Is that all there is? Gee, you’d love to have the board of rail and port group Asciano and its advisers on the other side of a price negotiation after their effort in extracting a whole 10 cents a share extra from Canadian bidder Brookfield Infrastructure. Overnight, Brookfield said it would acquire Asciano with a $12 billion bid made up of A$6.94 in cash and 0.0387 Brookfield Infrastructure Ltd partnership units for each Asciano share. The offer has an implied value of A$9.15, a 13% premium to Asciano’s last traded price. The offer is also higher than Brookfield’s previous bid, which had an implied value of A$9.05 per share. That’s right, a whole 10 cents. Asciano shareholders will feel comforted (and a whole lot richer) by that effort. — Glenn Dyer

Aurizon next? With Asciano on the way to being swallowed by a foreigner, will rail group Aurizon be next? It warned yesterday of flat volumes for coal being shifted by rail, and lower volumes for its WA iron ore business in the 2015-16 financial year. The wider economy is growing fitfully, so ordinary freight volumes will be uninspiring. In fact, the annual results yesterday gave no cheer for shareholders about the 2015-16 year. The company’s board and managers are paying out virtually all the profit as dividends to keep restive shareholders quiet. The company raised its dividend payout ratio to 70-100% of net profits after tax, and boosted the final dividend to 13.9 cents a share compared with 8.5 cents a year earlier. This takes the full-year dividend to 24 cents a share, up 45% on 2013-14 when a total of 16.5 cents was paid. The 2014-15 dividend was a payout ratio for the full year of 84% and 100% in the six months to June.

So the board and management have no idea or no interest in investing in its own business in the current year other than normal maintenance. Investors are restive because Aurizon has form on dodgy investments: the company is keeping its WA iron ore mine and railway (in partnership with a Chinese steel mill), rather than killing it off, because of the rather obvious weakness in iron ore prices now — and, for the foreseeable future, this means the project is uneconomic. Aurizon, with Asciano’s Pacific National, dominate the Australian rail freight market. — Glenn Dyer

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Oil’s new reality. Lower and lower goes US crude oil futures pricing, and they are now searching for US$40 a barrel and perhaps lower. That was after US oil futures found a new six year-plus low overnight (unlike Brent crude futures in London, which remain well above their multi-year lows) ending below US$42 a barrel and looking to go lower in coming days thanks to continuing fears about the global oil glut. In fact the immediate outlook is weak given the looming changeover in production mix for US refineries ahead of the northern autumn and winter. Analysts say the changeover in the production mix will boost the surplus of lighter crude and petrol. Brent crude ended at US$48.74 in London, perhaps a better indicator of global prices.

Analysts at Morgan Stanley said overnight that US oil demand is already near peak seasonal levels and will fall in the coming weeks as summer demand wanes. And the spectre of more crude oil from Iran looms over the market. This is why Santos shares touched a new six-year low of $5.98 yesterday. I wonder what Santos would do if US prices fell under US$40 a barrel? — Glenn Dyer

More TV gloom. The gloom continues for Australia’s big TV networks. Ten is already a basket case and is being bailed out by the Murdoch clan via their 50%-owned associate, Foxtel. Yesterday, Seven West Media hit a second all-time low in a row, when it hit a day’s low of 80.5 cents during trading. Seven ended at 81.5 cents ahead of its 2014-15 results release tomorrow and rumours that the AFL TV deal will be revealed today at a price of $2 billion for six years. Cash-strapped Seven might be forced to drop its games from four to three, according to some reports. Likewise, all is not well for Seven’s bitter rival, Nine Entertainment Co, whose shares also hit an all-time low yesterday: $1.38. That was its closing level ahead of its 2014-15 results next week. — Glenn Dyer

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Peter Fray
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