LUNCH DEALS: Objects of desire
Is Bank of Queensland eyeing Suncorp? And why has the Commonwealth Bank invested $160 million in China? Meanwhile aluminium stocks rise and finance mergers continue.
E-mail your tips and rumours to deals@businessspectator.com.au
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Is Bank of Queensland raising cash to buy into Suncorp and why has the Commonwealth Bank invested $160 million in China? Meanwhile, aluminium stocks rise as the market ponders the affects of Russia's power station disaster, finance mergers continue, Shell increases its stake in Arrow's Tipton West and Skilled Group is in a halt pending a capital raising of between $70 and $80 million.
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Bank of Queensland
"To take advantage of emerging growth opportunities" has been given as the reason behind Bank of Queensland's $340 million equity raising today. And word is that the regional lender, which will also see its pro-forma Tier 1 capital ratio increase to a highly cushioned 9.9 per cent as well, could use the money to buy Suncorp-Metway's banking assets. "Emerging growth opportunities” is, after all, bank-ese for mergers and acquisitions and the idea of a Brisbane-based fifth pillar, if you will, has appealed to many for some time. Importantly, BoQ's 'Project Pathways' corporate soul-searching exercise has led to a decision not to bring in a strategic investor. This gives BoQ the freedom to forge its own pathway, so to speak, though top shareholder BRED Banque Populaire will keep its cornerstone stake. After participating in the raising, BRED BP will be left with a 12.5 per cent stake in BoQ. The raising comprises a $143 million institutional placement, an $85 million one-for-nine non-renounceable institutional entitlement offer and a $112 million retail offer on the same terms. Both the placement and entitlement offers, underwritten by RBS and Brisbane stalwarts ABN Amro Morgans, will be conducted at $10 per share.
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Commonwealth Bank of Australia
The CBA is meanwhile participating in a rights issue by China's Bank of Hangzhou. To maintain its 19.99 per cent stake in Hangzhou, CBA will invest approximately $160 million, or 910 million renminbi. The raising, Hangzhou says, is to fund future growth and to increase its capital adequacy ratio in line with forthcoming changes to Chinese banking regulations. CBA chief Ralph Norris told the ABC's Inside Business on Sunday that it was on the lookout for Asian acquisition opportunities and that it had obtained an Indian banking licence. While the bank cannot increase its stake in Hangzhou beyond 20 per cent, it is rumoured that the ruler is being run over a number lenders in India, Indonesia and Vietnam. Australia and New Zealand Banking Group is otherwise thought of as Australia's "super-regional” bank, with its highly-publicised focus on Asian acquisitions.
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Tasmanian merger
MyState Financial Credit Union of Tasmania members have overwhelmingly voted to merge with Tasmanian Perpetual Trustees, a rival financial services firm whose shareholders will vote on the proposal later today. A merger between the two companies follows last week's merger proposal between South Australian credit unions Savings & Loans and Australian Central. That deal in turn follows on from the deal struck earlier this year between Bendigo-based RegionalOne and Mecu to create Australia's biggest credit union. Consolidation at the smaller end of the lending industry has been a long time coming following merger activity between other companies in the financial services sector. Takeovers of stockbrokers like Tolhurst and JBWere, financial planners like Australian Wealth Management and mortgage providers like Wizard Home Loans – and, very recently, Challenger's home loan unit – have kept otherwise unemployed takeover specialists busy in a relatively quiet year for mergers.
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Aluminium
Further to this morning's lead story on the effects that Russia's hydroelectric power station disaster could have on companies like Rio Tinto's Alcan, shares in Alumina have risen 3.66 per cent by mid morning, while overnight in New York, shares in Alcoa climbed 4.1 per cent, Century Aluminium Company jumped 7.45 per cent and Kaiser Aluminum stocks rose 2 per cent. Analysts have added weight to expectations that the disaster could lead to structural gains in aluminium prices with Commerzbank telling investors that repair work at affected plants could take up to four years. United Company Rusal, which owns the affected plants, is privately owned by billionaire oligarch Oleg Deripaska, who also owns a significant stake in Leighton Holdings' German majority shareholder Hochtief. All eyes are now on Alcan's Engineered Products division, which Rio has on the chopping block. Higher aluminium prices are expected to support a better sales figure. In other news, Perth-based explorer Bauxite Resources has signed a further non-binding memorandum of understanding with Yankuang Group Corporation over the development a joint venture alumina refinery in Western Australia. The agreement incorporates a proposed $9.85 million placement at 50 cents per share. After steep rises over the last couple of months, Bauxite's shares were down almost 7 per cent by midday from an open of 70 cents per share.
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Arrow Energy
It's not part of any takeover offer but Royal Dutch Shell subsidiary Shell CSG Australia has agreed to pay Arrow Energy $99 million for a further 12 per cent stake in the Tipton West Joint Venture and has agreed to reimburse Arrow for 30 per cent of any future contingent payments that Arrow makes to Beach Petroleum up to $21 million. Earlier this year Beach sold its interest in the joint venture project to Arrow for $260 million in cash and 20.61 million Arrow shares. Beach later sold the shares for $77.8 million, making a $8 million gross profit in the process. Rumours have circulated that Shell is targeting Arrow following an undisclosed takeover offer that was rejected earlier this year. It has also been rumoured that PetroChina, which yesterday signed a $50 billion oil deal with ExxonMobil at Gorgon, is interested in Arrow, whether in conjunction with Shell or alone.
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Tianshan Goldfields
Elsewhere in resources world, Tianshan Goldfields has signed an agreement to sell its entire Chinese gold portfolio to Hong Kong-registered China Power Sino Renewable Resources for $US22.5 million. The transaction, subject to due diligence undertaken over the next two months, will effectively leave Tianshan as a $35 million cash box. Tianshan's projects are based in the extreme northwest corner of China's Xinjiang province, the scene of recent ethnic riots and a Uighur nationalist movement that came to prominence with the visit of its leader to the Melbourne International Film Festival and the National Press Club in Canberra. Tianshan, whose name refers to a regional mountain range, used Huashan Capital, a Shanghai-based boutique advisory firm, on the transaction.
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Skilled Group
Contract labour service provider Skilled Group has entered a trading halt ahead of a capital raising the Financial Review has predicted to be around $70 million. It is understood the raising is being made at $1.50 per share, a 26 per cent discount to yesterday's close. Others say the deal is for a $70 million placement and a $10 million share purchase plan. It is not known, however, whether chief executive Greg Hargrave, whose family owns most of the company, will participate. A huge increase in trading volume preceded the halt.
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Wrapping up
Goodman Group, tipped this morning to be eyeing a takeover for ING Industrial Fund, has freed up $72 million in cash, having reduced its stake in the New Zealand-listed Goodman Property Trust from 28 per cent to 17 per cent. The sale of 93 million shares was made to a range of institutional investors at 95 kiwi cents per unit. Boart Longyear has successfully completed its institutional raising, receiving a total of $569 million in commitments. Phosphate Australia is meanwhile raising $3.83 million via a placement managed by Bell Potter Securities. The placement was oversubscribed, PhosAus said, and will be used to fund further work at the company's Highland Plains project. Golden Gate Petroleum is in voluntary suspension pending a capital raising announcement before the end of the week. Elsewhere, Globe Metals & Mining has signed a $12.9 million joint venture agreement with South African engineering concern Thuthuka Group, Orocobre has proposed a spin-off of its hard rock assets into a new company called Element Minerals, and a shareholder of Bowen Energy, Macrae Holdings (WA), has gone to the Takeovers Panel with an objection about members of the company's board having an interest in a takeover bid from Bhushan Steel. Also, Growthpoint Properties, the Johannesburg-listed company that has taken over Orchard Industrial Property Fund, has lodged a booklet for its $144.4 million Australian rights offer and finally, a Mesoblast associate in the United States, Angioblast Systems, has raised $10 million.
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Is Bank of Queensland raising cash to buy into Suncorp and why has the Commonwealth Bank invested $160 million in China? Meanwhile, aluminium stocks rise as the market ponders the affects of Russia's power station disaster, finance mergers continue, Shell increases its stake in Arrow's Tipton West and Skilled Group is in a halt pending a capital raising of between $70 and $80 million.
.
.
Bank of Queensland
"To take advantage of emerging growth opportunities" has been given as the reason behind Bank of Queensland's $340 million equity raising today. And word is that the regional lender, which will also see its pro-forma Tier 1 capital ratio increase to a highly cushioned 9.9 per cent as well, could use the money to buy Suncorp-Metway's banking assets. "Emerging growth opportunities” is, after all, bank-ese for mergers and acquisitions and the idea of a Brisbane-based fifth pillar, if you will, has appealed to many for some time. Importantly, BoQ's 'Project Pathways' corporate soul-searching exercise has led to a decision not to bring in a strategic investor. This gives BoQ the freedom to forge its own pathway, so to speak, though top shareholder BRED Banque Populaire will keep its cornerstone stake. After participating in the raising, BRED BP will be left with a 12.5 per cent stake in BoQ. The raising comprises a $143 million institutional placement, an $85 million one-for-nine non-renounceable institutional entitlement offer and a $112 million retail offer on the same terms. Both the placement and entitlement offers, underwritten by RBS and Brisbane stalwarts ABN Amro Morgans, will be conducted at $10 per share.
.
.
Commonwealth Bank of Australia
The CBA is meanwhile participating in a rights issue by China's Bank of Hangzhou. To maintain its 19.99 per cent stake in Hangzhou, CBA will invest approximately $160 million, or 910 million renminbi. The raising, Hangzhou says, is to fund future growth and to increase its capital adequacy ratio in line with forthcoming changes to Chinese banking regulations. CBA chief Ralph Norris told the ABC's Inside Business on Sunday that it was on the lookout for Asian acquisition opportunities and that it had obtained an Indian banking licence. While the bank cannot increase its stake in Hangzhou beyond 20 per cent, it is rumoured that the ruler is being run over a number lenders in India, Indonesia and Vietnam. Australia and New Zealand Banking Group is otherwise thought of as Australia's "super-regional” bank, with its highly-publicised focus on Asian acquisitions.
.
.
Tasmanian merger
MyState Financial Credit Union of Tasmania members have overwhelmingly voted to merge with Tasmanian Perpetual Trustees, a rival financial services firm whose shareholders will vote on the proposal later today. A merger between the two companies follows last week's merger proposal between South Australian credit unions Savings & Loans and Australian Central. That deal in turn follows on from the deal struck earlier this year between Bendigo-based RegionalOne and Mecu to create Australia's biggest credit union. Consolidation at the smaller end of the lending industry has been a long time coming following merger activity between other companies in the financial services sector. Takeovers of stockbrokers like Tolhurst and JBWere, financial planners like Australian Wealth Management and mortgage providers like Wizard Home Loans – and, very recently, Challenger's home loan unit – have kept otherwise unemployed takeover specialists busy in a relatively quiet year for mergers.
.
.
Aluminium
Further to this morning's lead story on the effects that Russia's hydroelectric power station disaster could have on companies like Rio Tinto's Alcan, shares in Alumina have risen 3.66 per cent by mid morning, while overnight in New York, shares in Alcoa climbed 4.1 per cent, Century Aluminium Company jumped 7.45 per cent and Kaiser Aluminum stocks rose 2 per cent. Analysts have added weight to expectations that the disaster could lead to structural gains in aluminium prices with Commerzbank telling investors that repair work at affected plants could take up to four years. United Company Rusal, which owns the affected plants, is privately owned by billionaire oligarch Oleg Deripaska, who also owns a significant stake in Leighton Holdings' German majority shareholder Hochtief. All eyes are now on Alcan's Engineered Products division, which Rio has on the chopping block. Higher aluminium prices are expected to support a better sales figure. In other news, Perth-based explorer Bauxite Resources has signed a further non-binding memorandum of understanding with Yankuang Group Corporation over the development a joint venture alumina refinery in Western Australia. The agreement incorporates a proposed $9.85 million placement at 50 cents per share. After steep rises over the last couple of months, Bauxite's shares were down almost 7 per cent by midday from an open of 70 cents per share.
.
.
Arrow Energy
It's not part of any takeover offer but Royal Dutch Shell subsidiary Shell CSG Australia has agreed to pay Arrow Energy $99 million for a further 12 per cent stake in the Tipton West Joint Venture and has agreed to reimburse Arrow for 30 per cent of any future contingent payments that Arrow makes to Beach Petroleum up to $21 million. Earlier this year Beach sold its interest in the joint venture project to Arrow for $260 million in cash and 20.61 million Arrow shares. Beach later sold the shares for $77.8 million, making a $8 million gross profit in the process. Rumours have circulated that Shell is targeting Arrow following an undisclosed takeover offer that was rejected earlier this year. It has also been rumoured that PetroChina, which yesterday signed a $50 billion oil deal with ExxonMobil at Gorgon, is interested in Arrow, whether in conjunction with Shell or alone.
.
.
Tianshan Goldfields
Elsewhere in resources world, Tianshan Goldfields has signed an agreement to sell its entire Chinese gold portfolio to Hong Kong-registered China Power Sino Renewable Resources for $US22.5 million. The transaction, subject to due diligence undertaken over the next two months, will effectively leave Tianshan as a $35 million cash box. Tianshan's projects are based in the extreme northwest corner of China's Xinjiang province, the scene of recent ethnic riots and a Uighur nationalist movement that came to prominence with the visit of its leader to the Melbourne International Film Festival and the National Press Club in Canberra. Tianshan, whose name refers to a regional mountain range, used Huashan Capital, a Shanghai-based boutique advisory firm, on the transaction.
.
.
Skilled Group
Contract labour service provider Skilled Group has entered a trading halt ahead of a capital raising the Financial Review has predicted to be around $70 million. It is understood the raising is being made at $1.50 per share, a 26 per cent discount to yesterday's close. Others say the deal is for a $70 million placement and a $10 million share purchase plan. It is not known, however, whether chief executive Greg Hargrave, whose family owns most of the company, will participate. A huge increase in trading volume preceded the halt.
.
.
Wrapping up
Goodman Group, tipped this morning to be eyeing a takeover for ING Industrial Fund, has freed up $72 million in cash, having reduced its stake in the New Zealand-listed Goodman Property Trust from 28 per cent to 17 per cent. The sale of 93 million shares was made to a range of institutional investors at 95 kiwi cents per unit. Boart Longyear has successfully completed its institutional raising, receiving a total of $569 million in commitments. Phosphate Australia is meanwhile raising $3.83 million via a placement managed by Bell Potter Securities. The placement was oversubscribed, PhosAus said, and will be used to fund further work at the company's Highland Plains project. Golden Gate Petroleum is in voluntary suspension pending a capital raising announcement before the end of the week. Elsewhere, Globe Metals & Mining has signed a $12.9 million joint venture agreement with South African engineering concern Thuthuka Group, Orocobre has proposed a spin-off of its hard rock assets into a new company called Element Minerals, and a shareholder of Bowen Energy, Macrae Holdings (WA), has gone to the Takeovers Panel with an objection about members of the company's board having an interest in a takeover bid from Bhushan Steel. Also, Growthpoint Properties, the Johannesburg-listed company that has taken over Orchard Industrial Property Fund, has lodged a booklet for its $144.4 million Australian rights offer and finally, a Mesoblast associate in the United States, Angioblast Systems, has raised $10 million.
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