Aussie property bet cements risk for Thai tycoon 5 Jun 2014 The billionaire who broke up Fraser & Neave last year is back on the M&A trail with a $2.4 bln bid for Australand. Buying down under would dilute exposure to Singapore, but pile debt onto a group still digesting its last deal. Managing the risk will require fancy footwork.
KKR’s $3.1 bln bid pours pressure on Treasury Wine 20 May 2014 The Australian wine producer has rebuffed an opportunistic offer from the U.S. buyout firm. The former Foster’s unit is a persistent underperformer. Treasury’s new CEO needs to quickly demonstrate his turnaround credentials, or let KKR try to squeeze out some value instead.
Australia’s mistimed austerity could boomerang 12 May 2014 Prime Minister Tony Abbott wants to raise taxes on top incomes and cut welfare. But tightening the government’s belt as the mining boom fades could prompt people to consume less, or borrow more against fickle housing wealth. With public debt low, a fiscal correction is untimely.
Macquarie shows Wall St rivals a mirror image 2 May 2014 The Australian group’s full-year earnings rose 49 pct, fuelled by unfashionable businesses like commodity trading. Superior returns and fewer balance sheet woes justify Macquarie’s strong share price. But as the group expands overseas, it will get harder to buck the trend.
Dairy holds key to $1.2 bln Goodman takeover 28 Apr 2014 The troubled Australian food group has rejected a bid from Singapore’s Wilmar and Hong Kong’s First Pacific that values it at 8 times this year’s EBITDA. To convince investors it is worth more on its own, Goodman quickly needs to find a buyer or partner for its dairy business.
BHP spinoff would swap one problem for another 1 Apr 2014 The miner wants to simplify its portfolio, possibly by demerging less attractive assets. But it’s not certain this would create shareholder value, and the move could cost financial and operational synergies. BHP may be better off patiently selling down as opportunities arise.
State aid may just prolong Qantas’ pain 28 Feb 2014 The Australian carrier, which just cut 5,000 jobs, is struggling to compete against its loss-making, foreign-backed rival. Lifting a cap on foreign ownership will only help if Qantas can find a deep-pocketed investor. A state guarantee for its debt may just extend the price war.
Privatisations a bright spot for gloomy Aussie M&A 13 Feb 2014 Australia is set for a bumper year of asset sales as cash-constrained local governments flog existing infrastructure to fund new projects. Federal disposals may further boost volumes. That’s a welcome diversion for investment bankers facing another slow year for deals Down Under.
Australia’s auto demise foreshadows demand slump 12 Feb 2014 Toyota has joined Ford and GM in closing its plant in the country. That’s a delayed reaction to the decade-long loss of manufacturing competitiveness. But the big risk to the economy is not Australians making fewer things. It’s that they will be buying less than before.
Richard Li’s $2.4bln CSL deal reconnects with past 20 Dec 2013 The Hong Kong mogul’s telecoms group HKT is paying 6.1 times adjusted EBITDA to buy back the mobile company he sold to Telstra in 2001. The synergies needed to justify a premium of roughly 31 percent aren’t too taxing. HKT ends up more indebted, but it’s basically a happy reunion.
Australia nudges dairy saga toward a finish 17 Dec 2013 Saputo has raised its offer for cheesemaker Warrnambool to A$537 million, at a regulator’s prompting. It could prove higher than a rival bid by Murray Goulburn, and looks more deliverable. Barring a knockout counterbid, investors would do well to take Saputo’s cash.
Australia’s mini-deal flurry belies gloomy 2014 17 Dec 2013 A late burst of activity led by the carve up of mall operator Westfield lifted M&A volumes 13 pct above 2012. But they are still well below a good year. A gaping budget deficit and recent political meddling suggest Australia won’t raise Asia-Pacific from its deal-making gloom.
Qantas needs help to escape financial nosedive 5 Dec 2013 The Australian carrier, which warned on profits, is a political hybrid. As a national champion it faces limits on raising foreign capital, but it lacks the financial advantage openly state-backed rivals enjoy. Something has to give, but Qantas could also do more to help itself.
Westfield shops for premium with $28 bln carve-up 4 Dec 2013 The Australian shopping mall giant is separating its international and local assets in a cash-and-share deal. The cleaner structure may allow Westfield to command a higher valuation like its U.S. peers. To lure new investors, it might need an overseas listing.
ADM should call Australia’s bluff with GrainCorp 2 Dec 2013 The U.S. agribusiness faces a paper loss on its 20 pct stake in GrainCorp after Australia blocked its A$3.4 bln takeover, arguing the market wasn’t sufficiently mature. ADM should sit tight, and then try again later. That would force Australia to show its real hand.
Australia too mealy-mouthed on protectionism 29 Nov 2013 Blocking ADM’s $3.1 billion takeover of GrainCorp is illogical. The U.S. buyer was paying a tidy premium for the Sydney-based wheat trader. While foreign investors won’t be happy, Canberra’s real mistake is in not saying plainly that it prefers a local bully to a foreign one.
Aussie dairy battle needs cheap debt to stack up 19 Nov 2013 Three bids in as many days have lifted the price tag for Australian dairy Warrnambool above A$500 million. Local cost savings and projections of China’s thirst for foreign milk help justify the frenzy. But the investment case also depends on low borrowing costs.
Aussie dairy battle in danger of overheating 14 Nov 2013 Bega Cheese hiked its offer for local rival Warrnambool to A$486 mln. That’s nearly double the dairy’s value before a bidding war erupted in September. Valuations depend on Chinese milk demand taking off. But with two other buyers still in the fight, the price could rise further.
Fleeing multinationals mean India needs hot money 23 Oct 2013 BHP Billiton is all but giving up on exploring for Indian oil and gas because of delayed clearances. Harsh rules on foreign stores have upended Wal-Mart’s plans. With a faltering business climate, New Delhi still craves investment dollars. Fickle short-term cash is its only bet.
Lloyds Australia sale shows new bank M&A template 11 Oct 2013 The British lender is offloading most of its assets down under to Westpac for A$1.45 billion. The deal allows both banks to focus on their home markets. It’s a symptom of the post-crisis de-globalisation of finance. For Australia, the reshuffle is almost complete.