BREAKFAST DEALS: YBR coin

Mark Bouris and Christopher Joye make a tidy sum on their Yellow Brick Road stakes, while GrainCorp says it's just too good to engage with ADM.

Macquarie Group’s deal with Yellow Brick Road put a rocket under the latter’s share price, turning a good day for directors Mark Bouris and Christopher Joye into a great day. GrainCorp put on a show of strength yesterday, batting away concerns about its stance against suitor Archer Daniels Midland. Meanwhile, Billabong International has suffered another setback, Qantas Airways had a great day with the ACCC, while Telstra Corporation had a terrible one.

Macquarie Group, Yellow Brick Road, Mark Bouris, Christopher Joye

A touch from the silver donut can still prove to be solid gold.

Yellow Brick Road shares surged 12.8 per cent during yesterday’s session as the market absorbed the significance of investment bank Macquarie Group taking an 8.3 per cent stake in the company for $6 million.

YBR founder Mark Bouris and strategic adviser and board member Christopher Joye (a former Business Spectator columnist, who’s now with The Australian Financial Review) benefitted greatly from the share movement.

According to the last YBR annual report, Bouris’ Golden Wealth Holdings owns a 26.7 per cent stake in the company, made up of 43.4 million shares. Joye was issued a 1.4 per cent stake in YBR on Wednesday at 40 cents a share, for his work with the firm.

Yesterday’s share price jumps means the value of Bouris’ stake increased value to $20.8 million from $17.4 million. Joye’s stake, with just a single trading day, increased to $1.2 million from $1 million.

GrainCorp, Archer Daniels Midland

The reason why GrainCorp chose not to engage with American giant Archer Daniels Midland over a sweetened $2.8 billion offer is because it is purified awesomeness.

That’s very loosely paraphrasing the statements from chairman Don Taylor and chief executive Alison Watkins at yesterday’s annual general meeting, where the company exuded formidable confidence that it has the support of the broader register.

Taylor, who was re-elected as chairman, told investors that 2012 has been an incredibly busy year for the grains handler.

"We bought two businesses on the same day, we had a record harvest, record earnings. Now we have become the prettiest girl in town and someone has made a proposal to us,” said Taylor.

Watkins said she was "very comfortable” with the level of shareholder support for the board’s decision not to engage with ADM at $12.20 a share, adding that the directors have made it clear they are not opposed to a deal per se.

"We have made it very clear to ADM and more generally that we are very open to proposals that are in shareholders interests and we are very willing to be constructive,” said Watkins.

GrainCorp recently welcomed a posse of hedge funds onto the register, which are trading on the ADM interest. It appears that Taylor and Watkins are pretty reassured with their plans.

Billabong International, Paul Naude, Sycamore Partners

Whatever the reason for the departure of Billabong International's chief financial officer, Craig White, it comes at a terrible time for the company.

The beleaguered retailer announced that White left the company yesterday, with the CFO of Billabong’s America business, Peter Bryant, taking over an in interim basis until a permanent replacement is found.

White leaves just a few weeks after head of strategy Andy Laws did likewise. Head of marketing in the US, Enrich Harris, took his exit in October.

Billabong says it’s conducting an international search for White’s successor. Finding someone when the company has such a long turnaround ahead of it will be difficult.

Doing so with director Paul Naude bidding $527 million, or $1.10 a share, in conjunction with Sycamore Partners, and the company’s largest institutional shareholder Perennial Value saying it wants out at that price, will be doubly difficult.

In the meantime, Billabong will have to ‘consider’ Naude’s offer without its chief financial officer of the last seven years.

Qantas Airways, Emirates

Qantas Airways chief executive Alan Joyce secured a big win yesterday with the consumer watchdog’s interim approval of the carrier’s alliance with Middle Easter carrier Emirates.

As Business Spectator’s Stephen Bartholomeusz argues, the fact that the Australian Competition and Consumer Commission only granted the pair five years rather than the 10 years they were seeking isn’t a deal-breaker.

"Apart from the reality that the question of an extension of the alliance can be revisited in five years’ time the logic of the rise and rise of the Middle Eastern and Chinese carriers says that, if anything, the competitive intensity on the routes between Australia and Europe and into Asia will continue to increase inexorably,” writes Bartholomeusz. "The duration of the authorisation will enable the ACCC to make decision based on the reality of the alliance and its experience over that period.”

The capacity floor that Qantas has offered for Trans-Tasman flights is a small price to pay for the Emirates deal. Though this isn’t final approval, ACCC chairman Rod Sims said that objectors like Virgin Australia would have to come up with a new argument to prevent a final tick that’s due in March/April next year.

With that issue effectively settled, attention will now shift to Joyce’s battle with a group of activist investors that are opposed to his overall strategy, as well as the ACCC’s consideration of Virgin’s deals with Skywest and Tiger Airways.

On the first matter, there’s a case to be made that the positive decision from the ACCC strengthens Joyce’s hand. Qantas is right up there with Telstra Corporation and the supermarkets that all too easily falls foul of the regulator. To get the consumer watchdog’s blessing is a huge boost for Joyce.

On the second matter, the ACCC looks well placed to approve Virgin’s $100 million acquisition of Skywest Airlines and 60 per cent stake purchase in low-cost operator Tiger Airways.

It would be a tough sell for Sims to give the green light for Australia’s dominant airline to partner up with a global giant, only to a red light to some relatively small purchases from the only domestic player keeping Qantas honest.

Telstra Corporation, Adam Internet, Trading Post

It wasn’t such a pleasant day for Telstra Corporation chief executive David Thodey when it comes to the competition regulator.

Telstra copped a double-punch combo from the Australian Competition and Consumer Commission with a delay to the decision on its proposed acquisition of South Australian ISP Adam Internet, along with the rejection of its sale of Trading Post to Carsales.com.au.

The ACCC’s preliminary view is that the Adam deal "is likely to result in a substantial lessening of competition in the supply of retail fixed voice and broadband services”. It’s now up to Telstra to try to prove otherwise, which will be a difficult task.

The consumer watchdog was more definitive on the Trading Post deal. It concluded that selling Trading Post to Carsales, which is the dominant market could, would also likely reduce competition.

The decline of Trading Post is doing a good job reducing competition in the online classifieds space on its own.

Seven Group Holdings, Kerry Stokes, Nine Entertainment, Fairfax Media

Media billionaire Kerry Stokes has reportedly sold down some of Seven Group Holdings’ equity investments to strengthen the company’s balance sheet.

The Australian understands that Seven has offloaded part of its stake in Agriculture Bank of China, once valued at $US250 million ($238 million).

Meanwhile, Nine Entertainment is on track for a return to the ASX sometime in 2014 after the Federal Court in Sydney approved the broadcaster’s $3.4 billion restructure.

And in newspapers Allan Gray’s Simon Marais has bumped his firm’s stake in Fairfax Media following the sale of its remaining stake in Trade Me. Allan Gray now holds 11.43 per cent of Fairfax, up 1 per cent.

All this just goes to show that the media deals aren’t quieting down as we head into 2013.

Wrapping up

Shareholders in Sundance Resources are planning to meet on February 1 to consider the long-awaited China Sichuan Hanlong Mining takeover offer, following approval from the Federal Court.

While Hanlong is offering (kinda) 45 cents a share, Sundance continues to trade around the low 30 cent market, indicating just how much chance the market gives of this deal going ahead.

Sticking with resources, Origin Energy has inked a supply agreement with Chinese controlled MMG, which The Australian understands is the most expensive domestic deal so far in the sector.

Basically, Origin is understood to be getting $9 a gigajoule from MMG, compared to the $3-$4 that the gas is changing hands for at the moment, of the $6 that long-term contracts up until this point have been set at.

Meanwhile, embattled coal tycoon Nathan Tinkler could face a terribly inconvenient tax bill if he offloads his stake in Whitehaven Coal, according to The Australian Financial Review.

The newspaper has spoken to an analyst that points out Tinkler could be up for a sizeable capital gains tax bill if he sells his 19.4 per cent stake. Not fantastic news when you’re facing debt problems.

Elsewhere, rural services company Elders says it has received non-binding proposals for its Futuris Automotive and Elders Rural Services businesses.

The company will conduct due diligence with a short list of bidders and is well placed to secure agreements early in the new year.

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