Keep your Coles dockets

Coles: The Coles bid is going to be raised, maybe twice. Don't sell your shares. This could be a real winner for retail shareholders.

The battle for the diversified supermarket group is the biggest deal in town and it's got a long way to go. As it stands Wall Street's private equity empire Kohlberg Kravis Roberts (KKR) has said it will exceed the bid already made by Wesfarmers.

Now Wesfarmers has a bid on the table of $16.47. It's a good bid that has been welcomed by traders. What's more, it’s got explicit tax advantages to Australian investors. Tom Hedley, the Queensland-based “pub baron” who has already sold more than 1% of Coles to Wesfarmers, says he sold into the deal because he was attracted by the tax terms of the Wesfarmers offer.

About $4.20 worth of the Wesfarmers offer is represented by Wesfarmers stock (also known as scrip). This means KKR will have to bid about $17.50 to offer a price that is realistically ahead of Wesfarmers.

If you then assume that Wesfarmers really wants to win this bidding war – and we already know that it is seen as a career-making deal for Wesfarmers chief executive Richard Goyder – then Wesfarmers will need to top $17.50.

The Coles stock is trading around the $17.50 mark, which tells you that investors are pretty sure this is how the story will unfold from here. This is one to watch very closely. What's more, there is still time for other players such as Woolworths or Harvey Norman to get into the action.

Uranium: Takeover activity in the uranium sector is intensifying after two eyebrow-raising deals in the past few days, where foreign players stepped into local takeover deals and delivered unexpected outcomes.

First, the ASX-listed Paladin group had been bidding for ASX-listed Summit Resources. Paladin kicked off its campaign with a 2 for 1 scrip offer and topped it with a 2 for 1.67 offer. Summit, a junior uranium explorer, looked as though it would be swallowed by one of the biggest of the local uranium players when a French uranium company, Areva, stepped into the breach. Areva has made a placement with Summit, taking out 9% of the company (with an option of going to 18%) – a move that could place a temporary block on Paladin’s plans.

Earlier today, Paladin and Summit looked as though they would announce a new twist in the story. The two groups entered a trading halt with an announcement pending.

Meanwhile, Omega, a junior ASX-listed uranium explorer, had been in the sights of Canada's Denison group. Denison first offered $1.10 cash a share and then lifted the bid to $1.15 a share. Again it looked like the Aussie junior player would be swallowed up. But with uranium prices rising higher (uranium recently hit $US113 a pound) anything might happen.

Out of the blue, a UK-domiciled company – Central African Mining, listed on the Alternative Investment Market – has made an all-scrip bid for Omega, representing a value of $1.44.

There's going to be a lot more takeovers in the uranium sector in the coming months. The global industry is enjoying an unprecedented resurgence. The issue for local shareholders will be the quality of the scrip offered in what will invariably be scrip-based deals from a sector where cash is scarce.

Qantas. Australian Airline Partners’ $5.45 bid for Qantas is now set to succeed. The question for shareholders is whether to hold or sell? I would sell.

Of course it might be interesting to stay on the Qantas register. There will certainly be a lot of action as the private equity cartel moves in to sell assets and cut costs. There are almost certainly going to be strong capital returns – maybe as much as $2 a share – and good cash dividends. The problem for retail shareholders is that these dividends will be unfranked.

What's more, any investor who stays on the for the ride will now be investing in a very different entity than the old Qantas. This is now a highly leveraged play in a notoriously volatile industry; there are many hurdles to be overcome by the new owners and very little to reassure small shareholders that these new players – even leading names such as Allco – can pull it off.

Rinker. If you're a Rinker shareholder reading about the various positions being taken up by institutional shareholders on the Rinker takeover, ignore them: there is a special deal for retail shareholders you should be aware off.

With a knockout improved offer of $US15.85 on the table it appears Mexico's Cemex has Rinker in the bag. The only residual problem for local shareholders is that this US dollar-denominated bid weakens every time the Australian dollar goes higher against the greenback.

At today's exchange rate, the Rinker deal is just $19.05, which is just about inside the bottom end of the independent expert's valuation for Rinker.

However, in a clever sub-clause in the Rinker deal, retail shareholders are been offered a special arrangement. Rinker will pay $19.50 for the first 2000 shares sold into the offer; this should cover the issue adequately for the majority of private investors in this deal.

Alinta. The billion-dollar question at Alinta is whether Macquarie Bank will come back and revise its offer to beat Babcock & Brown. There is plenty of debate in the market whether the B&B deal is really better than the original MacBank offer in the first place, so the game is still on.

Macquarie is likely to come back with a more heavily cash-based offer in the order of $15 for the West Australian energy company; it is most unlikely, despite various obstacles, MacBank would give up easily against its upstart rival.

nTakeover Action April 9-13, 2007
Date	Target	ASX	Bidder	(%)	Notes
29/03/06	Adsteam Marine	ADZ	SvitzerWijsmuller Marine	95.70	Closing date extended to March 23
13/04/07	Agincourt Resources	AGC	Oxiana	95.07	Compulsory acquisition
22/12/07	Avantogen	ACU	Chopin Opus One LP	77.35
30/03/07	Becker Group	BKR	Prime Television	0.00	Paul Ramsay Holdings, with 17.6%, will accept
2/03/07	Chiquita Brands S Pacific	CHQ	Timbercorp/Tradefresh	80.93
9/03/07	CCI Holdings	CHL	Bureau Veritas	19.90
16/11/06	Colorado Group	CDO	ARH Investments (Australia)	83.71
10/04/07	Dark Blue Sea	DBS	Photon Group	19.88	Lapsed
11/04/07	E*Trade Australia	ETR	Australia and New Zealand Banking Group	34.20	Offer to acquire outstanding 65.8%. Extended to May 4
28/02/07	Eumundi Group	EBG	Axiom Properties	16.92
12/04/07	Iberian Resources	IBR	Tamaya Resources	20.65	Recommended offer. Closing May 3
29/03/07	K2	KTO	Tomahawk Energy	0.00	Due diligence completed. Offer to proceed
22/02/07	Magna Pacific (Holdings )	MPH	Lionsgate Australia	11.65	Closes April 24
9/03/07	Marathon Resources	MTN	Crosby Capital Partners Inc	0.00	Closing date extended to March 6. Price increased from 68¢ to $3.52
13/04/07	OmegaCorp	OMC	Denison Mining Corp	33.11	Extended to March 21
13/04/07	OmegaCorp	OMC	Central African Mining & Exploration Co	20.00	Pre-bid arrangements for 19.997%
14/02/06	Orion Telecommunications	OTL	Toy Telco/Lewis Securities	8.89
6/03/07	Pacifica Group	PBB	Robert Bosch GmbH	72.45	Closing March 4
12/04/07	Qantas Airways	QAN	Airline Partners Australia	30.06	Offer extended to May 4. 90% acceptance condition dropped to 70%
13/04/07	Queensland Cotton Holdings	QCH	Olam International	13.40	Free of US Hart Scott Rodino (anti-trust) condition
28/02/07	Queensland Gas	QGC	TCW/Societe Generale	0.00
10/04/07	Rinker Group	RIN	Cemex Group	0.20	Closing date extended to April 27. FIRB approval. Directors recommend higher offer
11/04/07	S8 Property Trust	SPR	MFS	96.64
23/03/07	Shannon Resources	SHA	Carrick Gold	0.00	Carrick chairman will accept offer for 40%
12/04/07	Summit Resources	SMM	Paladin Resources	1.23	Summit announces strategic alliance with Areva
10/04/07	Sydney Roads Group	SRG	Transurban Group	62.20	ACCC not to oppose. Unconditional
19/03/07	Volant Petroleum	VOL	Sky Energy Investment /Karl Thomson Holdings	93.25	Unconditional
nScheme of Arrangement
11/04/07	Alinta	AAN	Babcock & Brown; Singapore Power		Vote mid-August
12/02/07	APN News & Media	APN	Independent News & Media Plc consortium	41.61	No meeting date set
13/04/07	AuSelect	AUS	Lion Selection		Court approval
13/04/07	Bendigo Bank	BEN	Bank of Queensland	0.00	Bendigo bank considering proposal. Continuing to review options
23/02/07	Consolidated Minerals	CSM	Pallinghurst Resources/AMCI		Vote May 07
3/04/07	Integrated Group	IWF	Programmed Maintenance Services		Vote May 10
13/04/07	Magna Pacific (Holdings)	MPH	Destra Corporation	0.00	Heads of agreement
23/03/07	PowerTel	PWT	Telecom Corporation of New Zealand	58.25	Vote April 23. FIRB approval
20/03/07	Promentum	PPR	Pacific Print Group (Australia)		Vote April 18
13/04/06	Repco Corporation	RCL	Private equity advised by CCMP Capital Asia		Court approval
5/04/07	Rural Press	RUP	Fairfax Media		Vote April 19. Preferred shareholders approve
13/04/07	Scarborough Minerals Plc	SRB	MinSec BVI	0.00
2/04/07	Veda Advantage	VEA	Pacific Equity Partners and Merrill Lynch Global Private Equity	0.00	Vote mid-June
nForeshadowed Offers
5/04/07	Coles Group	CGJ	Wesfarmers/Macquarie Bank consortium	12.80	Indicative scheme of arrangement offer
10/04/07	Coles Group	CGJ	Kohlberg Kravis & Roberts	0.00	Preparing for due diligence
13/04/07	Funtastic	FUN	ABC Learning Centres /Third party	19.99	Third party approach. Discussions terminated
12/02/07	Multiplex Group	MXG	Brookfield Asset Management and founding Roberts family	29.80	Discussions
23/03/07	Viking Industries	VKI	Shareholder consortium		Conditional offer at $1.09. Formal offer expected mid-to late April
17/01/07	Warehouse Group	WHS	Woolworths
nBackdoor Listing
7/03/07	Australian Institute of Property Management	APM	Teys Group		Teys Group shareholders to acquire 29.1% and take over management. Subject to shareholder approval

* Coles and QANTAS, two stocks mentioned in today's column are clients of Carnegie Wylie and Company, a shareholder in Eureka Report.