Perpetual's expert flips

G’day.

Welcome to Point Blank.

Today’s brief:

• Perpetual’s $2.2bn deal in jeopardy after $529M tax bomb flips expert’s opinion.

• MinterEllison aims for 80% AI usage by March.

• Bauxite price surpasses iron ore amid supply crunch.

 💼 Practice Points

• Liberal Senator Andrew Bragg’s lengthy critique of the watchdog painted ASIC as a meek and timid regulator. But now the gloves are off. In recent months, the regulator has racked up a string of high-profile court filings against corporate Australia, with casualties including Rex, ASX, NAB, and Cbus. ASIC is warning of a busy 2025. Watch this space.

• Starting in February, NSW practitioners must confirm that gen AI was not used to produce any content submitted in legal proceedings. Though lawyers have spoken up, making complaints about the impact of the AI practice note on discovery and expert evidence. The practice note advises against using AI for materials that present evidence, like affidavits and witness statements. Yet, it doesn’t address the common use of AI in areas like e-discovery. A NSW Supreme Court judge has suggested the Court fold to industry pressure and issue an updated practice note.

• ASIC has a stern reminder for directors for related party benefits approved under Chapter 2E. The financial benefit must be dished out within 15 months—not three years, notwithstanding ASX Listing Rule 10.15.7. ASIC urges companies to specify when the related party benefit will be given, as far as practically can be known (eg, within 5 days after the meeting). Directors should also provide sufficient reasons when recommending a related party resolution.

🏘️ Word on the Street 

• MinterEllison has set a bold goal: by March next year, 80% of its lawyers will use AI tools daily. The firm’s AI toolkit includes Microsoft Copilot, a secure version of ChatGPT, and a custom tool for drafting legal letters. Partners and staff are saving 2-5 hours per week with Copilot. A win for efficiency, but will AI clash with the billable hour model?

• Danny Gilbert, the co-founder and chair of G+T has been appointed to the RBA’s new governance board. 

• National law firm Colin Biggers & Paisley has promoted 4 lawyers up the ranks, including 1 as partner to its infrastructure and environment group.

• Justin Hannebery KC was elected president of the Victorian Bar – the first criminal barrister in decades. His predecessor, Justice Elizabeth Bennett, was elevated to the Federal Court of Australia.

📢 Talking Points

• UNSW has become the first university in the APAC region to sign an agreement with OpenAI to develop ChatGPT Edu—a tailored version of ChatGPT designed for universities to boost productivity, curriculum development, and support for both students and teachers.

• Queensland has passed "adult crime, adult time" laws, which will see youth offenders who commit serious crimes handed the same penalties as adult offenders. The laws will apply to children as young as 10.

• Big Tech has been snubbed from Labor’s tax talks. Assistant Treasurer Stephen Jones had plenty of time for News Corp, Seven, and Guardian execs but ghosted Meta and TikTok before locking in Labor’s tech tax. Google got a dinner invite months before calling it a “targeted tax,” but the rest of Big Tech didn’t even make the calendar. The “levy” kicks off Jan 1, hitting platforms with $250m+ in local revenue.

🏦 The Treasury

• US investors widely expect a third-in-a-row rate cut this week. Meanwhile, Bitcoin hits a new record.

🤝 Deal Room

• After Perpetual’s tax bombshell, its $2.2bn sale to KKR is facing fresh uncertainty. The independent expert has now cast doubt on the deal’s value, leaving Perpetual’s leadership scrambling. The risk and magnitude of the increased tax burden (~$529m, up from early estimates of $106m to $227m) means the deal may not be in the best interests of shareholders. Perpetual and KKR remain in talks.

• David Di Pilla’s DigiCO REIT IPO created a lot of hype. But two days in, and the share price has already dropped 14%. Not exactly the holiday cheer investors were hoping for. HMC Capital, DigiCO’s manager, is scrambling to assure everyone that nothing’s changed with the underlying business. But DigiCo just has a few trading days to turn things around before the institutional investors pack up for their end-of-year break. Time’s ticking.

• The market has seen a data centre boom take over Australia’s deal scene—and it’s showing no signs of slowing down. EY’s deal team is now on the case to sell Computer Room Solutions, an 18-year-old data centre infrastructure biz that’s pulling in around $60m in revenue.

• After a rollercoaster 2024, Allens predicts critical minerals dealmaking will soar in 2025, driven by easing borrowing costs and the energy transition’s hunger for commodities. While transaction volumes dipped (24 deals in 2024 vs. 49 in 2023), total deal value exploded from $5.3bn to $14.8bn. The catalyst? Lithium price crashes sparking megadeals like Allkem/Livent, Rio/Arcadium, and Pilbara Minerals/Latin Resources.

🏗 Sector Specific

Diggers

• Speaking of Rio/Arcadium, 3 disgruntled shareholders are suing NY-listed Arcadium Mining, claiming its directors misled investors and failed to uphold their fiduciary duty to maximise value. Rio's proposal offers a 90% premium on the company’s market value from two days prior to the offer but was below the $US10.6bn valuation the company commanded in May last year when its predecessors Livent and Allkem merged. The identity of the shareholders and the size of their stakes remain undisclosed in the filings.

• The price of bauxite, the raw material for producing aluminium, has surpassed the value of a tonne of iron ore for the first time, hitting a record high thanks to a supply crunch in Africa and surging demand from China.

Fin

• New CEO Anthony Miller is revamping Westpac’s leadership as CFO Michael Rowland heads for the exit. With Rowland’s retirement, the bank now has three top spots up for grabs.

Tech & Media

• Apple is developing a huge foldable iPad-like device that unfolds into the size of two iPad Pros, with a target release in 2028. The goal is to avoid the unsightly crease that current foldable products have.

• ACCC is suing Optus for unconscionable conduct, accusing the telco of selling mobile phone plans to vulnerable Australians—including a deaf and mute homeless man and an elderly man with Alzheimer’s disease.

• Battery tech player Novonix just scored a conditional US Department of Energy loan worth up to $1.2bn. The cash is earmarked for a synthetic graphite plant in Tennessee—another big win for the EV supply chain.

• The ABC will receive at least $126m over 3 years. The increased funding kicks in 2026-27, and was a commitment brought by Labor to the 2022 election. Hugh Marks now takes the stage as manager director of ABC.

Retail & Real Estate

• Financial crime regulator AUSTRAC is suing British gambling giant Entain, owner of Ladbrokes and Neds. AUSTRAC alleges that Entain’s board and management failed to properly oversee its anti-money laundering and counter-terrorism program, and lacked the necessary controls to verify the identity of customers making deposits.

• Pacific Hunter Group, the owner of Rockpool Bar and Grill, has been bought out by one of its main lenders, Metric Group, after reporting a staggering $288m loss for FY24.

• US-based real estate giant Greystar just snapped up a $1.6bn student housing portfolio in Australia. The deal includes 5,662 beds across prime university hubs in Sydney, Melbourne, Brisbane, Adelaide, and Canberra.

🧠 Word Guess

• A ceremony to bring forth the true character (9).

  Answer: Admission