Major deals change the landscape

SOME of Western Australia’s best-known companies were fundamentally changed as a result of the big corporate deals of 2004.

Alinta had another very busy year, completing several major trans-actions and emerging as a national player in the energy and infra-structure sector.

Burswood was swallowed up by Kerry Packer’s Publishing & Broad-casting, in what was seen as an inevi-table rationalisation of the gaming sector.

The Clough family ceded control of its listed engineering company to South Africa’s Murray & Roberts, which injected fresh capital to help Clough survive tough times.

Heavy equipment supplier Emeco International was sold in the year’s biggest private equity deal (see page 14).

In the resources sector, LionOre Mining International and Consolidated Minerals were two of the most active companies, pursuing a series of deals designed to add strategic value and expand their business.

Resource Capital Fund provided a rare example of successful share-holder activism, ousting the incum-bent management from St Barbara Mines.

It was also a stellar year for Initial Public Offerings, with nearly 60 Western Australian companies listing on the Australian Stock Exchange.

Overall, Alinta was the company that led the way in 2004, judging by WA Business News’ informal survey of corporate finance executives.

It completed three transactions that were ranked among the year’s best (see page 13).

PBL’s Burswood acquisition was finely priced. Shareholders benefited from a price well above prevailing market levels, while PBL is expected to benefit from synergies with its existing gaming operations.

Azure Capital managing director Mark Barnaba believes the acquisition has strategic implications beyond the actual transaction.

He said it was interesting that PBL had appointed two high-calibre and high-profile Western Australians – professional director John Poynton, whose positions include chairman of Azure, and Multiplex managing director Andrew Roberts – to the board of Burswood at a time when the gaming industry was consolidating.

Clough’s deal with Murray & Roberts is dismissed by some market watchers as a ‘distressed’ company falling into the arms of a big brother.

The critics say Murray & Roberts has won effective control without having to make a full takeover.

Clough has certainly been through a difficult two years and its current dispute with Origin Energy over the BassGas project has added to its problems.

Ernst & Young partner Martin Alciaturi, who was an adviser on the Murray & Roberts deal, believes it was a good transaction for Clough.

He said the company raised $40 million of new equity from a strategically value-adding partner at a premium of 42 per cent to the prevailing market price despite being in a major battle with one of its biggest clients.

Freehills partner Justin Mannolini, who advised Resource Capital Fund, said its campaign to install new management at St Barbara Mines was one of the most successful examples of shareholder activism in recent years.

“Most notably it was initiated by an institutional rather than a strategic shareholder,” Mr Mannolini told WA Business News.

“For many years now, it has been thought that such moves are unlikely to be effective unless the proponent is cutting a cheque; ie shareholders will accept a takeover bid but won’t vote out incumbent management.

“The deal shows that shareholders are maturing and taking their political rights seriously.”

Patersons Securities head of research Rob Brierley believes LionOre deserves special mention.

He said LionOre’s purchase of the mothballed Bulong nickel project for a bargain basement price, its off-take deal with Western Areas and its recent acquisition of MPI Mines had all added strategic value to the company.

Most of last year’s stock market floats are trading well above their issue price, delivering healthy gains to investors.

Some of the biggest gains have been delivered by small mining and energy stocks.

Gold explorer Hibernia Gold, chaired by mining entrepreneur Andrew Forrest, and Tomahawk Energy, which is investing in oil in Texas, have delivered returns of nearly 500 per cent.

Other top performers included Elixir Petroleum, which is investing in oil and gas in the North Sea, and Bluestone Tin.

Arguably the standout float of the year was IBT Education, a well-established company that offers pre-university and university pathway programs for students.

The offer, fully underwritten by Bell Potter Securities, raised $51 million, making it one of the largest floats in WA.

It was heavily oversubscribed and delivered big gains to investors who were lucky enough to get the scrip, with the $1.00 shares currently trading around $2.30.

Minter Ellison partner Andrew Thompson believes one of the top deals last year was the Wheelara iron ore joint venture, which brought together BHP Billiton, six of the largest Chinese steel mills and two of his clients, Japanese companies Mitsui and Itochu.

The venture involves develop-ment of a new mine and will sell $11.2 billion of iron ore over 25 years but Mr Thompson said it was more than a long-term sales agreement.

He said it was an integrated mining, transportation, tolling