Berkshire Acquires 3.7% in Australia Based IAG, Westpac to Lower Stake in BT

Marcus Jacob
16 Jun, 2015
New York City

In weak trading, ASX 200 index closed unchanged and Warren Buffett controlled Berkshire Hathaway agreed to acquire 3.7% stake in Insurance Australia Group. Motor vehicles sales in May declined 1.3%.

[R]5:30 PM Sydney – In weak trading, ASX 200 index closed unchanged and Warren Buffett controlled Berkshire Hathaway agreed to acquire 3.7% stake in Insurance Australia Group. Motor vehicles sales in May declined 1.3%.[/R]

Stocks opened lower in Sydney but tuned around after IAG agreed to sell a stake to Warren Buffett controlled Berkshire Hathaway.

However, market indexes closed unchanged after the latest minutes of meeting from the RBA failed to provide additional insight to the interest rate course.

Seasonally adjusted new motor vehicle sales in May fell 1.3% to 93,479 compared to 1.5% decrease in April, the Australian Bureau of Statistics said today.

Sales of the sports utility vehicles in the month plunged 6.1% and sales of other vehicles fell 0.2% while sales of passenger vehicles climbed 2.2%.

Australian dollar closed at 77.41 U.S. cents and in stock trading turnover jumped to 799 billion shares worth $5.2 billion.

At close, the ASX 200 Index slid 3 to 5,535.80 and the broader All Ordinaries Index fell 6.30 to 5,535.20.

In commodities trading, gold added US$4 to US$1,185 an ounce and Brent crude rose 0.36 cents to close at US$64.31 a barrel.

Australian Stock Movers

Amcom Telecommunications Limited surged 14.7% to $2.66 after the data and Internet services provider’s shareholders voted in favour of the proposed $1.2 billion bid from Vocus Communications Ltd.

Amcom said at the meeting, total 234.7 million shares were voted and 99.8% were in favour and 22.8% against.

Insurance Australia Group Ltd climbed 4.3% to $5.81 after the insurance company said the U.S. based conglomerate Berkshire Hathaway Inc agreed to acquire a 3.7% stake valued about $500 million as part of a ten-year strategic partnership.

Berkshire will buy about 89.8 million new IAG shares at $5.57 per share with an option to buy additional 5% within 24 months but also agreed not to exceed 14.9% stake.

In India, IAG plans to raise its stake in SBI General, the general-insurance with State Bank of India to 49% from 24% before the end of this year.

Monadelphous Group Limited declined 5.9% to $9.59 after the diversified services provider plans to lodge a counter-claim of $200 million through the Supreme Court of Queensland in response to $130 million claim filed against it by Wiggins Island Coal Export Terminal Pty Ltd.

Westpac Banking Corp gained 1.8% to $32.30 after the financial services provider plans to sell its stake in BT Investment Management for up to $700 million.

The bank plans to reduce the stake between 31% and 40% from the current 59% stake.