lundin Mining yesterday. The Panamanian government's curve ball to Lundin's prospective merger partner Inmet with regards to its lucrative Cobre Panama project has temporarily shifted the momentum in Equinox's favour and the suitor's boss, Craig Williams, has been pressing the point that this offer is not all about the 26 per cent premium but also about Equinox's growth profile. Williams has told Reuters that a combined Equinox-Lundin will be well placed to take advantage of booming copper prices and make the most of the short-term copper price environment. With copper prices looking healthy at the moment Williams certainly makes a compelling case and there's a good chance that it will not fall on deaf ears at Lundin. Meanwhile, another local copper player, Sandfire Resources, is obviously not content with just getting the ball rolling on its DeGrussa project in West Australia, with the miner looking to spread its wings in South America through a tie-up with Whinnen Resources. Sandfire has agreed to take a 17.1 per cent stake in the junior explorer through the purchase of 26.5 million shares at 7 cents per share as part of Whinnen's $7.28 million share placement. Sandfire will be issued with 17 million Whinnen shares and 14.5 million options at 20 cents per share as part of a technical services agreement between the companies. Whinnen is looking to secure copper, gold and silver exploration projects in northern Chile. In international mining news, Xstrata's institutional shareholders are apparently not too happy with the miner's decision to install former HSBC and Vodafone boss Sir John Bond as its new chairman, with some telling UK's Telegraph newspaper that Bond was perhaps not a strong enough counterbalance to Xstrata's straight talking boss Mick Davies. Investors are also reportedly unhappy about the lack of consultation with regards to Sir Bond's appointment.

Wrapping up

The head of UBS' Australasian operations Matthew Grounds has been appointed the joint global head of the Swiss investment bank's investment banking unit (IBD). Ground and UBS' head of investment banking in Europe, Simon Warshaw, who was also promoted will now work with the incumbent Jimmy Neissa. Grounds' elevation to the top job is hardly surprising given that UBS has been ruling the investment banking roost in 2010 and has been involved in most of the recent major corporate moves and M&A activity. Ground was instrumental in running Nine Entertainment's stake sale in carsales.com and will remain in Australia and continue to run UBS' Australasian business. Meanwhile, four senior AXA Asia Pacific Holdings executives will join chairman Rick Allert and director Patty Akopiantz in making the move to AMP. AXA's chief financial officer Geoff Roberts will join the boards of AMP Life and National Mutual Life Assurance as a non-executive director. AXA's group chief actuary and chief risk officer, Mike Thornton, will become director of group risk management in the merged entity, while AXA's general manager of group strategy, Arun Abey, will step down from his role but continue as chairman of ipac. Darryl Mackay will join AMP as company secretary and head of secretariat. All appointments will take effect on March 31. Elsewhere, The Australian reports that the federal government's climate adviser Ross Garnaut may be in the running for a spot on the Reserve Bank of Australia (RBA) given that Donald McGauchie and Warwick McKibbin are both set to leave the central bank's board. Expect a torrent of vitriol if Garnaut does indeed end up getting the spot. Asciano has reportedly hired Goldman Sachs to advise the company on a strategic plan under the watchful eyes of new CEO John Mullen. Finally, Lend Lease has won its first contract in the US in a good while with property group awarded a $167 million contract from Delta Airlines to expand and renovate it terminal at the John F. Kennedy Airport in New York.