The market is down 11. The SFE Futures suggested a 3 point fall in the market this morning.
The Dow Jones was up 37 overnight – It moved in a 142 point range and closed slightly higher in record territory on the back of a good inflation number, mixed economic news and takeover activity. At one point it was up over 100 points. Reuters Group agreed to a $17.2bn takeover from Thomson Corp., the deal will create a combined entity that would top Bloomberg as the world’s largest financial data and news provider. The consumer price index (inflation) increased 0.4% in April, slightly lower than the 0.5% gain expected and 0.6% gain in March and the National Association of Home Builders sentiment index fell to a 16-year low in April causing home building stocks to close lower. The NASDAQ had a bad session finishing 0.8% lower.
Resources mixed today, BHP up 14c to 3079c and RIO down 121c to 9050c. Metals mostly up overnight, Nickel up 3.3% Aluminium up 0.8% and Copper 1.4%. Zinc down 0.9%. Zinifex up 29c to 1754c. Oil price up 61c to $63.16 on the back of lingering concerns about refinery problems and uncertainties over whether US gasoline inventories can meet summer driving demand. Woodside down 44c to 4236c. Gold up $4.40. Newcrest down 40c to 2174c.
Good news for Nickel stocks this morning as the bidding war for LionOre Mining takes another step – Xstrata have upped their offer to C$25.00 topping Norilsk’s bid worth C$21.50 and up 35% from their original bid worth C$18.50. Interesting that they tried to buy LionOre at least 35% cheaper than they now think it’s worth. The bid has been unanimously approved by the LionOre board.
- The AFR has reported this morning that Transpacific Industries (TPI) is set to buy the Cleanaway business from Kohlberg Kravis Roberts (KKR) for more than $1bn. It wasn’t long ago (11 months) that KKR beat Transpacific in buying Cleanaway from Brambles (BXB) as it completed its slim-lining strategy and became a CHEP business. TPI is in a trading halt, it last traded at 1349c after closing up 3.5% on Monday.
- Research on Wesfarmers (WES) is mixed this morning after it held its operational briefing day in Sydney yesterday. Wasn’t much news in there. Merrill Lynch had a SELL recommendation on WES this week. WES down 28c to 3847c.
- CSR Ltd (CSR) down 13c or 3.5% to 352c after announcing a disappointing profit result, they announced FY07 NPAT fell 10% to $273.3m, excluding significant items profit was down 3.7% to $240.5m, just shy of A$239.1 million expected. There were suggestions they might announce a de-merger of the sugar business from the Building businesses but it looks like it’s all too early for all that as they conduct a Strategic Review. Most companies that have strategic reviews end up as takeover targets (you might remember Coles being bid for just after announcing their five year Strategic Review). It’s like putting out a For Sale sign. CSR is a great long term company and brand with short term problems – this is the time to strike and the rumours have done the rounds already post-Rinker bid.
- ANZ Bank (ANZ) have extended their offer for E*Trade until 25 May although they have 91.75% in the bag. Accept now and avoid compulsory acquisition – which simply means it takes longer to get your money. ANZ down 11c to 2958c.
- Cemex have announced they now have 21.23% of Rinker (RIN) up from 15.76% on Monday, Perpetual have accepted the bid. The offer is worth US$1585c. The offer closes on 8 June. It goes unconditional if they get 50%. RIN down 3c to 1903c.
- Auspine (ANE) have advised shareholders to take no action on the $332m takeover offer from Gunns Ltd (GNS). GNS up 8c to 349c and ANE up 3c to 614c.
- Goldman Sachs JB Were has a SELL recommendation out on Paladin this morning. They have a 508c valuation (price now 872c up 10c today). They say the risk/reward equation is not in investors’ favour and that uranium price weakness could be “very negative for the stock”. Understatement. Urnaium price is everything for a $5bn company that makes a loss.
- Coles Group have 3Q sales numbers tomorrow – they are unlikely to have any price impact – all we really want to know is who is bidding and what are they paying.
- There are predictable upgrades around in Macquarie Bank this morning after their final results came in better than expected yesterday. They are selling this international success and prospects as part of the bid to raise $750m in a capital raising to finance international growth (looks like the issue has been priced at $87.00 not including the 190c dividend — so equivalent to 8890c compared to the last trade at 8950c). The issue is likely to be oversubscribed and the price come on at a premium when it re-lists.
We have an article in the Marcus Today newsletter today about “Independent Research” – just because it’s not independent doesn’t mean it’s no good. We also have the winner of the “Race to $100” and it’s not Macquarie, RIO or CSL.
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