Downer EDI Limited (DOW); Spotless Group Holdings Limited (SPO):
Spotless shares have been trading below Downer’s offer of $1.15 per share. The Spotless board has not commented on the takeover bid since Tuesday. A New York hedge fund registered in the Cayman Islands has emerged as Spotless’s second-biggest shareholder following Downer EDI’s $1.2 billion takeover bid. The Coltrane Master Fund, which lists its address as Grand Cayman and is affiliated with New York headquartered hedge fund Coltrane Asset Management, has secured an 8.06 per cent position in Spotless via equity swaps. The swaps were acquired by Morgan Stanley and Goldman Sachs and are able to be converted into physical shares. Coltrane is believed to have been buying shares in Spotless before Downer announced its takeover bid on Tuesday, and topped up its position on Wednesday. Spotless shares, which closed at $1.04 on Thursday, have been trading below Downer’s offer of $1.15 per share in cash, allowing Coltrane to make a profit if it accepts the takeover bid. The emergence of a hedge fund as one of Spotless’s biggest shareholders is likely to work in Downer’s favour, because hedge funds typically want to make money out of takeovers while some of Spotless’s institutional investors may prefer to remain long-term shareholders.
Harvey Norman Holdings Limited (HVN):
Harvey Norman has been forced into a humiliating backdown by the Australian Securities and Investments Commission. The regulator directed the retailer to clarify a statement it made to the ASX this week denying an AFR Weekend report that it was under investigation by ASIC. The investigation is into Harvey Norman’s 2016 accounts and relates to the treatment of franchises. Retail group Harvey Norman has confirmed that the Australian Securities and Investments Commission is investigating its 2016 accounts, after a dramatic intervention by the regulator on Wednesday evening. Harvey Norman finance director Chris Mentis had issued a statement to the ASX on Tuesday denying a report by AFR Weekend that said ASIC was investigating. Mr Mentis said the Financial Review report contained ‘‘false statements and assumptions’’. Harvey Norman chairman Gerry Harvey said the Financial Review report, together with earlier reports was part of a conspiracy by short sellers, together with Australian fund managers and ‘‘media allies’’. Mr Harvey has continued to trade in Harvey Norman stock, buying 2 million shares on Monday for more than $8 million, and another 1 million shares yesterday. But Harvey Norman was forced to make a humiliating backdown after direct action by ASIC.
Metcash Limited (MTS):
Metcash is aiming to boost sales at Home Timber & Hardware stores by introducing merchandising and range changes that have helped lift sales at Mitre 10 stores by around 17 per cent. Metcash is aiming to boost sales at Home Timber & Hardware stores by introducing merchandising and range changes that have helped lift sales at Mitre 10 stores by around 17 per cent. Sapphire Stores, a refurbishment program rolled out to 18 Mitre 10 stores over the past two years, has increased average transaction values by about 4 per cent and basket numbers by 13 per cent, underpinning same-store sales growth by around 17 per cent. Another new strategy, shopper-led ranging, has boosted sales in categories such as hand tools by 10 per cent, power tools by 9 per cent, cement by 14 per cent and fasteners by 6 per cent.
Santos Limited (STO):
Queensland’s Palaszczuk government has defended approving Santos’ $US18.5 billion ($24.2 billion) GLNG export project, blaming drilling restrictions in other states for the shortages and high prices facing local buyers. Natural Resources, State Development and Mines Minister Anthony Lynham said the government could not be held responsible for changes in the domestic gas market, including restrictions imposed by other states that have contributed to the shortfall in supply on the east coast. ‘‘Since the GLNG environmental impact statement was prepared in 2010, significant new changes have occurred nationally with moratoriums and restrictions on gas exploration and production in other states,’’ Dr Lynham said .He also said the EIS approval was based on environmental requirements, signalling the statements around economic issues weren’t fundamental to that decision.
Sigma Pharmaceutical Limited (SIP):
Sigma Pharmaceuticals chief executive Mark Hooper has tasked his former finance chief, Jeff Sells, with leading a new business development team to pursue deals and partnerships that help to diversify earnings. Mr Hooper said the pharmaceutical wholesaler’s move to bulk up with six new business development executives marked a move away from being ‘‘reactive’’ when it comes to mergers and acquisitions. ‘‘We felt like as a business we were at a point where we needed to be more proactive about business development,’’ he told The Australian Financial Review. ‘‘I feel going forward it’s going to be more effective.’’ Sigma has been on a path to reduce its reliance on distributing medicines sold under the Pharmaceutical Benefits Scheme to its retail chemist customers, such as Amcal and Guardian. Moves by the government to rein in how much it spends on PBS drugs has put pressure on wholesalers.
Wesfarmers Limited (WES):
In the retail equivalent of robbing Peter to pay Paul, Credit Suisse analyst Grant Saligari says Wesfarmers could start to ‘‘fix’’ the problems at its struggling discount department store Target by selling its thriving Kmart chain. While the idea sounds slightly odd at first, Saligari’s reasoning is quite clever. He argues Kmart is at, or close to, its peak valuation, given that it now accounts for 75 per cent of the department store profit pool in Australia and 17 per cent of the expanded department store, clothing and soft furnishings profit pool. This is quite a testament to what Wesfarmers’ department store czar Guy Russo has done with this business. But Saligari argues that, eventually, Kmart’s run will end – that’s the cyclical nature and history of retail. Sell Kmart now – Credit Suisse puts a ‘‘base’’ valuation of $6.6 billion and a ‘‘blue-sky’’ valuation of $7.4 billion on the business – and Wesfarmers gets the resources it needs to fix up Target.
Westpac Banking Corporation (WBC):
The head of Westpac wealth arm BT Financial Group says banks that abandon the wealth sector could miss a ‘‘whole decade of growth’’, and has outlined plans to grab a bigger share of the burgeoning $2.2 trillion superannuation sector. However, BTFG chief executive Brad Cooper said the group would drop outdated cross-selling tactics in its wealth push and instead focus on keeping customers within the digital ‘‘ecosystem’’ it has spent more than five years and $630 million to build. He conceded that the wealth sector – including superannuation, insurance, investment and financial advice – was in a ‘‘transitional’’ phase, with millions of dollars being spent to address regulatory changes on all fronts. While he predicted this phase had at least two years to run, and would further weigh on profit margins, he said it would be a mistake for banks to hit the eject button.
(Source: AIMS)
Spotless shares have been trading below Downer’s offer of $1.15 per share. The Spotless board has not commented on the takeover bid since Tuesday. A New York hedge fund registered in the Cayman Islands has emerged as Spotless’s second-biggest shareholder following Downer EDI’s $1.2 billion takeover bid. The Coltrane Master Fund, which lists its address as Grand Cayman and is affiliated with New York headquartered hedge fund Coltrane Asset Management, has secured an 8.06 per cent position in Spotless via equity swaps. The swaps were acquired by Morgan Stanley and Goldman Sachs and are able to be converted into physical shares. Coltrane is believed to have been buying shares in Spotless before Downer announced its takeover bid on Tuesday, and topped up its position on Wednesday. Spotless shares, which closed at $1.04 on Thursday, have been trading below Downer’s offer of $1.15 per share in cash, allowing Coltrane to make a profit if it accepts the takeover bid. The emergence of a hedge fund as one of Spotless’s biggest shareholders is likely to work in Downer’s favour, because hedge funds typically want to make money out of takeovers while some of Spotless’s institutional investors may prefer to remain long-term shareholders.
Harvey Norman Holdings Limited (HVN):
Harvey Norman has been forced into a humiliating backdown by the Australian Securities and Investments Commission. The regulator directed the retailer to clarify a statement it made to the ASX this week denying an AFR Weekend report that it was under investigation by ASIC. The investigation is into Harvey Norman’s 2016 accounts and relates to the treatment of franchises. Retail group Harvey Norman has confirmed that the Australian Securities and Investments Commission is investigating its 2016 accounts, after a dramatic intervention by the regulator on Wednesday evening. Harvey Norman finance director Chris Mentis had issued a statement to the ASX on Tuesday denying a report by AFR Weekend that said ASIC was investigating. Mr Mentis said the Financial Review report contained ‘‘false statements and assumptions’’. Harvey Norman chairman Gerry Harvey said the Financial Review report, together with earlier reports was part of a conspiracy by short sellers, together with Australian fund managers and ‘‘media allies’’. Mr Harvey has continued to trade in Harvey Norman stock, buying 2 million shares on Monday for more than $8 million, and another 1 million shares yesterday. But Harvey Norman was forced to make a humiliating backdown after direct action by ASIC.
Metcash Limited (MTS):
Metcash is aiming to boost sales at Home Timber & Hardware stores by introducing merchandising and range changes that have helped lift sales at Mitre 10 stores by around 17 per cent. Metcash is aiming to boost sales at Home Timber & Hardware stores by introducing merchandising and range changes that have helped lift sales at Mitre 10 stores by around 17 per cent. Sapphire Stores, a refurbishment program rolled out to 18 Mitre 10 stores over the past two years, has increased average transaction values by about 4 per cent and basket numbers by 13 per cent, underpinning same-store sales growth by around 17 per cent. Another new strategy, shopper-led ranging, has boosted sales in categories such as hand tools by 10 per cent, power tools by 9 per cent, cement by 14 per cent and fasteners by 6 per cent.
Santos Limited (STO):
Queensland’s Palaszczuk government has defended approving Santos’ $US18.5 billion ($24.2 billion) GLNG export project, blaming drilling restrictions in other states for the shortages and high prices facing local buyers. Natural Resources, State Development and Mines Minister Anthony Lynham said the government could not be held responsible for changes in the domestic gas market, including restrictions imposed by other states that have contributed to the shortfall in supply on the east coast. ‘‘Since the GLNG environmental impact statement was prepared in 2010, significant new changes have occurred nationally with moratoriums and restrictions on gas exploration and production in other states,’’ Dr Lynham said .He also said the EIS approval was based on environmental requirements, signalling the statements around economic issues weren’t fundamental to that decision.
Sigma Pharmaceutical Limited (SIP):
Sigma Pharmaceuticals chief executive Mark Hooper has tasked his former finance chief, Jeff Sells, with leading a new business development team to pursue deals and partnerships that help to diversify earnings. Mr Hooper said the pharmaceutical wholesaler’s move to bulk up with six new business development executives marked a move away from being ‘‘reactive’’ when it comes to mergers and acquisitions. ‘‘We felt like as a business we were at a point where we needed to be more proactive about business development,’’ he told The Australian Financial Review. ‘‘I feel going forward it’s going to be more effective.’’ Sigma has been on a path to reduce its reliance on distributing medicines sold under the Pharmaceutical Benefits Scheme to its retail chemist customers, such as Amcal and Guardian. Moves by the government to rein in how much it spends on PBS drugs has put pressure on wholesalers.
Wesfarmers Limited (WES):
In the retail equivalent of robbing Peter to pay Paul, Credit Suisse analyst Grant Saligari says Wesfarmers could start to ‘‘fix’’ the problems at its struggling discount department store Target by selling its thriving Kmart chain. While the idea sounds slightly odd at first, Saligari’s reasoning is quite clever. He argues Kmart is at, or close to, its peak valuation, given that it now accounts for 75 per cent of the department store profit pool in Australia and 17 per cent of the expanded department store, clothing and soft furnishings profit pool. This is quite a testament to what Wesfarmers’ department store czar Guy Russo has done with this business. But Saligari argues that, eventually, Kmart’s run will end – that’s the cyclical nature and history of retail. Sell Kmart now – Credit Suisse puts a ‘‘base’’ valuation of $6.6 billion and a ‘‘blue-sky’’ valuation of $7.4 billion on the business – and Wesfarmers gets the resources it needs to fix up Target.
Westpac Banking Corporation (WBC):
The head of Westpac wealth arm BT Financial Group says banks that abandon the wealth sector could miss a ‘‘whole decade of growth’’, and has outlined plans to grab a bigger share of the burgeoning $2.2 trillion superannuation sector. However, BTFG chief executive Brad Cooper said the group would drop outdated cross-selling tactics in its wealth push and instead focus on keeping customers within the digital ‘‘ecosystem’’ it has spent more than five years and $630 million to build. He conceded that the wealth sector – including superannuation, insurance, investment and financial advice – was in a ‘‘transitional’’ phase, with millions of dollars being spent to address regulatory changes on all fronts. While he predicted this phase had at least two years to run, and would further weigh on profit margins, he said it would be a mistake for banks to hit the eject button.
(Source: AIMS)
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