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Good morning.

In what could be another blockbuster resources consolidation for 2023, energy giants Woodside and Santos have confirmed their early discussions on a potential merger. Valued at $43 billion and $22 billion respectively, the deal would create an LNG behemoth in an industry where scale can make or break.

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Market movers

A rejected bid to takeover Perpetual Group propelled shares in the investment manager over 7% Thursday. Soul Patts’ $3 billion offer was swiftly rejected by the Perpetual board as it “materially undervalued” the conglomerate at $27 per share.

Soul Patts’ offer, in tandem with Perpetual’s strategic review may yet draw more buyers out of the woodwork.

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The quick sync

• Why Flexstone made a business of specialising in the boring companies no one wants to talk about at a cocktail party. (Capital Brief)

• Santos and Woodside chiefs have made ‘5%’ headway in their merger negotiations. (AFR)

• How regulators and the all-powerful Pharmacy Guild of Australia were blindsided by Chemist Warehouse’s reverse merger plans. (Capital Brief)

• KPMG wants to make like Deloitte and merge its UK and Swiss businesses. (Financial Times)

• The EU’s negotiations on the AI Act have been an exercise in endurance – and there’s more left to debate. (Reuters)

• Moody’s asked staff in China to work from home over concerns of a backlash from Beijing following a credit downgrade earlier this week. (Bloomberg)

Trading floor

M&A

• Investors in Evolution Mining face losses as stock trades below the offer price amid concerns over Northparkes mine stake acquisition. (The Australian)

• This week marks the first anniversary of reports that Woolworths was gearing up to purchase PETstock. (AFR)

• EBOS reportedly considered a merger with Chemist Warehouse, similar to Sigma's deal. However, Chemist Warehouse withdrew its business from EBOS before Sigma's backdoor listing announcement. (The Australian)

• Ord Minnett shops around Dusk amid its low share price. (AFR)

• Suncorp is challenging the ACCC's decision to block its proposed merger with ANZ. (Capital Brief)

CAPITAL MARKETS

• CSIRO-backed Quasar, building 'Wi-Fi for space,' set for US launch in Florida. (AFR)

• ARN Media demands exclusive due diligence from Southern Cross amid bid considerations. (The Australian)

• 4D Medical is raising additional funds with brokers Bell Potter and E&P, aiming to secure between $30m-$40m. (AFR)

VC

• Generative AI startup Leonardo.Ai secures $23.5m in Series A funding, bringing total capital to $47m. (Startup Daily)

• Queensland government's Business Investment Fund joins $5.5m funding round for cloud data operations startup Dataweavers. (AFR)

• Arkeus, an optical radar startup, secures $4.45m in a seed round led by Main Sequence. (Smart Company)

• Everlab, a preventative health startup, gains $3m in pre-seed funding led by b2venture. (Capital Brief)

People moves

• Kevin Chong, a former principal at Barrenjoey Capital Partners, has joined Allegro Funds, while another member of the bank's sponsors team has left for personal reasons. (AFR)

• Dean Fremder, head of emerging companies ECM and private capital at Barrenjoey, is reportedly set to join Firetrail Investments as an equity analyst. (AFR)

Insight of the week by Stake

Fertiliser rollercoaster

After shooting up during the Covid-19 pandemic as supply chains around the globe became cluttered, and then soaring even higher as conflict erupted between Russia and Ukraine, fertiliser prices have dropped sharply this year.

While it can be hard to pinpoint a single cause, falling gas prices are probably one of the key contributing factors, as gas is an important input for fertiliser production. And while the fertiliser price drop still hasn’t materialised in food prices, it could be one of the leading drivers of deflation in future months.

_{This is not financial advice.}

The watercooler