Sydney view: Packer's mate shows the new boss's style

By GILES PARKINSON

James Packer is to firmly stamp his own management style on the family's business empire after the appointment of long-time friend and merchant banker Peter Yates as head of the publicly listed PBL.

The appointment is significant because it is the first major appointment by Packer since he took over from his father and he has chosen a well-known dealmaker instead of a proven manager for the top job.

Departing chief executive Nick Falloon has been a career executive at the Packer empire since he joined PBL nearly 20 years ago.

His was a steady style, with a focus on financial discipline, but he seems to have paid the price for the weakening performance of the Packers' all-conquering Nine Network, which appears to have been overtaken by Kerry Stokes' Seven Network.

But the performance of the Nine Network is not the Packers' major problem. Even they have been hurt by the tech wreck that has destroyed the equity values of telco and internet stocks across the globe.

They have been hit by huge losses from their Indian media investments and 23 per cent stake in One. Tel. They want desperately to negotiate the Foxtel joint venture with News Corp and Telstra, and PBL's own share price has been savaged by the ailing fortunes of its internet offshoot Ecorp.

That's why Packer has hired Yates. The 41-year-old headed Macquarie Bank's telecommunications, media and technology division and was a proven deal maker.

He was the principal adviser for Telecom New Zealand during its takeover of AAPT, but came to know the Packers through his work in establishing Crown Casino, and as an adviser to the NSW and Victorian Governments on the sales of their TABs. He also advised Telstra when it was considering the purchase of the Nine Network last year.

"PBL is poised to capture significant opportunities which are presenting themselves," Packer said on Tuesday night.

"Peter, with his extensive experience in the media, telecommunication and gaming sectors is exceptionally well qualified for this role and will be supported by a team of highly seasoned operators."

That means that Yates' lack of managerial experience will count for nothing. Packer wants his new man to cut deals and position the company as the pre-eminent media and communications group in the region.

He sees in Yates the same qualities as those colleagues and rivals who gave him two nicknames from the Star Wars series - Yoda for his strategic thinking, and Darth Vader for his raw aggression.

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There was a time when shareholders in takeover targets were happy to take the money and run (from the tax collector). That's because a successful bid had to be pitched at a decent premium and the taxman always stuck his hand out for his half share.

The introduction of capital gains relief for scrip-based takeovers has changed the dynamics of mergers and acquisitions, and it is proving confusing for shareholders used to pocketing a handy profit when control of their company changed hands.

SingTel this week won the six-month auction for Cable & Wireless Optus with a $A17 billion ($21 billion) bid that its rivals dismissed as excessively priced. Optus shareholders are not convinced.

SingTel is paying for a large part of Optus with excessively priced stock of its own. The straight scrip offer had a nominal value of $A4.57 a share when it was announced early on Monday morning, but a 20 per cent slump in SingTel's share price in the past two trading days has eradicated the takeover premium and Optus stock has fallen with it.

When the tender was formally announced last November, Optus was worth $A4.20. Yesterday with control set to pass from C&W to SingTel, Optus shares were trading at $A3.55.

That's not what Optus shareholders would have been expecting.

* Giles Parkinson is editor of AFR.com