BREAKFAST DEALS: Suncorp's suitors?

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Citigroup, like ANZ, is hot on Indonesia, while AXA Asia Pacific is eyeing oriental expansion opportunities as well. Meanwhile, rumours arise that JC Flowers is having a look at Suncorp, Qantas halts plans to float its frequent flyer business and a list of mining takeover rumours.
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Indonesia

Despite the recent terrorist attacks in Jakarta, shootings at Freeport McMoRan's copper-gold mine in Papua and vagaries of the global recession, Indonesia looks good in the eye of foreign investors. As Citigroup tells Singapore's Business Times that it plans to sell 20 business in consumer finance, many located in Europe, it has separately flagged plans to make a number of "fair price” acquisitions in Indonesia to expand its brand network in the country. ANZ of course is expanding in the country, with its $US550 million purchase of Royal Bank of Scotland's operations in six Asian countries including 20 branches in Indonesia serving 450,000 customers with deposits of $US800 million. ANZ already has a partnership with Indonesia's sixth largest bank, PT Panin Bank, and earlier this year increased its stake to 38.3 per cent for $US114 million. Even ANZ's new logo – a futuristic blue lotus with all sorts of exotic connotations – was launched in Jakarta, rather than Melbourne. In the capital markets, the Indonesia Stock Exchange continues to rise and grew 15 per cent last month, according to Bloomberg. Indonesia's debt market has also been busy with state-owned electricity company Perusahaan Listrik Negara pricing $US750 million in ten-year bonds earlier this week alongside retailer Matahari with a $US200 million issue. Late last month Bumi Resources raised $US375 million in convertible notes after initially offering just $US200 million, and in projects, state oil company Pertamina this week said it wants to have a bigger stake in a $US1.5 billion refinery joint venture with Japan's Mitsui.
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Suncorp-Metway

Over in the bancasphere, private equity group JC Flowers and ANZ are both reportedly having a close look at buying some or all the assets in Queensland bancasurrance firm Suncorp-Metway. The Australian reports that JC Flowers, chaired by former Westpac boss David Morgan, is looking at Suncorp three years after Morgan made an informal offer with then Westpac chairman Leon Davis at $23 per share. Suncorp, which will have a new chief executive in British insurance executive Patrick Snowball on September 1, closed yesterday at $7.64. Rumours also continue that ANZ is having a hard look at Suncorp, despite CEO Mike Smith's comments yesterday at a Sydney lunch that Suncorp wasn't on his radar, though he did add: "never say never”. The other perennial candidate is Bank of Queensland, which together with Suncorp's banking assets would create a larger regional force that would probably suit the wishes of the ACCC. BoQ, presently wrapping-up a strategic review called "Project Pathways” with advisory firm Palladio Partners, could make a move as early as this month.
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AXA Asia Pacific

Insurance and funds management group AXA Asia Pacific has meanwhile said it continues to keep "open files" on acquisition opportunities in Asia. Although the group's funds under management and advice fell 10 per cent in the year to $75.7 billion, half year profit almost trebled from $94.2 million to $270.4 million, providing a sounder platform for international expansion. AXA Asia Pacific has been rumoured on and off to be in the sights of French parent AXA, though an expansion should check that. The global insurance industry could be seeing a new resurgence now that the dust from the credit crunch is clearing. Shares in American International Group surged 63 per cent overnight ahead of the group's quarterly earnings report on Friday as short-sellers covered their positions. Shares in commercial and equipment lender CIT Group, which recently looked into the abyss of bankruptcy, also shot up 55 per cent overnight on no particular news. On Monday, AIG will also see a new chief executive in Robert Benmosche.
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Mining deals

This year's Diggers and Dealers conference in Kalgoorlie is generating fewer rumours than usual with the moderating presence of a few ASIC officers to make sure things don't get too out of hand at the mining town's many pubs and, er, entertainment centres. But new deal-making possibilities continue to surface every day and yesterday Barrick Gold let the cat out of the bag with its regional president Gary Halverson telling the punters "we are always looking at opportunities" amid rumours that it is looking at OZ Minerals' Prominent Hill site, in a deal that would then see the target return remaining cash to shareholders. OZ boss Terry Burgess, whose company has $US800 million in the bank, has perhaps inadvertently supported that theory by saying it's not in any hurry to spend its money. DJ Carmichael analyst James Wilson also told Reuters on the sidelines that Chinese firms would continue to eye Australian miners in spite of the Chinalco bust up with Rio Tinto. "I reckon there's still a few in the cards, there's still more to do – particularly in steel-related products," said Wilson. Rumours of the day include buyouts of Atlas Iron, Kagara and a possible financing deal between Fortescue Metals Group and China Investment Corporation, which continues to expand in everything from real estate (Goodman Group) to beverages (Diageo).
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Qantas Airways

Following the recent tie-up between British Airways, American Airlines and Spain's Iberia, Qantas Airways, the flying kangaroo, will continue to fly alone, with chief executive Alan Joyce adding yesterday that the carrier would avoid mergers for at least a decade. Qantas has also scrapped plans to list its $2 billion frequent flyer points business in the model of Air Canada spin-off Groupe Aeroplan, which trades on the Toronto Stock Exchange and now owns Britain's Nectar loyalty points program and a shopping rewards business in the Middle East. Besides discussions of a $9.03 billion merger with BA last year, Qantas has also held talks over the years with Air New Zealand, Singapore Airlines and Malaysia Airlines. Singapore and Air NZ have also been speculated to be interested in acquiring a stake in Virgin Blue Holdings, as has Abu Dhabi-based carrier Etihad. Virgin put those rumours to be last month, however, with a capital raising whose cornerstone investor happened to be Richard Branson's Virgin Group, rather than another airline. Still, airlines from Europe to North America to China continue to merge and consolidate so the pressure will remain on Qantas and Virgin Blue to prove out-performance if they continue to fly solo.

Wrapping up

Nufarm's purchase of two American sorghum companies for an undisclosed price yesterday has raised the ire of one fund manager who likened the move's opacity to a wider trend where company managers are treating themselves as kings, directors as fawning courtiers and shareholders as peasants. Medieval analogies continue with the appropriately-named Noble Group seen as a white knight, rescuing the fuel unit of America's SemGroup out of bankruptcy for a purchase price of $US65 million. Elsewhere, Canada's Petrobank Energy and Resources has offered to buy Toronto-listed TriStar Oil & Gas for $C2.24 billion in cash and scrip, an offer that has come with the support of a number of analysts. The deal would see a separate entity, PetroBakken Energy, being spun out that will focus on the technically-challenging oil province of south-eastern Saskatchewan. Also in oil, the $US3.3 billion acquisition of Kazakh upstream oil company MangistauMunaiGas by Kazakhstan's state-owned KazMunaiGas and China's CNPC has been delayed for no apparent reason. "Several issues are being resolved," a KazMunaiGas spokesman told Reuters. Still in resources, Canada's Red Back Mining has dropped its bid for Congo-focussed Moto Goldmines after a better offer was received from a consortium of Randgold Resources and AngloGold Ashanti. In other industries, Nasdaq-listed China Sky One Medical has flagged acquisitions in China, private Malaysian telco Maxis Communications has reportedly appointed Goldman Sachs, Credit Suisse and CIMB to advise on a $US2 billion Kuala Lumpur listing, and Lloyds Banking Group has finally finished due diligence on HBOS after 5,000 man hours. Lloyds agreed to a shotgun marriage in September last year. And finally, don't hold your breath, but reports are coming through that Goodman Group's capital raising will be for a total of $1.8 billion; $1.3 billion in an entitlement issue and $500 in a preference share placement to China Investment Corporation.