Tasman in Deal with JBS, ABC Sells

123jump.com Staff
05 Mar, 2008
New York City

Brazil based beef producer, JBS S.A. today announced that it had agreed to acquire for $1.27 billion two U.S. companies, Smithfield Beef Group and National Beef Packing Co, as well as Australia based Tasman Group, in cash and stock for assets. Allco Finance surged 33.3% on the reports that its co-founder had increased his holding in the finance house by 10%.Childcare company, ABC Learning has announced is close to concluding a deal to sell 60% of its U.S. operations.

[R]3:00AM New York, 7:00PM Sydney – ABC Learning plans to sell its U.S. based unit. Allco surges on founder increasing its stake. Nufarm acquires U.S. based businesses.[/R]

Market Sentiment

ASX 200 index shed 0.1% or 3.7 to close at 5,376.60.

Market Driver

Australia''s top investment bank, Macquarie Bank Limited today announced that Macquarie Securitisation Ltd would wind-back its Australian residential mortgage origination services for both retail and wholesale customers due to the significant increase in the cost of funding mortgages and current conditions in the global mortgage securitisation market.

The Head of Macquarie''s Banking and Financial Services Group, Peter Maher, said that the Bank would substantially reduce origination of new residential mortgages in Australia from 7 March 2008 but would continue to provide full service to Macquarie''s existing Australian borrowers totaling 95,000.

Maher said Macquarie''s mortgage portfolio comprises approximately 2.5% of the total outstanding housing loans market in Australia. Macquarie''s share fell 4.3%

Gainers and losers

Of the ASX 200 index stocks, Allco Finance Group led the gainers with a rise of 33.3% followed by increases in Macquarie DDR of 10.9%, in APN/UKA European of 6.7%, in Energy Res Australia of 6.5%, and in Independence Group of 6.2%.

Of the ASX 200 index stocks, Arrow Energy Limited led the decliners with a fall of 11.1% followed by losses in Sunland Group of 11%, in Asciano Group of 10.8%, in Insurance Australia of 10.1% and in Babcock & Brown of 9%.

Nufarm acquires US and UK businesses

Australia''s biggest supplier of farm chemicals, Nufarm Limited today revealed that it had acquired crop protection companies, British phenoxy herbicides supplier, AH Marks Holdings Ltd. for $65 million and Etigra LLC for $175 million in cash to expand in the U.K. and U.S.

The company said in a statement that it would fund the acquisition through the offering of $200 million in shares. Nufarm said it expected its earnings per share to rise by 5% in the 2009 fiscal years a result of the acquisition.

Nufarm is set to boost its sales to $1.9 billion on higher sales in products used to protect turf such as golf courses and in the global market for so-called phenoxy herbicides used to control weeds in crops.

Nufarm Ltd said the acquisitions would lift forecast annual net profit by $5 million this financial year to $150 million, up from the previous forecast of $145 million.

The company today announced a 60% reduction in unaudited first half profit to $4.6 million. It will release the official, audited figures later this month. Sales for the six months to January 31, 2008, rose to $990 million, up from just under $600 million in the previous corresponding period. Nufarm shares are on a trading halt.

Net profit on an operating basis, which excluded a $22.6 million net loss associated with barter trading liabilities in Brazil and a foreign exchange loss of $7.6 million, was $35.4 million, up from $6.6 million.

Nufarm said the global agriculture sector was ""very strong"", driven by unprecedented demand - especially in China - for protein from beef, pork and chicken. This required more cereal to feed more animals, which in turn required more agricultural chemicals to boost crop yields.

JBS S.A. acquires US and Australian firms

Brazil based world''s biggest beef producer, JBS S.A. today announced that it had agreed terms for the $1.27 billion acquisition of two U.S. companies, Smithfield Beef Group and National Beef Packing Co, as well as Australia''s Tasman Group, in cash and stock for assets.

The company said it will pay Smithfield $565 million in cash for beef- producing units, including cattle feedlots, National Beef in the U.S. for $465 million in cash and $95 million of stock, and Tasman Group in Australia for $160 million in cash.

It said the acquisitions represented important steps ""in the completion of the investment plan aimed at building a sustainable platform of slaughtering capacity and meat sales in the United States and Australia,"" as reported by Reuters.

JBS hopes to use the acquisitions to circumvent restrictions of beef exports from Brazil to U.S., Australia and Europe.

The transactions would make JBS the largest U.S. beef processor, supplanting Arkansas based Tyson. JBS already was the third largest in the U.S. after acquiring Swift & Co. last year.

Babcock & Brown Infrastructure in talks with WestNet Rail minority shareholders

Infrastructure investment specialised fund group, Babcock & Brown Infrastructure today revealed that it had commenced discussions with the 49% minority holders in WestNet Rail, as it seeks to delay the acquisition of the whole group.

The company said in a statement it was seeking to vary its call option over this minority interest by extending the exercise date beyond 31 March 2008 for up to a period of 12 months and to ensure that BBI has the option to pay the consideration in cash when the call option is eventually exercised.

It said that it was hopeful that the large majority if not all WestNet Rail minority shareholders would be receptive to this proposal. BBI said it was also giving consideration to reducing its current 32% effective investment in Natural Gas Pipe Line of America NGPL to approximately 26% effective interest due to strong investor interest in the pipelinee of America (NGPL).

A 26% interest would still leave BBI as the single largest shareholder and ensure all current governance protections remain in place. BBI said it remains committed to a long-term significant holding in this attractive U.S. gas transmission and storage asset business. WestNet Rail is a core asset for BBI that contains attractive medium term growth potential.

BBI also announced that it had commenced a review of its current portfolio for potential divestment of non-core assets.

Allco share recovers as former co-founder ups interest

Shares in troubled Australian investment company Allco Finance Group which have been on a free fall today surged 33.3% after today''s trade following reports that its former co-founder had increased his holding in the finance house by 10%.

The former co-founder, John Kinghorn, who also chaired former RAMS Home Loans Group Ltd raised his stake in Allco to 9.75% from 6.80% yesterday.

Kinghorn, who acquired the 6.80% stake in January is speculated to team up with up with the other founder of Allco, David Coe, to take the group private. Coe dismissed the suggestions saying that he had not had any discussions with Kinghorn.


ABC close to selling US unit

Childcare company, ABC Learning has announced is close to concluding a deal to sell 60% of its U.S. operations to Morgan Stanley Private Equity. The company''s director Eddy Groves, who is in the US, was in final negotiations on the partial sale of ABC Learning''s U.S. kindergartens, according to the Australian.

ABC would realize $750 million in cash proceeds with additional $32 million payable in 2009 which will be used to reduce its bank debt. The deal would help ensure that its local centres would survive and will not have to be sold-off.

The company requested trading halt in its stock to the ASE to allow for negotiations with potential buyers last week, after its shares slumped 43% in one day on its short term debts.

Meanwhile the group has been stalked by reports of a split between its founders Groves and his wife, Le Neve. Groves is now believed to be living on the Gold Coast and le Neve in Brisbane. The couple has two daughters together, according to various media reports.