BREAKFAST DEALS: Will BHP opt for oil?

More heartbreak for Marius Kloppers as Canada's decision to close its doors to PotashCorp adds to his growing list of failed deals, but with shareholders clamouring for a buyback where could the mining giant turn to next? Ten Network hands Nick Falloon's scalp to James Packer amid talk that Falloon was planning a buyout of his own. Elsewhere, Centro formally puts itself on the block after a friendly nudge from an interested suitor and AMP resumes talks with AXA SA and Leighton looks to Africa.

BHP Billiton

It's a case of third time unlucky for BHP Billiton boss Marius Kloppers who looks to have failed in his attempt to convince the Canadian government that the miner's $40 billion offer for Potash Corporation of Saskatchewan (PotashCorp) delivers a 'net benefit' to the country. Canadian Industry Minister Tony Clement shocked financial markets yesterday by blocking BHP's original deal and giving the miner 30 days to come up with something more savoury. It looks like BHP's stance on the potash marketing cartel Canpotex and the impact of the takeover on Saskatchewan's taxation regime may have led to Clement's decision. But it is rather difficult to look past the view that given Saskatchewan government's fierce opposition to the deal this was case where political pragmatism took precedence over market considerations. Marius Kloppers has been under a bit of pressure, deserved or not, to disprove talk that his three-year tenure has so far failed to deliver any growth through acquisitions and the latest setback will only bolster these voices. In fact, BHP shareholders should probably add QR National to his list of misses after The Australian Financial Review said that BHP had made a solo $5 billion plus play for QR's below rail assets before joining the consortium of miners dubbed Queensland Coal Industry Rail Group (QCIRG). QCIRG later dropped its bid in September paving the way for QR National's $6 billion float. BHP shares went up on the news as investors sized up the prospect of a share buyback but the deal is not entirely dead and some in the market reckon that Kloppers may not be willing to walk away quietly. However, BHP's recent track record suggests otherwise. The miner was quick to back down when regulatory pressures made its full tilt for Rio Tinto in 2007 and the more recent iron ore tie-up in the Pilbara unpalatable, so the jury is out on whether Kloppers will push ahead with more concessions to appease the Canadians. In the meantime, BHP shareholders look set to renew their calls for the miner to return billions of dollars of cash and given BHP's surplus it can easily give some money back to its shareholders and keep the rest for a heavyweight buy. There is talk that BHP may spend as much as $US25 billion buying back shares in the next two years, while Liberium Capital analysts have reportedly said that a $US10 billion buyback on current prices would provide 5 per cent earnings per share accretion. The failure in Canada will reinvigorate talk that the cashed up miner will now look to the oil and gas sector for such an acquisition. Perennial takeover target Woodside is seen as the obvious one and Woodside shares duly went up 1.6 per cent yesterday on the news. In September, the sector was abuzz with talk that BHP was interested in US oil company Anadarko Petroleum Corporation. The speculation sent Anadarko's shares soaring at the time but things have been quiet on that front and BHP may want to revisit that option in the near future. Anadarko, which was the US partner in BP's now infamous Macondo well in the Gulf of Mexico, has a market cap of $US24.9 billion, not exactly small change but well within BHP's range. Anadarko is also by no means alone out there with the likes of Cobalt International Energy and Plains Exploration & Production also seen as suitable targets. BHP will also most likely switch its attention to the development of its $10 billion Jansen project but that may not be enough for the miner to break into the potash sector. Output at Jansen is expected to be around 8 million tonnes a year but it won't reach full capacity until 2025. That may be just too long for BHP and one can never discount the chance of the miner switching its attention to other potash heavyweights.

Ten Network Holdings, Nick Falloon, PBL Media

Ten Network Holdings and its majority shareholder James Packer have seemingly struck a temporary truce in the battle for board seats and the removal of executive chairman Nick Falloon, but it looks like Falloon may have been hatching plans of a full management buyout of the network himself. Ten told the market yesterday that Falloon has agreed to leave the network following its annual general meeting in December if it helps resolve outstanding issues between Ten's board and Packer and his partner Lachlan Murdoch. There has been speculation that Packer may be willing to drop his push for a third seat if Falloon was willing to go and while this may look like Falloon taking one for the team there may be other factors in play. According to The Sydney Morning Herald, Packer's share raid may have actually foiled a plot by Falloon to take the Ten private. The paper said that Falloon was working with US private equity investor Hellman & Friedman to launch a management buyout of the network. It also suggests that Packer's raid may have been prompted after the media mogul got wind of the impending plan. This is exactly the kind of intrigue that keeps the wheels turning in the media world and if you think the game stops here you just might be wrong. The other media play bubbling away in recent weeks concerns PBL Media and whether its private equity owner CVC Asia Pacific is planning to float or sell the business. Reports of an imminent float in March have been played down in some quarters but Falloon and Hellman & Friedman may have some input in this. Both Falloon and Hellman & Friedman's boss Brian Powers have old connections with PBL and there is speculation that the two could now approach CVC with an offer that may be too good to refuse. By the way, Powers was the chairman and chief executive of Publishing & Broadcasting Limited (as PBL was then known) between 1994 and 1998. Back to the issue of board seats at Ten, the network is sticking to its guns when it comes to the third seat and The Australian reports that Packer and Murdoch may support the promotion of Ten's chief executive Grant Blackley to the network's board. Elsewhere, Lachlan isn't the only Murdoch making headlines at the moment with his illustrious father Rupert Murdoch's plans to buyout UK pay TV operator BSkyB flying into regulatory turbulence. UK business secretary Vince Cable has asked the UK communications regulator to examine NewsCorp's $US12.5 billion dollar bid while the deal is also under EU scrutiny.

Centro Properties Group

Centro Properties Group has officially put the "for sale” sign on its business and the proposed $13 billion asset sale pretty much looks like the end of the line for a business that was once a shining star in the sector before being brought back to earth by its debt burden. Centro's recently appointed CEO Robert Tsenin summed up the sentiment yesterday when he said that the formal process could spell the end of the listed trust and its spin-off Centro Retail Group. While the final outcome of the process in anyone's guess there is speculation that an informal takeover offer may have instigated Centro's move. According to The Australian, Centro was spurred into action after a Lend Lease led consortium, said to include the Government of Singapore Investment Corporation Private Limited (GIC) and a US-based group, lodged an $18.6 billion bid for all of Centro a month ago. Centro has so far denied the existence of any formal offers and also maintained that its lenders have not forced the asset sale upon it. Centro is being advised by JP Morgan and Moelis & Co, while UBS is assisting Centro Retail.

Wrapping up

The Australian Securities and Investments Commission's (ASIC) proposed sharemarket rules did not directly address the issues surrounding the mooted merger between ASX Ltd and the Singapore Exchange (SGX) but there is enough there for the proponents of the deal. The merger has generated a political firestorm of sorts but ASIC's slow burn examination of the impact of greater exchange market competition should point out the obvious need for ASX to forge a broader international identity for itself or risk irrelevance. Meanwhile, the boss of Tokyo Stock Exchange (TSE), Atsushi Saito, said that he will not oppose the tie-up between ASX and the SGX and the deal will lead to similar mergers in the region. TSE holds a five per cent stake in SGX. Elsewhere, it looks like AMP has returned to the table with regards to its plans for AXA Asia Pacific Holdings (AXA APH) with reports that it was in close discussions with AXA APH's French parent AXA SA. According to France's La Tribune, AXA SA, which holds a majority stake in AXA APH, has started sale talks with AMP. It was out with the old and in with the new at Leighton Holdings' annual general meeting yesterday as the company's incoming chief executive David Stewart outlined a possible shift in the construction giant's offshore strategy. Stewart has told shareholders that Leighton was looking to building a presence in Africa and offshore oil and gas contracts. The AGM also served as the backdrop to Wal King's farewell from Leighton and it looks like the outgoing chief wasted no time in thanking his allies and taking a few parting shots at his detractors. King was full of praise of those who had stood behind him but reportedly capped of his gratitude by saying "Obviously, I don't mention the people who haven't supported me.” In other news, Westpac Bank has categorically denied reports that it will cut 6,000 jobs in the next two years, labelling the assertions "grossly inaccurate.” The bank has said that staff cuts are inevitable but has refused to put any numbers on the table. Perth-based ship builder Austal scrambled to put its shares in a trading halt after they jumped close to 20 per cent on news that the US Navy may double the multi-billion dollar contract for 10 new Littoral Combat warships to 20 and possibly divide it between Austal and its rival Lockheed Martin Corp.