Another merger, Press Council, Macquarie, wrong AC recipients

5. Another day, another consumer-slugging merger

By Stephen Mayne, who bought $500 worth of shares in Onesteel and Smorgon Steel at 12.30pm

When the Smorgon family came to Australia from Russia almost 80 years ago, they got into all sorts of businesses but one particularly successful tactic was to target industries which were dominated by a lazy monopoly.

There were none bigger or more lazy that BHP's Australian steel monopoly, so it was no surprise that Smorgon Steel proved to be a great success over the years.

So it a rich irony indeed that the demerged BHP business Onesteel has today announced it is now paying a healthy premium to take over Smorgon Steel in a deal that values the enterprise at $2.7 billion, including $1.1 billion in debt, and will create a dominant domestic player in long products with 10,000 employees.

Smorgon has clearly got the better end of the deal in return for giving up control because its shares have rocketed 43c to a six year high of $1.77 while Onesteel is only up 11c to $4.09, suggesting the market anticipated fabulous synergies and no problems from the competition authorities.

Smorgon will only get two spots on the expanded Onesteel board – Graham Smorgon and chairman Laurie Cox – but the Smorgon family will still emerge as the largest shareholder of the combined operation, albeit only with about 10% depending on how much cash or scrip they accept.

The presentation barely even mentions the ACCC, which will no doubt play a major role in determining whether this deal can go through. Chairman Graeme Samuel is increasingly regarded as a merger soft touch as Australian industry gets more and more concentrated with every passing month, so don't expect him to tough a stand protecting the consumer.

Like the old investment banker that he is, Samuel takes an approach of "finding a way to get the deal done". In this case that has been a boon to his old employers at Macquarie Bank, which has advised the Smorgon family for the past decade and will no doubt pocket a big success fee if this deal gets done, effectively finalising the break-up and sale of the family's empire.




18. A Press Council win for Akerman

By Stephen Mayne, who has this morning announced a People Power tilt at the 2006 Victorian election

When you're banned, it's hard to get a run in the Murdoch tabloids but I've discovered a new way – lodge a complaint with the Australian Press Council. Even though the Press Council dismissed the complaint, the following appeared on page 19 of The Daily Telegraph on Friday under the headline "Telegraph article is vindicated".

The Australian Press Council has dismissed a complaint against The Daily Telegraph from Stephen Mayne concerning a December 2005 Piers Akerman column in which he was mentioned.

The article discussed the Federal Government's proposed sedition laws aimed at preventing the ‘urging' of violence and argued that journalists would not be caught by them. Mr Akerman continued: “While some media figures have been arguing for a shield law specifically to exempt the media from the anti-terrorism laws, it can be argued that almost anyone can call themselves a journalist these days, as evidenced by the nonsense published by people claiming to be journalists on websites such as Eric Beecher and Stephen Mayne's Crikey.”

In a brief letter to the editor emailed four days later Mr Mayne wrote: “Piers Akerman blithely opines that ‘almost anyone can call themselves a journalist these days' and then describes me as someone ‘claiming to be a journalist'”.

In two following sentences Mr Mayne outlined his journalistic credentials. The newspaper replied that Mr Mayne's complaint was "entirely without substance" and that a careful reading of the article showed that Mr Akerman did not label Mr Mayne as someone "claiming to be a journalist".

The Council agrees with this interpretation. It does not see any implication in the column that impugns Mr Mayne's journalistic credentials. Nonetheless, the Council believes that, had the newspaper printed a letter from the complainant (the Council frequently recommends that complainants write letters to the editor to achieve balance), this matter could have been resolved at the outset.

Given that Crikey has never failed to publish a letter from someone at News Corporation, it is a bit rich that I'm now batting zero for six in getting letters to News Ltd published and even had my entire platform censored when running for the board in 2002.

The Tele's executive editor Roger Coombs was told at the mediation in May that if they didn't run my polite 96-word letter I would run for the News Corp board again this year. Naturally, the Murdoch power-abusers never give an inch so the nomination is in although it might be withdrawn if the Herald Sun lifts its silly six year ban as we count down to the Victorian election on 25 November.




24. Macquarie tries to charge for share register

By Stephen Mayne, candidate for the Maquarie Bank board

Here we go again. Macquarie Bank were doing reasonably well in running a relatively fair election for the board this year, but the Millionaire Factory was in touch over the weekend, responding to this detailed letter that I sent last week seeking to clarify the rules of engagement.

Like so many companies before them, Macquarie has decided to try and charge for a copy of its share register, in this case $3600.

Imagine if political candidates had to pay thousands of dollars for a copy of the electoral roll to send out a letter to voters. I'll try writing to ASIC but the AGM is less than a month away and most of the institutions start voting about two weeks out so the timetable is very tight.

The campaign is explained in the notice of meeting and should be hard for any institution to resist – vote for Mayne to send a message to Macquarie to adhere to US law by banning staff from taking up shares in any floats or capital raisings they are managing. If elected, I've even promised to resign as soon as Macquarie makes the policy change, which would be within days of any successful tilt.

It should be a no brainer for institutions because they are the people getting shafted when the Millionaires scoop up big allocations. However, don't expect many of them to support the tilt because Macquarie could easily exact some revenge by winding back future allocations to those very institutions that took a stand.

For instance, the bank has just agreed to pay $657 million for London bus operator Stagecoach, which has 4300 staff. If Macquarie flips the business into an associated fund next year, the usual slate of instos will be clamouring for a slice of the action. Would Macquarie be less inclined to invite an institution to participate if they voted for the outsider at the AGM? It's an interesting question.

Finally, the latest edition of the Chartered Secretaries Australia magazine includes a 2,500 word piece I've knocked up on how AGMs should be run, so let's hope Macquarie takes some of the suggestions on board.





25. The business leaders who shouldn't have got an AC

By Stephen Mayne

While my top 20 Australian business figures over the past 25 years is hardly perfect, it has a lot more quality control than the Howard Government's gong panels over the past decade.

Have a look at the 135 AC recipients since 1996 and you'll notice that only three of them are in my top 20 – Frank Lowy, Gary Pemberton and Dick Pratt. And when it comes to gonging business leaders, I reckon the Howard Government got it wrong in giving an AC to the following:

Tim Besley: chaired CBA and Leighton well but was completely asleep as chairman of the Wheat Export Authority
Sir Rod Carnegie: sacked as CRA boss, quit the GIO chair prematurely and was publicly attacked by his former CEO at Newcrest
Ross Dunning: can't say why due to suppression orders
Margaret Jackson: chaired the BHP and Pacific Dunlop audit committees when both came a cropper and Qantas shares hit a three year low
John Landels: not a bad leader of Caltex for 14 years but Liberal connections shouldn't have delivered a first division gong
Hugh Morgan: nasty right wing record on race and should have been sacked when WMC lost $500 million in Canada
Maurice Newman: chairing a gouging monopoly like the ASX is nothing special
Nick Paspaley: whatever merit is coloured by excessive Liberal Party donations
John Prescott: presided over almost $10 billion in losses at BHP
John Uhrig: sold out Australia by merging CRA with Rio Tinto and letting the whole show be run out of London
Stan Wallis: the AMP chairman in charge when almost $10 billion was dropped in the UK
Sir Bruce Watson: MIM was hardly a standout performer for all those years when led by this fellow

A cut above this group in a "defendable" category of AC recipients are Charles Curran, Transfield founders Carlo Salteri and Franco Belgiorno-Nettis, Douglas Daft, Robert de Crespigny and Charles Goode.

These sorts of comments are always highly subjective so all feedback is welcome to smayne@crikey.com.au.

Copyright © 2022 The Mayne Report. All rights reserved

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