DataRoom AM: AGL arcs up

AGL Energy is challenging the ACCC’s decision to block its Macquarie Generation takeover, while more of ANZ Bank’s Asian assets could soon be on the chopping block.

AGL Energy has issued a challenge to the competition watchdog’s view that its proposed takeover of Macquarie Generation will result in a substantial lessening of competition. It’s a path the firm simply had to take -- and there’s reason to believe it will pay off.

Elsewhere, ANZ Bank plans to simplify its Asian interests, Yanzhou Coal backs away from its Yancoal Australia bid, G8 Education snaps up a recent IPO candidate and confidence swells in the prospect of a TPG Telecom-iiNet merger.

AGL Energy has unsurprisingly decided to fight an Australian Competition & Consumer Commission decision to block its proposed $1.5 billion takeover of Macquarie Generation. The company rightly decided that an unchallenged decision would have major implications for heavyweights in the sector -- specifically AGL, Origin Energy and EnergyAustralia -- but it remains to be seen whether it will get its way. There is a precedent of sorts, as the last time AGL contested an ACCC decision (in 2003) it came out victorious.

The challenge will go via the Australian Competition Tribunal rather than the Federal Court as AGL seeks to pursue the quickest route to a decision.

ANZ Bank is likely to offload more of its minority interests in Asia if it is unable to claim full control. Next on the chopping block is its 55 per cent stake in Cambodian-based ANZ Royal. It follows the sale of a 9.6 per cent shareholding in Vietnam’s Sacombank in 2012 and could be the precursor to an offloading of its 39 per cent interest in Indonesia’s Panin Bank. ANZ is still looking to expand in Asia, with Thailand, Myanmar and Hong Kong the most likely locations for its next acquisition.

In resources, China’s Yanzhou Coal has relented on its controversial push to claim full control of Yancoal Australia. The Chinese firm appeared set to proceed with the planned buyout after a positive Foreign Investment Review Board decision late last year, but it was unable to agree terms with 13 per cent stakeholder Noble Energy. Yancoal shares fell 10 per cent on the news.

Market darling G8 Education has bought out rival Sterling Early Education in a deal worth $228 million. The news comes just a fortnight after Sterling delayed a planned $200m float, which would have valued the company at close to $250m.

A bigger deal could be in the works, however, as Citigroup analyst Justin Diddams has boldly predicted TPG Telecom could soon make a move on rival iiNet, according to The Australian Financial Review. The departure of iiNet founder and chief executive Michael Malone has been viewed as a positive for a deal to finally eventuate, with Diddams suggesting a merger is now likely before the end of 2014.

In aviation, plans to allow increased foreign ownership of Qantas Airways have been backed by a parliamentary committee report into proposed changes to the Qantas Sale Act. The Greens and Labor remain steadfast in their opposition, however, leaving the Senate as a potentially insurmountable roadblock.

In IPO news, holiday apartment manager Mantra Group will hold strong with its plans to price shares between $2 and $2.60 when launching its equity raising today, according to the AFR. The float could raise as much as $446m.

Finally, Leighton Holdings’ Middle East joint venture has secured a $1.86bn contract in Qatar. Habtoor Leighton will carry out the three-year design and construction project alongside local firm Al Jaber Engineering.