Kirin Acquires Dairy Farmers, Realtors Fall

123jump.com Staff
25 Aug, 2008
New York City

Kirin acquired Australia''s second largest dairy farm operations known as Dairy Farmers after ten months it acquired National Foods from San Miguel of Philippines. The brewer agree to pay A$910 million for the dairy and had paid A$2.7 billion for National Foods. Australia, the third largest dairy exporter in the world is expected to increase its milk production less than 2% and exports more than 10% in the fiscal 2009.

[R]5:00AM New York, 7:00PM Tokyo - Property deals decline by 51% in April-July period. Kirin is to acquire Australia’s second largest dairy known as Dairy Farmers.[/R]

Japan stock indexes increased led by financial stocks on market speculation that Korea Development Bank is exploring to buy a controlling stake in Lehman Brothers, however there are many hurdles remain in the acquisition, including the approval from Korean government for the deal.

The current leader of Korean Development Bank is former head of Lehman Brothers and is know in investing banking circles in Korea to make aggressive deals. Korean government may be reluctant to sanction the approval as Lehman Brothers holds several assets in its portfolio that are illiquid and may have market value as less as 10% on the books.

Retreating oil prices, which fell the most in four years, also helped lift exporters.

Market Sentiment

In Tokyo trading Nikkei 225 gained 1.68% or 212.62 to 12,878.66, and the broader Topix Index advanced 1.9% or 22.83 to 1,239.25.

In the first section of the Tokyo Stock Exchange 6.6 billion shares worth 673 billion yen were traded and in the second section 128 million shares valued at 2.2 billion yen changed hands.

Of the Nikkei 225 stocks 202 rose, 21 declined, and 2 were unchanged. Shinsei Bank Ltd led advancers in the index shares with a rise of 6.05% on speculation that Korea Development Bank is exploring a substantial stake acquisition in Lehman Brothers.

Property Deals Drop by 51%

The Nikkei News reported on its Web site today that the value of real estate transactions by real investment trusts and listed firms dropped by 51% to 630 billion yen from a year earlier in the April to July period, as continued turmoil on the credit markets made it increasingly difficult to access cash.

Gainers & Losers

Shinsei Bank Ltd led advancers in the Nikkei 225 index shares with a rise of 6.05% followed by increases in Meidensha Corp. of 5.34%, in Furukawa Electric of 5.13%, in Nippon Sheet Glass of 5%, and Denso Corp. of 4.95%.

Shinsei Bank and other financial stocks advanced on news that Korea Development Bank is interested in buying Lehman Brothers. Mitsubishi UFJ Financial Group increased 4.79%, Mizuho Financial Group gained 4.76% as a result.

Inpex Holdings led decliners in the Nikkei 225 index shares with a fall of 4.45% followed by losses in Yahoo Japan Corp. of 2.96%, in Mitsubishi Rayon Co. of 2.69%, in Sumitomo Metal Industries of 2.67%, and Toho Zinc of 2.59%.

Inpex Holdings fell after crude oil prices for October delivery fell the most in four years, dropping 5.4% to $114.59 a barrel.

Sumitomo Metal Mining and other commodity stocks also tumbled on a rising dollar buoyed by comments by the U.S. Fed Reserve Chairman Ben Bernanke that falling commodity prices and rising dollar and a positive indicator for future growth.

Mitsubishi Corp. shed 0.66%, in Japan Steel Work of 1.16%, in Kobe Steel of 0.39% and Nippon Mining House of 0.17%.

Kirin to Acquire Dairy Farmers

Kirin Holdings reported on its Web site today that National Foods Limited, a wholly-owned subsidiary of Kirin Holdings Company Limited, will acquire all shares in Dairy Farmers, Australia''s second-largest fresh dairy company for A$884 million.

The proposed acquisition values the company Australian Cooperative Foods Limited which trades as Dairy Farmers at 12.8 times earnings before tax and depreciation and amortization.

ACF Chairman Ian Langdon said, “The National Foods proposal offers ACF shareholders an attractive cash price as well as providing certainty regarding forward farm-gate milk pricing and security of milk supply arrangements6. In addition, the proposal delivers on the Board’s commitment to provide shareholders a liquidity event following the Co-operative’s 2004 restructuring.”

The average regional price will increase between 1 and 2 cents per liter compared with those recently announced by Dairy Farmers and will continue to be linked to composition, supply pattern, farm size and location.

The DF EBITDA earnings in 2007 were $71 million including one-time charges of $170 million, an increase of 25% from a year ago. The Dairy Farmers have agreed to a break-up fee of $6.75 million.

Through the arrangement Kirin will acquire all outstanding ordinary shares on a fully diluted basis, including existing ordinary shares and instruments equivalent to or convertible into ordinary shares in DF amounting to a total of 126,957,492.

However the sale agreement is subject to the approval of at least 75% of DF shareholders, which is expected to take around three months.

According to Kirin, NFL and Warrnambool Cheese and Butter Factory in Allansford, Australia are in discussions to finalize the details of a joint venture that will operate the acquired cheese business after completion of the transaction.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 212.62 or 1.68% to 12,878.66, , Hang Seng index in Hong Kong increased 712.73 or 3.50% closed to 21,104.79.ASX 200 index in Australia increased 83.50 or 1.69% to close 5,014.90. The KL Composite index in Malaysia decreased 6.87 or 0.63% closed to 1,078.73.

The Kospi Index in South Korea increased 5.20 or 0.35% to close at 1,502.11, SET index in Thailand closed lower 3.73 or 0.55% to 678.20 and JSE Index in Indonesia increased 6.73 or 0.32% to 2,127.22. The Sensex index in India increased 48.86 or 0.34% closed to 14,450.35.