Murchison Bids for Midwest in Australia

123jump.com Staff
10 Oct, 2007
New York City

Australian stocks closed at a record high led by gold mining stocks and strength in retail and banking sectors. ASX 200 increased 0.9% or 60.50 to close at 6,738.30. BHP Billiton jumped 2.3% and Rio Tinto added 0.9%. Mitsubishi controlled Murchison Metals launched a surprise bid for Midwest controlled by Sinosteel. The offer with a 34% premium is desinged to get a control of proposed port to be built in the Western Australia.

[R]5:00AM New York, 5:00PM Tokyo – Gold miners lifted stocks in Australia to a record close.[/R]

In Sydney trading ASX 200 Index gained 0.9% or 60.5 to 6,738.30. Australia''s S&P/ASX 200 Index extended its jump into record territory riding on gains in resource stocks led by mining giants BHP Billiton, which rose by 2.3% and Rio Tinto which added 0.9%.

Trade on the Australian stock exchange was on the upside as gains were recorded in all sectors including banks and commodity stocks. In the energy sector Woodside trade stronger at 0.8%, Oil Search was up 1.9%, but Santos declined 1.7%. Gold miners also rose on higher metal prices. Newcrest rose 0.2% and Lihir added 2.3%. Great Gold Mines was the most active stock with 216 million shares changing hands.

The big banks were also stronger with ANZ gaining 0.6%, the Commonwealth Bank adding 1.6%, the National Australia Bank adding 0.7% and Westpac edged 0.3% higher.

Retailers were mixed, with Woolworths putting on 0.03%, Harvey Norman adding 1.6%, Coles rising by 0.1% and David Jones was down by 2.8%.

In the media sector, Fairfax was up 0.8%, PBL rose 2.5%, and News Corp edged lower 0.3%.

Murchison Metals Ltd controlled by Mitsubishi launched a hostile and unconditional bid for Midwest Corp controlled by Sinosteel Corp to build shipping port to ship iron ore from Perth on the western coast of Australia. The surprise takeover offer values Midwest at A$4.70 or 34% higher than its closing price. Midwest jumped 28% on the news and Murchison added 2%.

Murchison hopes that after the purchase the combined company will produce 45 mtpa and have cash reserve of $200 million with no debt. Murchison is valued at $2.2 billion and Midwest is valued at $855 million. The surprised bid offers 34% premium from the recent close. The Midwest stock surged 28% after the news.

The Western Australian state government recently rejected the plan from Murchison to build a port and railroad line in the region. WA Planning and Infrastructure Minister Alannah MacTiernan announced yesterday that the right to construct the port would be subject to a contestable process, limited to the two mining companies (Murchison and Midwest Corporation) who have requested this right. These companies could nominate in their own right or through a nominated infrastructure provider. The state Government cancelled the approval for Midwest''s port and railroad project in July.

The dollar closed stronger today but missed the $0.90 mark with traders locking in their bets ahead of tomorrow''s local jobs data. The American currency was weakened by minutes from the US Federal Reserve''s last meeting as the market took the view that the U.S. interest rates are more likely to be lowered.

The Australian dollar traded at $0.8992, up from yesterday''s close of $0.8945. During the day it traded between a low of $0.8981 and a high of $0.9008.

Of the ASX 200 index shares, Mt Gibson Iron led the gainers with a rise of 15% followed by increases in Perilya Ltd by 6.6%, in Gunns Limited by 5%, in Paladin Resource by 4.8%, and in Jubilee Mines NL by 4.2%.

Of the ASX 200 index stocks Stigma Pharmaceuticals led the decliners with a fall of 2.4% followed by losses in Energy Resource Australia of 2.6%, David Jones Ltd of 2.8%, in Alumina Ltd and Ansell of 4.1%.