Sydney Slips; GrainCorp, AWB Deal Final

Chandrasekhar Atreya
30 Jul, 2010
New York City

Stocks in Australia retreated on cautious outlook at Macquarie Group. GainCorp agrees to buy AWB and form Australia

[R]6:00 PM Sydney, Australia – Stocks in Australia retreated on cautious outlook at Macquarie Group. GainCorp agrees to buy AWB and form Australia’s largest wheat trader. Vestar Capital agrees to acquire Health Grade. Queensland appoints more banks to help in its proposed IPO of rail assets.[/R]

Stocks in Australia retreated after cautious comments from Macquarie Group and caution ahead of U.S. gross domestic product data.

The ASX 200 Index fell 0.68% or 30.60 to close at 4,493.50.

GrainCorp agreed to buy smaller rival AWB for $855 million with an idea to combine forces against big global rivals like Bunge, Cargill and Glencore. The all share deal would create a combined group with a market cap of more than $2 billion.

Origin Energy, Australia’s second-largest power retailer said it fourth quarter sales rose by 50% from a year ago to A$203 million, bringing total revenue for the financial year to A$632 million, up 10% from a year earlier.

Vestar Capital, a private equity firm, has agreed to acquire Health Grades for about $294 million in cash, the companies said Wednesday. Health Grade provides ratings for hospitals.

Queensland government appointed more lead managers to help in the planned IPO of the state’s coal tracks and trains, scheduled for the end of the year.

Commonwealth Bank of Australia Ltd and Wilson HTM Investment Group were named as co-lead managers for the sale of Brisbane-based QR National, the government said in a statement today.

Resource News

Rio Tinto formalized an agreement with Chinalco’s listed Hong Kong subsidiary, Chalco, that will see the Chinese company invest $1.35 billion to develop the Simandou iron ore project in Guinea.

U.S.-based Peabody Energy Corporation and Swiss mining giant Xstrata are understood to be eyeing emerging Australian coal miner Aston Resources for a takeover. According to media reports, Aston is expected to unveil next week an IPO seeking to raise $400 million, which already has attracted Singapore’s Noble Group and Japan’s Itochu as cornerstone investors.

Noble and Itochu have reportedly agreed to collectively take $100 million worth of Aston shares under the offer. Aston’s appeal to suitors is its Maules Creek coal project in NSW, which it bought from Rio Tinto in 2009 for about $500 million.

Canada based ATCO Group has approached Hastings Diversified Utilities Fund within the past week about its Epic Energy pipeline business.

Commodities trader Noble Group will have the right to buy 1.5 million tons of coal a year from Nathan Tinkler’s Aston Resources as part of its investment in the company’s $400 million float.

Shell has suffered a further delay to the environmental approval for its Prelude floating LNG project in Western Australia in the latest series of deferred rulings on gas export projects.

Northern Energy announced the delineation of 5.9 million tons of probable reserves of hard coking coal at its proposed Colton mine, part of the Maryborough project in Queensland.

Gainers & Losers

Hastings Diversified Utilities Fund led the gainers in the ASX 200 with a gain of 3.79% to A$1.37 followed by AWB Limited 3.66% to A$0.99 and Elders Ltd 3.45% to A$0.45.

Carnarvon Petroleum Ltd led the losers with a loss of 7.32% to A$0.38 followed by Sundance Resources Ltd 6.45% to A$0.145 and Isoft Group Ltd 6.45% to A$0.0145.