DataRoom AM: Dollars to donut

Analysts are starting to get excited again about Macquarie Group with deals activity cranking up. The investment bank gets a double win for OzForex, which has started its roadshow. Meanwhile, Nine has reportedly received assurances from WIN that it’ll get a look at rival offers if the reach rule is abandoned, doubts are growing about the chances of Murray Goulburn challenging Bega Cheese for Warrnambool Cheese & Butter Factory and Treasury Wine Estates has said it won’t be selling its US business…for the umpteenth time.

Macquarie Group, OzForex

It’s often forgotten in the business deals speculation pages that one of the crucial barometers for the industry is Australia’s Macquarie Group.

While the bank’s results don’t stand or fall on the basis of deals activity alone, it’s a very important component that’s hasn’t been contributing much for quite some time.

That really feels like it’s about to change. Macquarie’s $480 million first half profit yesterday has got some analysts predicting that the investment bank’s traditionally stronger second half will carry it over the $1 billion annual profit line for the first time since 2010.

At the moment a lot of the optimism in the deals space is predicated on the preparations of a few headliners – OzForex, Nine Entertainment, Veda and Dick Smith amongst them – and with only Virtus Health and Steadfast putting away successful IPOs, Macquarie can hardly start banking coin.

But the fact is undeniable. An uptick in deals activity will be hugely beneficial to the silver donut and the optimism in the sector is stronger now than at any point in the last two years.

And speaking of Macquarie in relation to sharemarket floats, the investment bank will benefit as a manager of the OzForex IPO and a part-owner. US firm Carlyle Group also counts itself as an OzForex backer.

The online foreign exchange company has kicked off its roadshow for a $480 million IPO from which $439.4 million will be raised for its owners.

Still speaking of Macquarie, though by name not by nature – one deal that is looking a little shaky is the NSW government’s proposed sale of energy company Macquarie Generation.

The shakiness comes from news that the O’Farrell government has appointed former High Court judge John Dyson Heydon QC to investigate what are alleged to be questionable employment contract changes at MacGen.

It’s not so much that an inquiry of this nature threatens the sale of the $2 billion business entirely, but the timing could be influenced certainly.

Nine Entertainment, WIN Television

Nine Entertainment has reportedly secured the inside line with WIN Television in the event that the Abbott government axes the 75 per cent reach rule and the TV networks are allowed a merger frenzy.

The Australian Financial Review believes that Nine struck a ‘first look’ agreement with WIN when it purchased the company’s Perth TV station for $220 million. This deal has only just been completed.

The idea behind the agreement is Nine would have the right to look at any proposal that’s put for the rest of WIN’s business, giving it a prime opportunity to match it.

Speaking of which, Prime TV is broadly expected to merge with metropolitan affiliate Seven West Media if it came to it, which would leave Ten Network and Southern Cross Broadcasting to partner up as well.

TV deals are a bit of a strange world however. It’s best to keep the speculation qualified.

And while we’re talking TV, the incoming boss of horse-racing channel TVN is unmoved by accusations that the company’s board is riddled with “mistrust” and will put all his efforts into securing a new deal broadcasting deal with Tabcorp, according to The Australian.

Warrnambool Cheese & Butter Factory, Bega Cheese, Murray Goulburn

While the board of Warrnambool Cheese & Butter Factory might be hoping that Murray Goulburn joins the race for the dairy company, analysts have thrown cold water on the prospect.

Bega Cheese has a $319 million takeover offer on the table for WCB, in which it holds an 18 per cent stake. Murray Goulburn has previously made a run at WCB and holds a 17 per cent stake of its own.

You can see why the tongues started wagging.

Yesterday however, Murray Goulburn reported a flat underlying profit of $37.8 million in 2012-13 and the 75 per cent debt ratio is a concerning burden for analysts if it intends to have a crack at WCB.

Murray Goulburn’s net profit went up — actually it doubled — $34.9 million, but that was on account of the previous year’s numbers being dragged down by restructure costs.

The fact that Bega’s bid is unconditional raises the stakes for Murray Goulburn. Although its 18 per cent stake means it could still have a lot to say about the final outcome, whether it bids or not.

Treasury Wine Estates

David Dearie might have lost his CEO job with Treasury Wine Estates, but the former Foster’s Group arm isn’t thinking about selling its troublesome US business.

Treasury, the company behind the Penfolds, Rosemount, Lindeman’s and Wynns labels, was forced into a terrible $160 million writedown in July with millions of litres of wine destroyed because it couldn’t be sold in the US.

The company didn’t have a great handle on the stock it had on hand.

There's a long-running narrative about the problems that Foster’s, now Treasury as a standalone, has had with wine in the US. But chairman Paul Rayner isn’t budging.

Wrapping up

Starting with infrastructure, the final bids for RiverCity Motorway are in with an expectation that a decision could be made within days. A price tag of $600 million to $700 million is tipped.

Meanwhile, Telstra Corporation says it has no problem with working with the new Coalition government, but chief David Thodey has warned any tomfoolery over a new deal won’t be met receptively.

To put in another way: We got a deal with Labor and we aren’t budging unless it’s in our interest to do so.

CLSA has offered some details into the jostling around Commonwealth Property Office Fund. According to a research note from the firm, Dexus Property Group has confirmed that several possible partners have put their hand up for a joint bid at the assets in CPOF.

And finally, The Wall Street Journal reports that APN News & Media has begun checking market interest for its online retail unit brandsExclusive. The company sells products for brand partners including Lacoste, Esprit, Zac Posen and The North Face.