Australian Index Drops 0.9%; Healthscope Bid

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
14 May, 2010
New York City

Stocks fell ahead of release of key indices data next week. Healthscope receives A$1.74 billion bid. Gindalbie raises A$175 million for iron ore project. The Australian dollar decreased 0.1% to 89.44 U.S. cents.

[R]3:00 AM New York, 7:00 PM Sydney – Stocks fell ahead of release of key indices data next week. Healthscope receives A$1.74 billion bid. Gindalbie raises A$175 million for iron ore project.[/R]

Australian stocks fell as investors were cautious ahead of key data on industrial production, retail sales, manufacturing and housing starts next week.

Commodity stocks however pared losses as fears over the Greek debt crisis subsided.

The Australian dollar is slated for a weekly gain even as the two South Pacific currencies weakened yesterday against the yen, as higher-yielding assets surged on May 10 after European policy makes announced a near $1 trillion loan bailout package as well as bond purchases.

National Australia Bank Ltd is starting its due diligence on the potential acquisition of the retail branches of Royal Bank of Scotland Plc, to meet the mid-June deadline set for final bids by RBS, the Australian newspaper reported today.

Banco Santander SA is the other contender for these assets.

Healthscope Ltd shares gained the most in a decade after the second-largest hospital owner in Australia received an acquisition proposal for A$1.74 billion from a private equity group at A$5.50 per share for all outstanding stocks, the Melbourne-based company said today.

Healthscope owns and operates 43 private hospitals in Australia and delivers one in every 17 Australian babies born, according to the company’s 2009 annual report.

Hennes & Mauritz AB, Europe’s second-largest Swedish clothing retailer is looking to open stores in Australia apart from Brazil and Argentina in the southern hemisphere to tap emerging market growth to catch up with its larger peer Inditex SA.

Brazil and Argentina look interesting said CEO Karl-Johan Persson in an interview in Stockholm and said that he is also looking at Australia.

Wheat prices are heading for a slump as increased global stockpiles combined with rising European production are driving Chicago futures lower, said ANZ Agricultural Commodities Strategist Scott Briggs via telephone from Melbourne today.

Wheat futures have declined 11% this year as rising supplies and favorable weather in growing areas are more likely to increase world inventories for a third year in a row, the US Department of Agriculture forecasted on May 11.

In Sydney trading ASX 200 Index fell 0.9% or 41.7 to 4,611.10.

Of the ASX 200 index stocks, 79 rose, 137 fell, and 14 were unchanged. Healthscope led gainers in the index shares with a rise of 17.3% after the company received a A$1.74 billion bid.

The Australian dollar decreased 0.1% to 89.44 U.S. cents.

Healthscope Receives A$1.74 billion Bid

Healthscope reported today that it has received a A$1.74 billion offer from a private equity consortium. The offer was priced at A$5.50 a share, 22.2% premium to the company’s last traded share price of A$4.50.

The company is yet to form an opinion on the proposed transaction.

Market rumors note that Texas Pacific Group and Carlyle were behind the offer.

Gindalbie Raises A$175 million

The Australian reported today that Gindalbie has raised A$175 million from institutional investors after selling A$111.8 million worth of shares to institutions at 93 cents per share, representing a 20 discount from its last closing price of A$1.16.

Ansteel, which holds 36.12% equity in the firm, snapped up $63.2 million entitlement under the offer. Gindalbie Metals is expected to raise A$206.4 million.

Gindalbie and Ansteel intend to build a A$1.98 billion iron ore project in Western Australia.

ASX 200 Index Movers

Healthscope led advancers in the ASX 200 index stocks with a rise of 17.3% followed by Australia Agriculture 3.7%, Murchison Metals 3.6%, Linc Energy 3.6%, and Energy World Corp. 3.3%.

Gindalbie Metals led decliners in the ASX 200 index stocks with a fall of 8.6% followed by Biota Holdings 6.3%, Karoon Gas Australia 4.3%, Platinum Australia 4.3%, and Kagara Ltd. 4.3%.

Gindalbie Metals declined after selling A$111.8 million worth of shares to institutions at 93 cents per share.

Other Movers

Commodity stocks rose as worries over the Greek debt crisis subsided. Iluka Resources gained 2.5% to A$4.50 and Roc Oil Co. edged up 2.4% to A$0.42.

Financial stocks fell as investors traded cautiously ahead of key data from the U.S. Commonwealth Bank slipped 2.2% to A$53.71, Westpac declined 1.5% to A$24.89 and National Australia Bank declined 2.2% to A$25.37.

Mirabela Nickel remained unchanged at A$2.41 after it reported an A$25.2 million loss for the three months ended March 31.

Woodside Petroleum dropped 0.02% to A$44.80 as crude oil prices tumbled 1.2% to $73.5 per barrel.