Sydney view: NZ's corporate reputation has underarm reek

Last week marked the 20th anniversary of the infamous underarm bowling incident at the SCG. Australians are still embarrassed about that, and for good reason, as New Zealanders should be by all the underarm deliveries that are still permitted by their own corporate law.

Allied Domecq chief executive Philip Bowman has witnessed some interesting corporate tactics in Australasia (he was the finance director who blew the whistle on the Yannon affair at Coles Myer), but he has probably never come across anything quite like the home-ground advantage of NZ's takeover laws.

It is true to say that Allied Domecq and its adviser, Goldman Sachs, were outmanoeuvred by Lion and Credit Suisse First Boston after they made their surprise move on Montana Group.

And it is also true that Lion Nathan has done well by its own shareholders, picking up a controlling stake in the country's major wine producer without having to make what in Australia would be called a proper bid.

But the cynicism of the act was simply breathtaking, as much as the actions of the New Zealand Stock Exchange were quite inexplicable. Not only did the exchange permit an underarm delivery, it didn't even let Allied come out to bat in the second innings.

Commerce Minister Paul Swain was on the button. It was a fiasco and a disaster for NZ's corporate reputation. The new takeovers code can't come soon enough.

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The company formerly known as the Big Australian has found a new name, the Cautious Australian, and it is driving analysts crazy.

BHP is not, at this stage, going to bid for any of Billiton, WMC, MIM, Iluka Resources or any number of petroleum companies that may be looking for some corporate activity.

But it will continue to add to its suite of iron ore and coal assets as it develops and nurtures relationships with its major customers - the Japanese trading houses.

This week's successful bid for Brazilian iron ore miner Caeme Mineracao e Metalurgica was a case in point. BHP, subject to various pre-emptive rights agreements, will become a partner with Mitsui in owning the world's fourth biggest iron ore miner.

It is a similar strategy to the one that saw BHP last year make a joint bid with Mitsubishi Corp for Queensland coalminer and joint venture partner QCT Resources.

BHP chief executive Paul Anderson does not seem likely to get all hairy-chested like his predecessors or his rivals over at Rio Tinto, who have spent $7 billion in the past year alone.

Instead, Anderson delivered a $1.7 billion share buyback - the largest in Australian corporate history.

That will have the added bonus of helping to put a floor under the share price and add to the company's earnings per share, and, with the $1.2 billion spent on Caemi, means Anderson has found a home for nearly $3 billion of the loose cash he has on hand.

Another $3.5 billion will be spent on capital expenditure, including new projects.

The market, however, is convinced that Anderson is up to something big, and talk is rife that a friendly merger with Billiton or even Rio Tinto or Anglo American is on the cards.

The analysts' reasoning is that it is the only way for Anderson to deliver his promised $40-a-share level within the next two years.

If that is the case, expect some drastic action with the company's latest sleeping time bomb - the HBI project in Venezuela, which promises to be as damaging to BHP's accounts as the West Australian experiment.

* Giles Parkinson is editor of AFR.com.