BHP settles, but Rio and BHP diverge 🚧

G’day.  

Welcome to Point Blank. It’s a Monday, and we’ve got legal insights 👇

Oh, and is anyone feeling an iced coffee today? ☕️

 💼 Practice Points

• Recently, plaintiffs have tried claiming litigation funders’ commissions as separate damages on top of ordinary damages arising out of the defendant’s alleged conduct. The NSW Court of Appeal has ruled against this approach.

• Earlier this year, A&O Shearman predicted that competition authorities would stay tough on mergers into 2024, and it looks like they were right. Excellent job A&O. The ACCC has Qube's acquisition of the Melbourne International RoRo & Auto Terminal in its sights. Seems the regulator is worried it might give Qube exclusive operating rights. Across the pond, New York's Attorney General in the US is probing Capital One's proposed US$35.3bn takeover of Discover Financial Services, which could create the largest US credit card issuer and, of course, associated concerns about higher costs for us vulnerable consumers.

• Meanwhile, under the new merger reform laws, the ACCC will also zero in on liquor, pathology, and private cancer mergers while increasing oversight of private equity deals.

 📢 Talking Points

• For decades, Rio and BHP have moved in lockstep. Now the world’s most valuable miners diverge with their energy transition bets, The Economist reports: 

  • Despite the 80% decline in lithium prices, Rio’s new deal with Arcadian Lithium for $6.7bn will make Rio the world’s second-biggest lithium player. BHP boss, Mike Henry has said he doesn’t “see the opportunity” in lithium, preferring to hone in on copper with the attempted $39bn acquisition of Anglo American earlier this year. 

  • The pair also differ on aluminium. Rio is one of the world’s biggest bauxite miners (the ore refined into aluminium for us non-mining folk). BHP opted to divest its aluminium assets a decade ago. 

  • Rio’s growth pursuit is far more aggressive than its counterpart, evident by BHP’s operating assets remaining on par with its 2019 figures.  

  • But time will tell for Rio’s growth strategy – as it currently stands, BHP’s return on capital remains 7% higher than its mining rival. Anyways, back to our regularly scheduled programming.

• Albanese defends a decade of free upgrades courtesy of Qantas, including for his son.

• US’ average hourly billing rate for partners has reached an eye-watering US$1,114 (A$1,686) per hour, a 36% jump since 2022 and an 83% increase over the last decade.

• Liberal National Party leader David Crisafulli has just edged out a victory in the Queensland election, ending Labor's decade-long reign. The election outcome also means this is the first mainland state to elect a centre-right government in over 18 months. This shift might spell trouble for Labor in the upcoming federal election.

 🏦 The Treasury

• Despite a drop in inflation to a 3½-year low, RBA Governor Bullock signals no imminent interest rate cuts, with economists expecting rates to remain steady until Feb 2025. The Governor said it could take two years before inflation is under control. Inflation data is to be released this week.

  

  ASX as at market close. Commodities and crypto in US dollars.

 🤝 Deal Room

• Siren Gold faces shareholder unrest because its board is backing a sale to RUA Gold, even though Street Talk reveals there's a better, undisclosed bid from Federation Mining on the table.

• The Italian utility giant Enel Group is in exclusive talks to purchase an 80.1% stake in Bright Energy Investments for ~$800m, which holds a portfolio of renewable energy assets in Australia.

• Capri Holdings, the owner of Michael Kors, saw its shares tumble nearly 46% after a US judge blocked its US$8.5 (A$12.9m) with Tapestry, the parent company of Coach. This setback dashed hopes of building a more assertive US luxury brand portfolio that would unite brands like Kate Spade, Versace and Jimmy Choo under one roof.

• Star Entertainment’s lenders might extend the deadline for raising $150m, a prerequisite for securing an additional $100m in debt. Investor interest has waned amid concerns over the additional $800m debt tied to Star’s Brisbane development.

• Aware Super and Delancey Real Estate team up to splash £1bn (A$2bn) into UK property, with a particular focus on the high-end streets of London.

🧠 Brain Teasers

• Judges find animals leaving a point (3)

• Perhaps just a contract, though incomplete and mostly imagined (5)

• Under pressure initially, reduced to strength (12, 15)

See you tomorrow for the answers! No cheating now…

🏗 Sector Specific

Diggers

• Amidst MinRes’ tax scandal, proxy firms may advise shareholders to vote against crucial resolutions at the company’s AGMs, including Ellison’s re-election. Following a 25.6% drop in MinRes’ share price, AussieSuper reduced its stake in MinRes to 4.89%, making it no longer a substantial shareholder. The board enlisted law firm Herbert Smith Freehills to investigate the scandal. MinRes to report on the probe by 4 Nov.

• Adding fuel to the fire, MinRes is facing a serious animal cruelty investigation, with disturbing claims that hundreds of cattle may have been cut off from water and others trapped in earthworks.

• BHP has secured a pivotal $48bn settlement for the 2015 Fundão dam disaster, the settlement figure falling below market expectations. While this is seen as a strategic win for the company, BHP and Vale have eroded the local community's goodwill toward the mining industry.

Fin

• TPB clears 4 of 9 former PwC agents in the tax leaks scandal, while investigations reveal that 22 overseas staff received confidential Australian tax information.

• The corporate watchdog is investigating Macquarie Group for its ties to Keystone Asset Management, which is under scrutiny for alleged misleading statements and undisclosed conflicts. This follows a $4.95 million fine against Macquarie for not addressing suspicious trading activities, raising further concerns about its compliance culture.

• Following the lead of ANZ, Origin Energy, and Suncorp, CBA threatens to cut bonuses for employees who WFH more than 50% of the time.

Telco & Tech

• Nvidia snatches the crown from Apple as the world’s most valuable company, fuelled by skyrocketing demand for its AI chips, briefly hitting a stock market value of $3.53tn on Friday.

• Optus is facing legal action for 2022 cyberattack. Regulators claim the attacker took an unsophisticated, "trial and error" approach, while Optus insists the attacker had an insider's playbook of their systems.

• Big Tech pundits are at the ready for the remaining Big Tech giants’ quarterly earnings reports, which should be released any day now.

🏘️ Word on the Street 

• NSW judiciary is at war with the Crown Prosecution as District Court judge alleges DPP Sally Dowling SC tried to “exert influence” over the ­judiciary and engaged in “ethically questionable” behaviour. Yikes… Judge Wass has made a complaint to the Legal ­Commissioner that the lead silk put the independence of the judiciary at risk by having private correspondence with the Chief Judge about Judge Wass’s conduct on three separate cases. All I’ll say is that the ABC mini-series would be a hit.

• Top law firms like Ashurst, HSF, and Clayton Utz are on a partner hiring spree, attracting talent from big four consultancies and their rival firms to address growing demand in sectors like energy and insolvency. Likewise, Sparke Helmore nabs another team from global rival Clyde & Co, following their recent partner appointments from Bird & Bird and KWM.

• A Sydney lawyer has been jailed for a minimum of 12 months for forging documents, falsifying invoices, defrauding clients and misrepresenting her qualifications.