Australia

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.

Cathay-Qantas spat to clear cloudy Hong Kong skies

11 Oct 2013

The city’s dominant carrier is challenging its Australian rival’s plan to set up a local budget operator. The dispute hinges on the vague definition of airline ownership in Hong Kong’s constitution. Greater legal clarity could freeze Qantas out, or spark a competitive scramble.

Mongolia gives a little in investment tug-of-war

7 Oct 2013

As Rio Tinto thrashes out terms for its stalled copper project, a promise of equal treatment for foreign investors bodes well. Mongolia’s rich resources mean overseas groups will tolerate occasional bad behaviour as long as they mostly get their way. That now looks more likely.

Australia haunted by imaginary crises

6 Sep 2013

They were spooked by the global financial meltdown even though it left the country largely unscathed. Now Australians are worrying about the end of the mining boom. Yet slowdown need not spell economic disaster. An impending change of government may help restore some optimism.

Not all Asian countries need to fear the Fed

5 Sep 2013

Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.

Rio’s asset sale woes another case of bad timing

8 Aug 2013

The miner overpaid on acquisitions in the boom years. Now that the cycle has turned, planned sales - of a Canadian iron-ore mine, the diamonds business and some duff aluminium smelters - have stalled. The delay is not a disaster, but shows how vital timing is to miners’ returns.

Billabong pays up for shelter from debt storm

17 Jul 2013

In return for saving the Australian surf brand from a potentially fatal debt crunch, private equity group Altamont gets a 12 pct coupon on loans and up to 40 percent of Billabong’s equity. Existing investors will see scant returns, but without this deal they could have been sunk.

Batista’s house of cards is too clever by half

11 Jul 2013

The Brazilian sometime multi-billionaire may now lack the $1 bln pledged to OGX. Other group companies dependent on the oil explorer could suffer as a result. Batista’s interlocking realms, along with Babcock & Brown and other too-smart creations, serve as a warning to investors.

Australia’s political bang is an economic whimper

26 Jun 2013

PM Julia Gillard has been ditched as head of the ruling Labor Party in favour of her predecessor, Kevin Rudd. The brutal switch might make Australia’s impending election a closer contest. But the country’s economic future still depends more on events in China than Canberra.

Rest of world wishes for Australia’s economic woes

16 May 2013

The land Down Under has its problems, not least a China-driven commodities downturn and a rising budget deficit. Fears of a housing bubble persist, too. But with unemployment low and the currency falling, Australia has the economic stability other countries dream of.

Hot Aussie economy could tarnish Chevron’s future

26 Apr 2013

The oil giant is poised for better output growth than rival Exxon. But it is more active Down Under, where a strong currency and a crowded market have pushed the cost of its shared Gorgon LNG project up 40 pct to $52 bln. Runaway capex is a risk to an otherwise bright outlook.

Floating LNG offers good economics, tough politics

15 Apr 2013

Woodside Petroleum is the latest energy group to examine building a floating gas facility to salvage an otherwise uneconomic mega-project. The cost savings could be substantial. But the newfangled technology creates fewer jobs than onshore LNG. Host governments won’t like that.

Marius Kloppers will be hard act to follow at BHP

20 Feb 2013

The miner’s outgoing boss benefited from great assets, management discipline, a bull market, and some luck. BHP’s returns were solid under Kloppers, despite the financial crisis. His successor, Andrew Mackenzie, will stick to the formula, but he’ll need more luck to do as well.

China’s role in Rio Tinto chief’s downfall

18 Jan 2013

Tom Albanese’s $38 bln Alcan deal was a bet China would use more aluminium and close down its unprofitable producers. Instead, it has propped them up, helping push prices down and the CEO out of his job. It’s a reminder that China’s state capitalism plays by different rules.