Sydney Stocks Cautious on BHP Hostile Offer

123jump.com Staff
19 Aug, 2010
New York City

Stocks in Australia closed nearly flat after rallying initially on upbeat earnings but worried that BHP may overpay for Potash Corp. Weekly earnings of full-time employees rises by at least 5% in the quarter ended May. BHP makes $39 billion hostile offer for Potash Corp.

[R]6:00 PM Sydney, Australia – Stocks in Australia closed nearly flat after rallying initially on upbeat earnings but worried that BHP may overpay for Potash Corp. Weekly earnings of full-time employees rises by at least 5% in the quarter ended May. BHP makes $39 billion hostile offer for Potash Corp.[/R]

The stocks then fluctuated in the day’s trading and closed up fractionally higher. Investors turned cautious after BHP Billiton offered 20% premium to Potash Corp in a hostile bid and worried that the company may overpay.

The ASX 200 Index in Sydney gained 0.09% or 4.1 points to close at 4,479.00.

Seasonally adjusted average weekly ordinary time earnings for adult full-time employees rose 0.8% in the quarter ended May for an annual rate of 5.2%, the Australian Bureau of Statistics said Thursday.

The quarterly survey showed the weekly earnings for private and public sector combined was A$1,253.10, with private sector and public sector earnings rising annually by 5.1% and 5.8% respectively.

The bureau also reported that merchandise imports rose by $366 million in July, seasonally adjusted to $18.786 billion.

Wesfarmers reported a 3% increase in net profits to A$1.56 billion as lower coal export prices weighed on a stronger performance from its retail businesses including Coles and Bunnings.

BHP Billiton launched a hostile A$44 billion all cash takeover offer for Canada’s Potash Corp after its earlier offer was rejected. Analysts are advising the miner not to overpay for Potash Corporation. BHP said Wednesday it was offering $130 a share to shareholders of Potash, a 20% premium to the closing price on August 11.

Mining services company Industrea Ltd reported a net annual profit of A$61.98 million in the year ending in June which included a benefit of A$20.2 million following the clarification of tax provisions. The earnings were four times higher than the prior year on tax benefit and rising sales to China.

Royal Dutch Shell and PetroChina Co Ltd. completed the takeover of Arrow Energy Ltd today.

ASX Ltd, the operator of Australia’s main stock exchange at Sydney, posted a 13% increase in second half profit as trading volumes increased on the back of a recovery in global economy.

Net income rose to A$160.1 million in the six months ended June 30, from A$141.7 million a year earlier.

Resource News

China’s largest steelmaker by output, Hebei Iron and Steel said it is in talks with Australia’s Sundance for potential cooperation on the Mbalam project in West Africa.

Bharat PetroResources executed an agreement with Norwest for a farm in two of Norwest’s Perth Basin permits.

Brazil-focused base metal explorer Avanco Resources Ltd signed a deal with mining giant Vale that could earn it up to $40 million.

Avanco said its subsidiary AVB Mineracao Ltd signed a deal with Vale to give them an option to acquire its Trindade North property located in Carajas region of Brazil with a high prospect for iron ore.

Gainers & Losers

Elders Ltd led gain the ASX 200 Index with a rally of 15.32% to A$0.715 followed by Gunns Ltd 6.3% to A$0.675 and Caltex Australia Ltd 4.27% to A$10.49.

Downer EDI Ltd led decliners in the index with a fall of 6.77% to A$4.41 followed by Cudeco Ltd 5.31% to A$2.32 and Paperlinx Ltd 4.55% to A$0.63.