BREAKFAST DEALS: Foster's revisit

Foster's Group's wine spin-off Treasury Wine Estates looks to be in the sights of heavyweight Chinese suitors, while the takeover tussle between Foster's and SAB Miller looks to have hit a stalemate. Meanwhile, BHP Billiton may unveil a new share buyback program when it posts its half-year results in August and Rio Tinto has put more money into coal in the Bowen Basin. In other news, Qantas hoses down talk of a Japanese joint venture for Jetstar, while Virgin Australia could profit handsomely from Tiger Airways' misfortune. Elsewhere, Telstra brings down the shutter on its BigPond DVD rental business and tuna baron Tony Santic's tuna business casts its nets for a new strategic investor.

Foster's, SAB Miller, Treasury Wine Estates, Bright Foods

Foster's takeover dance with SABMiller may have been hogging the front pages in recent weeks but there's fresh speculation filtering through on the other half of the demerged Foster's Group, with Treasury Wine Estates reportedly in the sights of a heavyweight Chinese suitor. The first post-demerger M&A speculation started in May, when global wine giant Constellation Brands voiced its interest in the company. But it looks like Constellation may have to get its skates on for a potential tilt at TWE after reports that China's Bright Food Group is taking a close look at the winemaker. According to Bloomberg News, the privately held, Shanghai-based food conglomerate has held internal talks about making a bid. Bright Food appeared in the local corporate scene around this time last year with a $1.65 billion bid for CSR's Sucrogen business. It was beaten to the punch by Singapore's Wilmar International but the Chinese giant has since made no secret of its intentions to expand through acquisitions and, given the rising demand for wine in China, a move on TWE makes sense. However, just like the Foster's/SABMiller situation, the key consideration will be just how much is the suitor willing to pay for its target. TWE is valued at $2.18 billion and last September a pre-demerger Foster's rejected a private equity bid for Treasury worth up to $2.7 billion. Then there's the added consideration of the strong Australian dollar and the fact that market conditions still look pretty tough. However, Bright Foods wants to grow, is reportedly planning to raise more capital and, after losing out on Sucrogen, may not be in a mood to back down.

Meanwhile, Foster's boss John Pollaers struck a confident note yesterday speaking to ABC TV, saying that his immediate focus is to get the beer business on the right track and help it reach its full potential. Pollaers was adamant that the demerger hadn't been designed to set the business up for a takeover but perhaps the most interesting thing was his statement that there had been no discussions with SABMiller since its offer was rejected. Foster's shares may be rising on hopes of a juicy takeover race but things seemed to have reached a stalemate. No new bids have emerged so far and SABMiller has withdrawn its executives from Australia. There's also very little chatter out of SABMiller as well, with the suitor's boss, Graham Mackay, reportedly switching his focus away from the deal. So it's all quiet on the beer front for the moment and we will have to wait and see when the action starts bubbling again.

BHP Billiton, Rio Tinto, Karoon Gas, Aquila Resources, Vale

Moving to the mining sector, the speedy resolution of BHP Billiton's $10 billion capital management program has sparked hopes that the mining giant may be ready to unveil another share buyback. According to UBS analyst Glyn Lawcock, a renewed capital program could be announced when BHP posts its half-year results on August 24. The thing is that BHP's cash pile is just so big that some analysts reckon that the miner could announce another $10 billion share buyback and still have scope for a $65 billion acquisition in the second half without breaking a sweat. Meanwhile, Rio Tinto has agreed to invest more money into coal in the Bowen Basin, with the heavyweight miner signing a non-binding letter with minnow Australian Pacific Coal. The letter spells out the proposed non-binding terms about the potential acquisition or joint venture of APC's Mount Hillalong project. Under the terms, Rio Tinto assumes the financial and technical risk to examine the coal project. Elsewhere, there's some good news for Karoon Gas, with the company reportedly getting the nod from the federal government to start drilling at its Browse Basin project. According to The Australian, Karoon and its project partner Conoco Phillips are now expected to start drilling at the Poseidon field by October, with five to six wells targeted at a cost of up to $800 million. In other news, senior executives of Brazilian mining giant Vale are going to be in Australia this week and unsurprisingly the miner's ongoing dispute with Aquila Resources will be foremost on their agenda. According to The Australian Financial Review, the Vale executives are expected to meet with the Queensland state government which is none too pleased about the argy-bargy with Aquila hurting export revenue. It will also be interesting to see if there are any indications of a potential takeover play by Vale for Aquila.

Qantas, Jetstar, Japan Airlines, Tiger Airways

Qantas has hosed down talk that its budget arm, Jetstar, has forged a joint venture with Japan Airlines. The speculation was fuelled by reports out of Japan that Jetstar and JAL had signed a deal worth up to $232 million to enter the domestic Japanese market. According to a report in the Nikkei, Jetstar and JAL would each own a 30 per cent stake in the joint venture. However, Qantas has denied that any such joint venture deal has been reached. Meanwhile, the big news in the aviation sector over the weekend was the grounding of Tiger Airways Holdings by the Civil Aviation Safety Authority. The unprecedented move by CASA, not seen since its move to ground Ansett's 767 fleet in 2001, has already prompted some to predict the demise of the low cost, no-frills airline and, even more importantly, the focus is on just how Qantas and Virgin Australia are going to benefit from it. Tiger said that CASA's decision would cost it an estimated $1.6 million a week and its international chief executive Tony Davis was on his way to hold crisis talks with the regulator, however, the potential dismantling of the airline is expected to be a boon for Virgin Australia, which some analysts reckon will pick up the bulk of the business. The reason for this bullishness is Virgin's recent code-share deal with Singapore Airlines, which owns a third of Tiger. According to the Herald Sun, citing an unnamed analyst, the dismantling of Tiger could see Virgin take Tiger's Australian operations while SIA moves to take control of Tiger in Singapore. The analyst added that SIA could add Tiger to its planned medium to long-haul budget service. It may be a bit premature to call just how the cards fall here but one thing is for certain, if Tiger is drummed out of Australia then domestic fares will inevitably rise – and that's great news for Qantas and Virgin.

Telstra, Quickflix, Rupert Murdoch

Telstra has finally decided to close the book on its physical DVD rental service business almost seven years after its inception. BigPond Movies is set to close from September 30 and while the telco will continue to serve movies over the internet, it will no longer post hard-copy DVDs out to members' homes. One notable beneficiary of Telstra's decision is Perth-based Quickflix, which is reportedly set to pick up the business from the telco. Quickflix went into a trading halt on Friday and The Australian reports that a deal could be announced as early as today. Quickflix, which is Australia's largest online DVD rental service, is the logical buyer of the business given that sending out physical copies of DVDs and Blue-Rays to the letterboxes of its members is still pretty much its bread and butter. It's also a logical move for Telstra given its focus on building the digital side of its business. Quickflix does plan to launch an online business this year but for now the acquisition of BigPond Movies should be a welcome addition to its annual revenue, estimated to be around $20 million. In fact, Quickflix has already launched a promotion for BigPond customers who will be affected by the service closure, offering discounted membership for those who make the switch before September 30. In other media news, Rupert Murdoch's part-owned Sky News' bid for the $223 million broadcast rights to Australia's offshore television service, Australia Network, has reportedly been stopped in its tracks by intervention from the Gillard government. The network broadcasts news, drama and sport to 44 countries in Asia and the Pacific, and has so far been broadcast by ABC, however, the federal government launched a new tender process for the supply of the service for the next 10 years last year. According to Fairfax papers, the Sky bid won the approval of the independent panel set up to evaluate the competing tenders but the government is having second thoughts about taking the service away from the hands of ABC putting the entire process in limbo.

* Quickflix has informed the market this morning that it has entered into a commercial agreement with Telstra in relation to the BigPond Movies DVD rental business. Under the terms of the deal, Telstra will refer those customers who wish to continue subscribing to a DVD rental service, to Quickflix. In return, Quickflix will make a variable payment to the telco based on how many customers decide to make the switch. The other good news for Quickflix is that it will acquire BigPond's entire library of DVD and Blu-ray discs and equipment.  

Wrapping up

Tuna baron Tony Santic's Tony's Tuna business is reportedly seeking a strategic investor to help expand operations and might be mulling the potential sale of a third of the business. According to The Australian, the move has been precipitated by the decision of investment company Victor Smorgon Group to sell a strategic stake in the joint venture it has with Santic. Melbourne investment and advisory firm Wingate House is reportedly advising VSG on the sale with strong interest expected from Asian investors. Meanwhile, in private equity news, Helmsman Capital is reportedly looking for a buyer for Force Corp, a specialist provider of elevating work platforms, with an information memorandum hitting the desks of potential trade and sponsor buyers. According to the AFR, Greenstone Partners is advising Helmsman on the sale process. Finally in appointment news, Nufarm is reportedly set to welcome former chief financial officer of Mayne Pharma, Paul Binfield, as its new CFO this week and ASX Ltd and Coca Cola Amatil chairman David Gonski has joined the state government's new board of Infrastructure NSW. He will join MAp chairman Max Moore Winton, former Boral CEO Rod Pearse, CBA director Carolyn Kay and food exporter Roger Fletcher.

* Nufarm has this morning confirmed the appointment of Paul Binfield as the company's new chief financial officer. Binfield is currently a finance director with Coles Liquor and Hotels.