News Corp Faces More Inquiries; Peabody Lifts Macarthur Bid

Marcus Jacob
14 Jul, 2011
New York City

Australian stocks closed lower but resources linked stocks advanced. News Corp was forced to drop its bid to acquire UK based BSkyB after lawmakers united against its bid. Peabody raised its bid for Macarthur and initiated the due diligence process.

[R]4:30 Sydney – Australian stocks closed lower but resources linked stocks advanced. News Corp was forced to drop its bid to acquire UK based BSkyB after lawmakers united against its bid. The company is also likely to face more investigation in the U.S. Peabody raised its bid for Macarthur and initiated the due diligence process.[/R]

Australian stocks traded lower but resource stocks inched higher. Banks were on the decline after a rating agency placed U.S. debt on a watch with a negative review of lawmakers fail to increase debt ceiling before the end of the month.

News Corp was forced to abandon its bid to acquire BSkyB after UK lawmakers united in their opposition.

News Corp was forced to give up its ambition of acquiring the company after a huge public outcry concerning its systemic lapses in news gathering tactics and hacking of phones of fallen soldiers and murder victims.

The company is also likely to attract U.S. lawmakers and the U.S. Securities and Exchange Commission’s investigation in paying bribes to UK police.

The ASX 200 index decreased 24.10 or 0.5% to 4,491 and All Ordinaries index dropped 21.90 or 0.5% to 4,561.

The Australian dollar decreased 0.02% to US$1.075. Spot gold in Sydney trading increased $16.80 to US$1,590.30 an ounce.

In trading, turnover increased to 2.07 billion shares worth $5.36 billion and 576 shares closed higher, 447 declined and 374 were unchanged.

Stock Movers

David Jones plunged 18% after it estimated net in the second half to decline as much as 12% from the previous estimate of 5% increase. The retailer also estimate net in the first half of the current fiscal year to drop 20%.

The David Jones’ profit warning dragged other retailers and mall operators. Myer dropped 6.4% and Westfield declined 2.3%.

Macarthur Coal increased 12 cents to $15.34 after Peabody revised its bid to acquire the company. The company also agreed to due diligence process on the condition that any offer has to be at least $15.50 a share including dividend of 16 cents a share.

Separately Fidelity Investments lowered its stake in Macarthur to 3.55% or 10.7 million after it sold 2.3% stake or 7.2 million shares in the company for a price between $15.16 and $15.27 a share.

Resource companies closed higher after China reported economic growth of 9.5% in the second quarter.

BHP Billiton decreased 3 cents to $43.60, Rio Tinto closed unchanged at $80.95 and Newcrest added 2.2% to $39.80. Iluka Resources gained 3.5%.

Santos Limited added 0.8% to $13.25 and Woodside Petroleum increased 1 cent to $40.04.

Banks were on the slide in trading today. Westpac decreased 1.9% and ANZ decreased 0.9% to $20.98.

News Corp rose 3.1% after the company was forced to drop its bid for the 61% of the British Sky Broadcasting. The company has been facing multiple inquiries in the UK for its news gathering practices and may face tighter scrutiny in the U.S. for its alleged role is seeking telephone records of Sept 11 victims.