THE DISTILLERY: An AXA to grind

This is no fracas over a few fee fiddles. It's bigger. It must be, because it drew a rare appearance in print this morning from Sydney Morning Herald business section boss Michael West. It's the increasingly stupefying corporate soap opera, the NAB bid for AXA Asia Pacific. It has had all the mind-numbing interest of Days of Our Lives, with Melbourne-based regulators and business writers playing a part in keeping this tortured story alive rather than putting it and us out of our misery. Can anyone remember a senior regulator coming out and slamming hedge funds and other investors, as ACCC chief Graeme Samuel did last night over this tortured deal?

Here's how The Age's Malcolm Maiden and Eric Johnston reported it: "Graeme Samuel, head of the nation's competition regulator, has launched a stinging attack on 'unprecedented, inappropriate and unacceptable' rumours about the commission's talks with National Australia Bank over the bank's proposed $13.3 billion bid for wealth manager AXA Asia Pacific. The Australian Competition and Consumer Commission chairman revealed that hedge funds had called him directly, but refused to take the calls." He also says he deleted the calls. He shouldn't have, Graeme, you should have taken down the numbers, noted who the calls were from and publicised them. Name and shame, name and shame.

So that prompted the appearance in print of Michael West in a semi-editorial: "Either Graeme Samuel can't bring himself to say a firm and final 'no' or Cameron Clyne can't take a series of nos for an answer. The competition tsar is under pressure. Samuel is fighting a bellicose campaign of leaks and relentless lobbying from the banks and hedge funds. They want to get this $13 billion bid for AXA over the line, but the ACCC chairman knows that, should he allow the National Australia Bank to take over AXA Asia Pacific, he would have little justification in knocking back a Commonwealth Bank bid for AMP. And so on."

The ACCC chief's comments garnered coverage from the AFR and from The Australian this morning, where Richard Gluyas reported: "ACCC chairman Graeme Samuel launched an extraordinary attack on participants in NAB's proposed $14 billion takeover of Axa Asia Pacific. The Australian Competition & Consumer Commission chairman accused NAB and its partners of trying to manipulate the commission's deliberations with a 'whirlwind of innuendo'." Name and shame, Graeme. No more Italian suppositories, cut the innuendo.

And The Australian's Matthew Stevens weighed in: " Graeme Samuel is as mad as hell and he is not going to cop it any more. A seething Australian Competition & Consumer Commission chairman yesterday claimed that an 'unprecedented' level of background briefing has consistently blighted NAB's attempt to negotiate a set of undertakings that might enable the regulator to overturn its opposition to a proposed $13.3 billion takeover of Axa Asia Pacific." A story more Home and Away than Days of Our Lives, which is at least a soap opera for grown-ups.

The Australian's John Durie didn't mention the Samuel comments, but got right to the heart: "After trading in an uninformed market for 80 days, Axa finally took itself off the bourse yesterday, as talks between NAB and the Australian Competition & Consumer Commission over whether the bank can buy Axa's local arm head for a conclusion – possibly today. Suffice it to say the events of the past 12 weeks have been nothing short of a farce." Couldn't agree more.

Away from this storm in an annuity, there were other stories worthy of comment this morning, such as News Corp's earnings. Business Spectator's Stephen Bartholomeusz looked into the future through the News Corp annual profit and found: "The News Corp result makes it even more obvious why Rupert Murdoch wants to buy the 61 per cent of UK pay TV operator BSkyB that he doesn't already control. BSkyB is, however, easily the most obvious and low-risk expansion for News, whose history of growth by acquisition over the decades is stained by some major blemishes. It would make News the largest pay TV operator in the globe but, more particularly, allow it to capture more of the second-tier cash flows and profits it can generate from the content it originates in its film and television studios."

Fairfax's Malcolm Maiden looked back and said it was mostly down to funny glasses and Avatar, which disguised a deeper transition: "Fox News is now News's No. 1 earner, having boosted its share of group operating profit from about 20 per cent five years ago to 57.3 per cent in the latest year, with a 37 per cent leap in operating profit from $US1.653 billion to $US2.268 billion. Movie industry profits are volatile. In a 'Cameron Year', they are a great thing. In the more common fallow years, the bulked-up cable TV operation is an increasingly fat cushion." As usual, more insight on the result from the non-News Corp commentators in Australia this morning.

Fairfax's Elizabeth Knight was a busy little columnist, perusing gambling (another of the deadly sins, after the David Jones sexual harassment case earlier in the week) with an online comment on Tabcorp's decision to spend more at its Sydney casino, despite suffering a profit fall: "The Tabcorp board has taken the somewhat risky move of allocating even more money to its casino division – despite the fact that the full-year earnings from this business segment were down 17.5 per cent. The company is effectively doubling its bet on casinos emerging as a saviour. And ... Tabcorp's business is up against structural issues in both gaming and wagering that are almost overwhelming." The AFR said that investors were running out of patience with a company with yet another excuse for more poor performance.


And Ms Knight had the hard hat and work boots on and was down the mine, looking at Rio's returns:
"We now have a new Rio Tinto. Same management, but very different outlook. The result it delivered to the market last night – net earnings of $US5.8 billion – was robust. It came in at the upper end of expectations and held promise it could be improved over the short to medium term. This company's story is now about how it can capitalise on the continued strong growth in the prices of iron ore, coal and other commodities." Chanticleer in the AFR covered the Rio result, saying the company was back from the brink. Indeed, "had escaped from Chinese (Chinalco) hands" might have been more accurate.


And finally a couple of thoughts: first, food prices are surging. Wheat prices surged overnight to more than $US8 a bushel (a two-year high) in Chicago as Russia brought in an export ban: "The prices of everyday staples such as bread, flour and beer are set to rise sharply after Russia imposed a ban on grain exports, triggering panic in commodities markets and sending wheat prices to their highest since the 2007-08 global food crisis. Vladimir Putin, Russian Prime Minister, announced the ban on all the country's grain exports, effective within 10 days, after a severe drought devastated crops and wildfires spread across the country. Coffee, hogs (bacon, pork), cotton, all rose overnight, but corn and soybeans were weak.


And ahead of tonight's US jobs and employment data, The Financial Times' Alphaville blog site has this discussion on the surprise surge in weekly jobless claims: "Sluggish growth -- meet sluggish jobs. Initial jobless claims — the number of people who file for unemployment insurance each week – jumped by 19,000 to 479,000, its highest level since April".

And finally, gold or yen, or is it a yen for gold? Financial Times columnist Peter Tasker writes: "There are not many financial assets that are priced higher today than before the Lehman shock in September 2008. Two that have done investors proud are the yen and gold bullion. At first there seems little in common between the yellow metal, which has been a store of value through the ages, and the currency of a country with feeble economic growth and Godzilla-sized government debt. Yet both are perceived as havens of safety in a troubled world. Strangely, the yen may be the more deserving of that accolade."