West Australia Agrees to Buy Seven; BlueScope Net Loss Doubles

Marcus Jacob
21 Feb, 2011
New York City

Stocks in Australia traded lower on the rising tensions in the Middle East and China increase reserve requirements. West Australia agreed to acquire Seven Group for $4.1 billion to create the largest locally based media company. Woodside net rose and BlueScope net loss doubled.

[R]4:30 PM Sydney – Stocks in Australia traded lower on the rising tensions in the Middle East and China increase reserve requirements. West Australia agreed to acquire Seven Group for $4.1 billion to create the largest locally based media company. Woodside net rose and BlueScope net loss doubled.[/R]

Stocks in Australia fell as tensions in the Middle East and North Africa rose and crude oil futures traded volatile. China also increased bank reserve ratios by 50 basis points to stem the rise in loan growth.

The ASX 200 index decreased 36.7 or 0.7% to 4,900 and the All Ordinaries index declined 35.20 or 0.7% to 4,990.90.

The crude oil futures in Asian trading increased US$1.59 to close at US$91.30 and the Australian dollar edged lower to US$1.02. Gold closed in Sydney trading at US$1,394.90.

West Australia and Seven Merge

West Australia Newspapers Holdings said it agreed to acquire Seven Group Holdings to create the largest local media company based in Australia and raise $1.15 billion to fund the purchase. The total purchase cost is estimated at $4.1 billion.

The merged company will be listed on the Australian Securities Exchange under the name Seven West Media.

BlueScope Net Loss Doubles

BlueScope said net losses in the first half doubled to $55 million from $28 million a year ago on revenue increase of 13% to $4.62 billion. The steel maker said that losses were driven by $356 million increase in materials cost of which $106 million was recovered in higher steel prices.

The steel maker declared 2 cents a share interim dividend and said it would breakeven in the second half.

Woodside Petroleum Doubles Dividend

Woodside Petroleum said its full-year profit increased to US$1.55 billion and it doubled the dividend to 55 US cents.

The offshore natural gas and oil explorer said its planned expansion of $14 billion Pluto project in Western Australia is on track and it will continue to develop $20 billion Browse development.

Woodside chief executive Don Voelte who had earlier said he will resign from the company and will return to the U.S. in the second half of 2011. He also confirmed that 20 days of production lost in Western Australia to cyclones in Pilbara region may not be recoverable.

Stock Movers

BHP Billiton decreased 71 cents or 1.5% to $45.85 and Rio Tinto declined 1.7% to 86.14.

Caltex Australia rose $1.01 or 7% to $15.33 after full-year net increased to 49% to $302 million and doubled its dividend.

Banks closed lower. Commonwealth Bank decreased 28 cents to $53.92, National Australian Bank declined 25 cents to $26.12, ANZ dropped 22 cents to $24.65 and Westpac fell 14 cents to $24.07.

Seven Group Holdings increased 21 cents or 2.3% to $9.30 and West Australia Newspapers was halted at $6.34.

Seven Group also said first half net rose to $123.6 million and West Australia said it will raise $1.15 billion to fund the purchase of Seven. West Australia said its first half net increased 1.2% to $50.1 million.

Telstra declined 16 cents or 5.4% to $2.80 after it traded ex-dividend.