Australian Stocks Rebound; Foster

Marcus Jacob
21 Sep, 2011
New York City

Stocks in Australia gained after China

[R]6:30 PM Sydney – Stocks in Australia gained after China’s leading economic indicators point to sustained economic expansion till the end of the year. The dollar edged lower. Foster’s Group agreed to a buyout offer from SABMiller for $10 billion.[/R]

Australian stocks edged higher and overlooked the ongoing turmoil in the euro zone. The market focused on the latest economic data from China and noted that the leading economic indicator increased 0.6% in July.

The indicators, designed to show economic activity in the next six months, pointed expanding economy till the end of the year.

The ASX 200 index rose 31.60 or 0.8% to 4,071.8 and All Ordinaries index added 28.8 or 0.7% to 4,153.6.

The Australian dollar fell 0.6% to US$1.021 and fetched 79.09 yen compared to 78.49 yen yesterday. The spot price of gold fell $49.60 to US$1,774.10 per ounce.

Foster’s Agrees to SABMiller Revised Offer

Foster’s Group Limited agreed to a revised takeover offer from SAB Miller that values the company at $10 billion.

The offer was revised to $5.10 a share from $4.90 a share and SAB Miller will also pay special dividend of 30 cents a share.

The merger will be executed through a scheme that will require approval of at least 50% of shareholders with at least 75% of company stock tendered.

The long drawn out and often contentious merger talks played out in the public that ended after the SABMiller agreed to lift the offer and also agree to a special capital payment to cover tax rebate.

The company recently spun off its wine division and traded as a separate beer making company and holds nearly 50% market share in Australia with seven of the top 10 best selling beer brands in Australia.

David Jones Reaffirmed Negative Outlook

The department stores chain operator David Jones reported fiscal year ending in July sales declined 4.4% to $1.962 billion. Earnings in the period fell 1.5% to $168.1 million from $170.8 million.

Chief Executive Paul Zahra said the retailer is not in a position to issue a full year outlook and “trading is volatile.” The company also pinned hopes of any sales recovery in the Christmas season and lower number of discounts available at the store and cut staff hours.

The retailer declared 15 cents a share of dividend in the second half, lower than the 18 cents paid in the period paid in the previous year.

Stock Movers

BHP Billiton Ltd increased $0.33 to $37.13 and Rio Tinto added $0.69 to $69.59. Newcrest Mining Limited rose 49 cents to $38.83 and Atlas Iron decreased 13 cents to $3.49.

Iluka Resources fell 70 cents to $14.50 and Paladin Energy Ltd increased 10 cents to $1.57.

Oil Search Limited increased 1 cent to $6, Santos Limited rose 26 cents to $11.49 and Woodside Petroleum added $0.33 to $33.68.

Commonwealth Bank of Australia decreased $0.42 to $43.95 and National Australia Bank rose 19 cents to $22.19. ANZ added 7 cents to $19.39. Westpac gained 8 cents to $19.31.

Qantas Airways Limited added 1 cent to $1.53.

David Jones Limited closed up 6 cents to $2.76 and Wesfarmers increased 4 cents to $30.66.