Takeovers Talks in Australian Mining Sector

123jump.com Staff
20 Dec, 2007
New York City

Takeover activities in the mining and building industries heated up in Australia. BlueScope Steel agreed to purchase IMSA Steel from Ternium S.A. for $730 million. Herald Resources is in preliminary talks with Indonesia based PT Bumi Resources. Herald is looking to develop zinc mine in Indonesia. Western Plains and OneSteel remain deadlocked in their discussions to export iron ore from a port controlled by OneSteel. Australian stocks fell today on the weakness in mining and financials

[R]5:00AM New York, 9:00PM Sydney - The Australia index declined by 0.6% after loses in mining and financial stocks.[/R]

ASX 200 index declined 0.6% or 39.5 to close at 6,176.90.

BHP Billiton closed down 1.4%, Rio Tinto declined 1.8%, and Commonwealth Bank of Australia declined 1.2%.

The Preliminary market turnover was 2.18 billion shares worth $11.83 billion, with 523 stocks higher, 715 lower and 345 unchanged.

Centro Properties was the most actively traded stock with 114.95 million shares worth $157.17 million changed hands.

Australia''s largest steel maker, BlueScope Steel today announced that it will acquire the outstanding shares of IMSA Steel Corp for $730 million from Ternium S.A listed on NYSE. After the acquisition BlueScope will be the second largest supplier of pre-engineered buildings used for barns, aircraft hangers, and schools behind Houston based NCI Buildings Systems Inc. The company expects to realize annual savings of US$40 million after the merger.

The company announced that its latest consolidated sales for the year ended December 31 2006 were approximately US$1.2 billion with Earnings Before Interest, Taxes, Depreciation and Amortization of US$86 million.

According to the release the acquisition will be funded by a 364-day bridge loan facility and BlueScope will also assume approximately US$20 million in under-funded pension liabilities.

The purchase will double BlueScope''s sales in the $157 billion U.S. commercial and industrial building market, adding 23 plants from California to North Carolina.

BlueScope closed up 2.9%.

Herald Resources Ltd today announced that it is in the preliminary discussions with companies that had expressed interest in merger. The latest development comes barely a week after the company told its shareholders not to take action following a $455 million (US$391 million) takeover bid by Indonesia''s largest coal producer PT Bumi Resources at A$2.25 per share.

Herald Resources is planning a zinc and lead mine in Indonesia. Takeovers and mergers in the industries are rising as companies hope to meet growing demand from China and rising commodity prices in the last five years.

PT Bumi had indicated to Herald that it could assist Herald to acquire the Indonesian government''s approval for $192 million Dairi mine project. Herald has been waiting for the approval for the past two years. Herald added 3.1% by close of the trade.

Western Plains Resources Ltd said it will continue talking to OneSteel on port access following its decision to block Western plans to export iron ore through the Port of Whyalla. OneSteel, which owns the port, said today, it is unlikely to approve a Western Plains'' plan to build a rail loop, barge loader and storage shed at Whyalla in South Australia State.

OneSteel''s spokesman was reported to have said that it plans to export 4 million tons of iron ore through its port in fiscal 2008. Western Plains was down 39 percent, while Onesteel was up 0.5%.

Of the ASX 200 index shares, Centro properties led the gainers with a rise of 9.5% followed by increases in Centro Retail Group of 9.3%, in Tishman Speyer by 7%, in Allco Finance Group by 5.7%, and in Paperlinx Limited by 5.2%.

Of the ASX 200 index stocks IOOF Holdings led the decliners with a loss of 5.2% followed by losses in Newcrest mining by 5.1%, in Macmahon Holdings and Nexus Energy Limited of 4.8%, and in Mount Gibson Iron of 4.5%.

In other stocks, National Australia Bank lost 0.7%, Westpac dropped 1.8% and St George Bank shed 1.9%.

In the energy sector, Oil Search was up 0.9%, Woodside Petroleum dropped 0.9% and Santos shed 0.9%. Gold miner Lihir added 1.6%.

The retailers were mixed with Woolworths adding 0.5%, Wesfarmers dropping 1.6%, Harvey Norman losing 2.1%, and David Jones declining 0.2%.

The stocks in media sector were mixed. News Corp gained 0.3% but Fairfax Media shed 0.9%.

Insurance Australia Group looks set to report a fall in its fiscal 2007 annual profit of between 13% and 18%, according to three different brokers. IAG declined 1.2%.

Rail and ports operator Asciano is planning to sell its stake in pallet provider Brambles lowering its stock by 1.6%.