The market is down 3. The SFE Futures suggested a 21 point rise in the market this morning.
The Dow Jones was down 13 overnight – It moved in a narrow 57 point range and closed slightly lower after investors locked in profits in what was a quiet session on Wall Street. There was a heap of takeover activity, as usual, General Electric announced it was selling its plastics division to Saudi Basic Industries for $11.6bn and Altel Corp. agreed to a $24.8bn offer from Goldman Sachs Group and TPG Inc. In what will be the biggest offering of shares by a private equity firm, Blackstone Group announced it will raise as much as $7.75bn selling stock to the public and the Chinese government. According to Bloomberg, the IPO values Blackstone at about 14.9 times 2006 net income. The S&P 500 briefly passed its record close of 1,527.46 for the first time in more than 7 years and the NASDAQ had a good session, it closed 0.8% higher.
Resources doing well. BHP up 18c to 3136c and RIO up 40c to 9269c. It had its uranium seminar in London last night. Metals all up overnight, Nickel up 0.1%, Zinc up 1.8% and Aluminium up 0.7%. Copper up 1.8%. Zinifex down 7c to 1763c. Oil price up $1.32 to $66.25 on the back of concerns about military attacks on Nigerians oil supply ahead of the US summer and US refineries running below 90% capacity. Woodside up 25c to 4355c. Gold up $1.80. Newcrest up 10c to 2234c.
All a bit quiet today after yesterday’s big gain. Lots of takeover talk as usual. Platinum Asset Management (PTM) lists on the ASX tomorrow. The shares sold were worth $700m at 500c (founders sold a 25% stake). Total market cap at 500c is $2.8bn. Talk that it will open at 600c. Note that this is not a listed investment company it is ownership of a funds management group with $22bn under management. Other companies in the financial services sector that could list include Bell Potter, Wilson HTM, Tricom and Centric according to the press…cashing in on the market.
- Fortescue Metals (FMG) down 8.5% in the last 2 days after putting on 33% last week. Its CEO Andrew Forrest is now worth $3.8bn on paper after having bought in at 8c a share. FMG up 89c to 3429c today. Peaked at 3850c this week. Some suggestion it was up because of increased leveraged ratios at some margin lenders last week.
- Publishing & Broadcasting’s (PBL) joint venture MPEL, listed on the NASDAQ is struggling. Its share price was down 14% last week and is down 30% since listing. There was talk is the US that they might be interested in Trump Entertainment Resorts (TRMP). PBL up 2c to 2094c.
- Talk that Paladin (PDN) could be a takeover target with French company Areva the bidder (Areva have a 10% blocking stake in Summit Resources which is being bid for by Paladin). The story is in the AFR this morning page 20. “Paladin goes from Hunter to Hunted”. It is not a very substantial article. PDN up 37c or 4.22% to 913c. PDN will be helped by the RIO uranium seminar overnight. It told us the uranium market will remain tight until 2011 at least.
- APN has a shareholder vote on the bid from Independent News on Friday. They have full page Ads advertising the meeting. They are obviously looking for as many proxies as possible. The bid is at 620c. The price is 598c reflecting the possibility that the vote may not get up. APN down 3c to 575c.
- There have been a few takeover stories that have failed to materialize: Fosters (FGL) – story that private equity met with them and decided not to do anything; Tabcorp (TAH) – PBL was supposed to have a crack with Tattersalls and Rio Tinto (RIO) should have been bid for by BHP Billiton. The Orica price has also punished a few of the hopefuls peaking at 3486c on bid talk and now 31732c. After the QAN bid failure (and probably APN and maybe Rinker) it seems the private equity boom has peaked. They can only pay sensible prices because they need a return, they have no synergies or strategic interest in their purchases. SO the price they pay is limited, in a rising market their opportunities are getting priced out and if they bid too low the institutions reject them. Main game over. You might notice Blackstone Group (private equity firm) listing in the US. When the buyers are sellers you sell.
- Leighton Holdings (LEI) just keeps going up, its up another 137c or 3.8% to 4442c today. It announced a joint venture construction project with Emmar MGF in India. The deal is set to generate US$1.25bn in revenue over the next five years on top of the $19bn already in its order book.
We have an article in Marcus Today today looking at market themes. Which ones are going backwards, which ones remain strong and which ones are developing.
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