LUNCH DEALS: Motherland of M&A

LUNCH DEALS: Motherland of M&A

Skipped BREAKFAST DEALS this morning? Catch up on the most important deal of the day.

FKP Property gets set to pass round the cap, again, China's corporate acquisition machine gets an edict (and extra funds) from Beijing, Russia looks lovingly at Namibia's uranium assets and Infigen Energy says goodbye to Babcock & Brown International. Big developments in the insurance industry, capital raisings galore and a trading halt for Eircom Holdings are just some of the other wheels and deals in today's wrap.
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FKP Property Group
Brisbane-based developer FKP Property Group has entered a trading halt pending the announcement of a capital raising thought to be arranged by Macquarie and UBS. The move will see FKP join the growing ranks of real estate groups that have double-dipped into the equity capital markets and shareholders are unlikely to see that as a good thing. In October FKP raised a little over $100 million after UBS and Macquarie refused to underwrite more than the commitments of major shareholders Stockland and Mulpha. And not only that, they charged a 4 per cent underwriting fee. It is not thought that FKP will be in a better position today. When it launched its last entitlement offer – a five-for-14 offer at $1.50 per stapled security – shares were trading at 95 cents. Yesterday they closed at 76 cents – less than a sixth of what they were this time last year when FKP, again advised by Macquarie, rejected a $5 share offer from Lend Lease. (For more capital raisings today, see our story below.)

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Dexion
Storage products and shelving manufacturer Dexion has announced a $19.4 million capital raising via a one-for-one accelerated non-renounceable entitlement offer at 30 cents a share. The raising, made at a 28.6 per cent discount to yesterday's close, is being underwritten to $12 million by Wilson HTM Corporate Finance. Proceeds will be used to reduce net debt, which is forecast to be at $49 million on June 30. Depending on the take-up of the offer, gearing is expected to reduce to between $37.6 million and $30.4 million, or a pro forma gearing position of between 61 and 44 per cent. Certainly not a shelf company, Dexion has been busy of late with former Credit Suisse equity chief Tim Ryan's Orion Asset Management coming on the register last month with a 5.55 per cent stake.

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China's M&A grand strategy
Further to reports this morning and yesterday of China's growing interest in foreign takeover targets like Brazil's MMX and possibly Xstrata and Vale, Beijing's National Development and Reform Commission has put companies on notice that they must clear foreign takeovers with the central authorities first so as to combine corporate and "national strategic planning" interests. While this is nothing new it demonstrates perhaps a growing move back in China to centralisation. While companies like Chinalco may claim to be independent and "commercial", to the government at least they are more appendages of the state. Another very recent development is the growth in so-called "M&A loans" from China's state-owned banks. While Australian companies often have to cite things like "debt reduction" "general purposes" when raising money from risk-averse capital markets (and you can almost forget about M&A loans from our banks), China's banks have extended the equivalent of $US1.42 billion in these M&A loans since last Monday, according to Xinhua.

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Russia!
Moscow's stockmarket may (again) be in meltdown, but deals keep flowing with Lukoil saying it is looking at the acquisition of several European refineries and the country's communications minister saying he wants state-owned telco Svyazinvest to merge with another of the country's "big three" service providers. And then there's that talked-about tie-up between Germany's Deutsche Bahn and Russian Railways, which would create a railway behemoth from the Rhine to the Pacific Ocean. Like China, Russia has something of a grand national M&A strategy, perhaps suggesting why the mining deals that Russian oligarchs make in Australia are viewed with a scepticism well beyond knee-jerk xenophobia. And while there are no new Russian deals down under presently on the cards, Russian President Dmitry Medvedev is this week visiting Namibia to talk "business partnership". Top of the agenda will no doubt be the country's rich uranium deposits, which have attracted Rio Tinto, Paladin Energy, Extract Resources and many more besides. A new nuclear cold war could be building.

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Infigen Energy
The wind farm operator formerly known as Babcock & Brown Wind Partners has reached an agreement with Babcock & Brown International (BBI) on the terms of the acquisition of its Australasian, US and German wind energy development pipeline. Infigen Energy has agreed to pay the former manager $23.5 million plus an additional $8 million in separation costs. The decree absolute in the divorce gives Infigen total control of its wind farms and will contribute approximately 20 megawatts of installed capacity to the portfolio. The Australasian assets will be held 50:50 with National Power Partners, which Infigin continues to negotiate with on development joint venture arrangements. Last week, Transfield Services Infrastructure Fund sold a 130 megawatt wind development to AGL Energy for $9 million.

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Insurance
In the wake of NAB/MLC's acquisition of the bulk of Aviva's Australian businesses, there have been further deal developments in Australia's insurance industry. Suncorp-Metway has rebranded its insurance division Suncorp Life, perhaps signalling an eventual split from the group's banking arm – something that has been talked about for quite a while. QBE Insurance Group has meanwhile told the Financial Times that it plans to look for acquisitions in Europe. Chief executive Frank O'Halloran told the paper that it had the funding to acquire up to $750 million in gross annual premiums in the next year. QBE has amalgamated 120 businesses since 1984 the FT said. Overseas, the Bermuda-domiciled reinsurer IPC Holdings said it is still in sale talks with rival Validus Holdings, but is speaking to other companies about possible deals. Validus is offering IPC $US1.72 billion for its international windstorm and catastrophe reinsurance business. As we segue into flapping butterfly wings and hurricanes and so forth, these developments portend others.

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Capital raisings
The party continues with still more companies taking advantage of relatively robust share prices to raise money. While the cynical among you may see this as a last minute grab, it hasn't deterred Lion Selection, GBST Holdings and Silver Swan Group from all entering trading halts today. Something like $90 billion has been raised in Australia this financial year. We could bang on about it all day, how much it is compared with other markets overseas, but you already know that. Uranex meanwhile has added another $4.73 million to that amount, announcing a share placement managed by Patersons in Perth. Hill End Gold has also raised $2.65 million in a placement managed by Sino Investment Services.

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Wrapping up
Mintails has been approached by an unnamed gold producer with an offer for its South African assets. Entering a trading halt, the company expects to receive a written proposal within the next day. Stirling Products and Catalpa Resources have also entered halts pending corporate transaction announcements, and Linc Energy has announced the appointment of UBS to advise on the sale of several assets for a possible several billion dollars. Meanwhile, MacarthurCook has rejected a revised, unconditional 30 cent takeover offer from AIMS Financial Group, but said the board remained "open to any superior proposals". Last year MacarthurCook used a blocking stake held by IOOF to thwart a $1.35 bid from AMP. Elsewhere, the Federal Court has approved the scheme of arrangement proposed between BlueFreeway and IPMG Administration. IPMG will privatise the company, offering shareholders 4 cents per share. A separate deal with an unlisted company sees Mineral Commodities entering into an agreement with Africa Uranium to earn up to a 51 per cent interest in the latter for $US7 million. And finally, Toll Holdings has bought three businesses for an undisclosed amount and Eircom Holdings has entered a trading halt with a formal announcement on Singapore Technologies Telemedia's bid for the company's majority-owned Irish telco asset expected by Friday.