BREAKFAST DEALS: Woodside target?

Woodside Petroleum cops another beating as investors lose faith with the local energy major and, with its stock dipping below the $40-per-share mark, BHP Billiton just might start thinking about a possible move. Another big day on the NBN front with Communications Minister Stephen Conroy set to release the final regulatory directives for the ACCC with regard to Telstra's network. Meanwhile, consolidation is the name of the game in the local gold sector with Focus Minerals and Crescent Gold joining forces through a friendly scrip offer, Melbourne-based Mineral Deposits looks to be making all the right moves and Aquila get one over Vale. Elsewhere, Chi-X seals an expensive deal with rival ASX Ltd and Leighton recruits former Brambles executive Craig van der Laan as chief risk officer.

Woodside Petroleum, BHP Billiton

Woodside Petroleum's shares took another beating yesterday and, with investors starting to lose faith with the local oil and gas major, there is talk that the dip in its share price may open a window for BHP Billiton to make a move. The latest delay and cost blowout at the Pluto LNG project has sparked a wave of downgrades from analysts but it's Credit Suisse that has reignited the talk of a potential $35 billion bid from BHP. The speculation hinges on one primary factor, Woodside's share price, which is now below the $40 mark, and just the invitation that BHP needs. However, a full move on Woodside is unlikely given the regulatory headaches that may entail for BHP. But the mining giant's board is meeting in London this week and there just might be a push to re-engage with Royal Dutch Shell to pick up its 21.5 per cent stake in Woodside. The local energy major's shares have fallen about 15 per cent this month, a far cry from the $50.85 a share mark they hit in April, and speculation of a BHP bid had a lot to do with that jump. However, the latest delay and the $900 million cost blowout at Pluto, which could end up as the most expensive LNG project ever built, have sparked an immensely negative reaction from investors, mainly because of the rapid change in Woodside's position. It was only three weeks or so ago that former boss Don Voelte said that Pluto was close to completion and would be built for $14 billion, however his successor Peter Coleman has obviously had to change that tune. That doesn't inspire confidence and has, in fact, highlighted a broader issue with the LNG sector: there just might be too many projects running the race at the moment and some are bound to slip up. According to ratings agency Fitch, the plethora of projects face "increasing execution” risks from rising costs and delays. Investors are certainly starting to see that picture themselves given the fall in the share prices of Origin Energy and Santos.

NBN Co, Telstra, Optus

The $11 billion national broadband deal has reportedly inched closer to fruition with a definitive agreement potentially ready for release as early as this Thursday. According to The Australian Financial Review, the federal Cabinet has signed off on the deal to end Telstra's monopoly over fixed-line telephone and internet networks. The 1,700 page agreement has been kicking around now for close to two years and it's about time this arduous process finally kicks up a gear. The AFR adds that Communications Minister Stephen Conroy is preparing to announce final directions to the Australian Competition and Consumer Commission on how to regulate Telstra's network while the broadband network is built. Conroy's original draft was labelled as being too soft by Telstra's rivals, so it will be interesting to see what caveats the cabinet has imposed on the final version. Telstra will not sign the NBN deal if it doesn't like what it sees and, given the telco's importance to the overall wellbeing of the project, there shouldn't be too many curveballs there. Meanwhile, Optus is reportedly set to seal its own deal with the NBN Co with regards to its HFC cable network. The telco is seemingly poised to shut down the cable and migrate its customers to the national broadband network in a deal worth between $500 million to $1 billion.

Focus Minerals, Crescent Gold

The merger between Catalpa Resources and Conquest Mining has obviously got the consolidation ball rolling among the Australian junior gold miners, with West Australian rivals Crescent Gold and Focus Minerals now deciding to join forces through a scrip offer. Under the terms of the agreement, Focus is offering one share for every 1.18 Crescent shares, a 30.5 per cent premium to Crescent's last closing price of five cents. Focus has entered into a pre-bid acceptance agreement with Crescent's major shareholder, Deutsche Bank, which is happy to accept the offer for a 19.9 per cent stake in Crescent. Deutsche actually holds 29.23 per cent of Crescent through its wholly-owned subsidiary Gulara Pty Ltd and can dispose the remaining 9.33 per cent stake to a third party at any time. The deal is a win-win for both miners. Focus has been looking for an opportunity to move up the ladder, from an explorer to a fully-fledged producer, while Crescent gets a great chance to make the most of its assets. The merged entity will be the fourth biggest Australian gold producer, provided Focus can now clear the decks with regards to keeping costs down and maximising the output from the combined assets. Focus was advised by Hartleys Limited with Mallesons Stephen Jaques providing the legal advice. Crescent was advised by Gryphon Partners with Blakiston & Crabb acting as its legal advisor.

Mineral Deposits, Aquila Resources, Vale

In other resources news, Melbourne-based Mineral Deposits (MDL) has kick-started a $151 million rights issue after the minerals sands miner unveiled its deal with France's Eramet to form a joint venture to develop the $US516 million Grand Cote project in Senegal. The funds raised from the equity raising are destined to be pumped into the project given that bringing it online as quickly as possible is in the best interests of both MDL and Eramet. Rare earths may have captured the imagination of the market in recent months but mineral sands is where the action is at, especially when you consider that sector heavyweight Iluka Resources has been the best performing stock this year. Iluka shares have jumped nearly five-fold in the past 17 months but there are some who reckon that the $7.2 billion company may already be too expensive for many investors. That's where the MDL story gets interesting. The mineral sands market is hot right now but there's no guarantee how long that will last and, unlike copper and iron ore, the mineral sands market is a touch murkier. The best bet for juniors in the sector is to ramp up their developments as quickly as possible and the deal with Eramet gives MDL just that opportunity. Those looking for exposure in the mineral sands market may now have a closer look at MDL – it's no Iluka but the Eramet JV is a positive development. The company also said its chief executive, Jeff Williams, will step down on July 1 and be succeeded by chief financial officer Rick Sharp.

Meanwhile, Aquila Resources has won one of its battles against Brazil's Vale with the Supreme Court of Queensland ruling in its favour with regard to its valuation dispute with the heavyweight miner. The two companies have been at each other's throats over the price Vale will pay for exercising its option to buy Aquila's 24.5 per cent interest in the Belvedere coking coal project. Aquila reckons its stake is worth $345 million while Vale said it was more around the $90 million to $100 million mark. Vale went to the Supreme Court of Queensland challenging Aquila's valuation but the miners will now have to come up with a compromise to settle the issue.

Chi-X, ASX

New kid on the block Chi-X has scored a five-year deal with rival ASX Ltd to use its clearance and settlement service. The deal will allow seamless settlement of deals between the two platforms once Chi-X takes the stage in October but comes at a hefty price. Chi-X, owned by Nomura, will pay an initial fee of $10,000 to apply for access and an annual service fee of $275,000. It's expensive but Chi-X had little choice given that the ASX is the only game in town right now. However, that may well change with London-based LCH Clearnet lodging its application with ASIC to move into the Australian market and, as the AFR points out, Chi-X will play a role when it comes to convincing global clearance houses to come on board.

Wrapping up

Leighton Holdings has appointed former Brambles executive Craig van der Laan to the newly created positions of chief risk officer and group general counsel for the Leighton Group. Van der Laan was at one time touted as the likely boss of Brambles before the appointment of Tim Gorman. Meanwhile, Leighton and GE have been awarded a $130 million contract by the Verve Energy and Macquarie Capital joint venture for the Mumbida Wind Farm development in Western Australia. In other news, Fortescue boss Andrew Forrest's entry into the biotech sector is complete with his unlisted company Allied Medical now holding 70 per cent of the new entity formed through its takeover of listed bioMD. Allied has essentially come to the sector through a reverse takeover of bioMD and it looks like the new company's executive ranks are now being filled by former Fortescue staffers. Allied chairman Chris Catlow, Fortescue's former chief financial officer, will be the chairman of the new company, while another Fortescue alumni, Graeme Rowley, has been appointed a non-executive director. Finally, Morgan Stanley has reportedly helped an institutional shareholder sell 17.5 million shares in Coca-Cola Amatil at $11 a share. According to the AFR, the line of shares came from either the Coca-Cola Company or Capital Group.