AGL Energy Ltd (AGL):
Energy giant AGL is to cut electricity prices across NSW, Queensland and South Australia from July 1. It follows Origin Energy price cuts earlier this week, which sent out a challenge to rivals. For residential customers the AGL (AGL) cuts will mean an average 0.3 per cent fall in NSW, 1.6 per cent drop in Queensland and 0.4 per cent cut in SA. Queensland small businesses will save one per cent off their bills, while the cut will be 0.1 per cent in NSW and 0.3 per cent in SA. “While these price cuts are slight, they’re part of a downward trend that is emerging as more investment in new sources of supply comes into the market,” AGL chief customer officer Melissa Reynolds said.
Atlas Iron Limited (AGO) AND Fortescue Metals Group Limited (FMG):
The fate of both Mineral Resources’ $280 million takeover bid for Atlas Iron and the embattled miner itself are hanging in the balance after Andrew Forrest’s Fortescue Metals made a shock move on to the Atlas register. Fortescue shapes as both a potential white knight and grim reaper for Atlas, which is losing millions of dollars each quarter amid ongoing weakness in lower-grade iron ore prices. Fortescue yesterday announced it had spent $55 million acquiring a 15 per cent stake in Atlas at 4c a share — a premium to the scrip-based takeover from MinRes that valued Atlas at around 3.3c a share — as well as a cash-settled swap equivalent to another 4.9 per cent interest. Fortescue Metals chief executive Elizabeth Gaines said the company did not intend to support the scheme of arrangement between Atlas and MinRes “on its current terms, but reserve the right to do so”. While the arrival of a cashed-up third party on the share register of a company already subject to a takeover would typically prompt a share price rally in anticipation of a bidding war, Atlas shares instead fell more than 12 per cent to 2.8c as investors bet that Fortescue’s blocking stake would instead spell the end for any transaction.
Bubs Australia Ltd (BUB):
Shares in baby food supplier Bubs Australia have shot up as much as 5 per cent after the company announced it has struck a deal with Chinese e-commerce giant Alibaba to launch a flagship store on its Tmall.com platform. Bubs (BUB) told the ASX it expects the global merchandise value its new Bubs online store to be at least five million yuan ($A1.03 million) for the first 12 months of trading. Bubs says infant nutrition cross-border sales on Alibaba increased 8.8 per cent last year. Bubs’ new deal comes days after the company said its revenue would “at least double” next financial year after striking a deal with New Times Asia to supply products to up to 20 online platforms in China. The company also announced today a “critical step” forward in achieving China Food and Drug Administration registration by entering into a manufacturing agreement with Australia Deloraine Dairy, which is one of 15 licenced facilities in Australia authorised to produce infant formula eligible for importation to China. “This strategic partnership is a crucial step in achieving CFDA registration, enabling us to advance our China expansion strategy for physical export of Bubs Chinese labelled infant formula products into Mother and Baby stores in China,” chairman Dennis Lin said. “The manufacturing agreement will also enhance visibility over our supply chain and product provenance for both our domestic and Chinese labelled products.” The agreement will see Bubs purchase a minimum of 500,000 tins in the first year post registration, with annual increments throughout the term, reaching 1.5m tins in the fifth year. For the first half, Bubs delivered a net loss of $3.9m, due to costs related to its NuLac Foods acquisition, while revenue surged 87 per cent to $3.3m. At about 11.15am (AEST), Bubs shares were trading up 5 per cent at 84 cents.
FlexiGroup Limited (FXL):
It has been some time since listed lender FlexiGroup has made headlines, but while the group’s board is lying low, some wonder whether another privatisation attempt is back on. Rumors have surfaced in the past fortnight that the consumer and commercial lender may be heading for a delisting in a move that would no doubt be prompted by its founding chairman Andrew Abercrombie, who controls just over 24 per cent of the stock. The timing may seem odd, given shares in FlexiGroup have just started to rally after a boardroom bust-up about two years ago. But Abercrombie has been rumored before to have considered such a move and market analysts and shareholders say it would come as no surprise if he was working something up behind the scenes with a private equity firm. In 2015, TPG Capital, Kohlberg Kravis Roberts and investment bank Macquarie were all said to have approached the company.
Gage Roads Brewing Co Limited (GRB):
West Australian craft brewer Gage Roads will acquire Broome brewery Matso’s for $16 million. The company (GRB) says it will undertake a $10m placement to institutional shareholders and a $2m share purchase plan to help fund the transaction. Gage Roads, which brews Little Dove, Sleeping Giant and Single Fin beers, said the purchase agreement comprises $13.25m plus deferred consideration of up to an additional $2.8m in cash or scrip, subject to the achievement of performance criteria over three years. It comes amid rising demand for craft beer, with an annual growth rate at 9.7 per cent, according to the latest IBISWorld data. Matso’s is known for its ginger and mango beer varieties and has the largest market share of the alcoholic ginger beer category.
Inghams Group Ltd (ING):
Analysts at Macquarie have cut their recommendation on poultry producer Inghams after chief executive Mick McMahon announced his resignation sooner than they had expected. “Management uncertainty is likely to persist until permanent CEO announcement,” they said. Analysts downgraded their recommendation on Inghams stock from “outperform to neutral”. Yesterday, Inghams (ING) announced that chief commercial offer Quinton Hildebrand would be appointed interim CEO when Mr McMahon steps down after the release of the company’s full-year results. The announcement triggered a 9.05 per cent plummet in the company’s share price. Macquarie analysts said the share price tumble reflected the strong regard in which Mr McMahon is held. Mr McMahon, who has been in the role for two-and-a-half years, oversaw the company’s transition from a privately owned business to an ASX-listed company. At about 1.30pm (AEST), Inghams shares were trading 0.67 per cent lower at $3.70.
OZ Minerals Limited (OZL):
OZ Minerals chief executive Andrew Cole says he’s not worried about the copper and gold miner becoming a takeover target and would instead see any approach from a suitor as a compliment. “If somebody thinks they can use our assets more effectively than we can, that’s fine. I would see it as a compliment, in fact, if someone wanted to buy our portfolio of assets,” Mr Cole said at a mining lunch in Melbourne ¬yesterday. “It would need to be for the right price, of course, because we’ve got plans to expand Prominent Hill and Carrapateena — plans that are not yet valued in the marketplace. So we would want to see value for those being realised if someone was going to buy them today … but I’m not worried about being purchased. And we won’t have a defence strategy — we’ll have a response strategy to make sure we get the right price for our shareholders.” Citibank analysts last week named OZ Minerals as one of their five most likely takeover targets in the industry, saying the miner “could have many suitors”. Other targets named by Citi were Whitehaven, Resolute, Perseus and Galaxy. Mr Cole’s comments come as OZ Minerals stares down the deadline for its takeover of ASX-listed copper junior Avanco Resources. The miner requires a 50.1 per cent stake in Brazil-focused Avanco for the bid to be successful, in a deal that would boost OZ Minerals’ copper production and expand its operations outside Australia. OZ Minerals is offering Avanco shareholders 8.5c in cash and 0.009 of its shares for each Avanco share.
Rio Tinto Limited (RIO):
Miner Rio Tinto has announced a joint venture with Minmetals to explore for world class mineral deposits in China. The joint venture, which remains subject to regulatory approvals, was signed off this week. In a statement released on Friday morning Rio Tinto said the immediate priority for the joint venture would be mineral targets in China identified under a technical collaboration agreement between the parties. But Rio also signalled that the scope of the joint venture would eventually be widened, saying that "the future collaboration of the parties will expand to exploration of global resources". Rio Tinto chief executive officer Jean-Sebastien Jacques welcomed the agreement. "The formalisation of the exploration joint venture is an important milestone in our growing partnership with China and Minmetals, which is an increasingly important player in the global mining industry. Our complementary strengths in exploration put us in the best possible position to find metals and minerals essential to human progress," he said. China Minmetals Corporation president Guo Wenqing said the partnership was very significant to his company. "Rio Tinto has rich prospecting experience and great discoveries worldwide, while Minmetals has solid technical expertise and extensive experience – the two strong partners will drive breakthroughs, pioneer progress, and promote the exchanges and collaboration of the global resource industry," he said. Rio Tinto said the registered capital of the joint venture would be RMB200M (US$31.3 million).
Tabcorp Holdings Limited (TAH):
Australian wagering giant Tabcorp is looking to dump its British Sun Bets joint venture with News UK after the business struggled to hit targets. Tabcorp updated the market today following reports from the UK overnight that it had told Sun Bets staff that it was preparing to exit the project. Tabcorp (TAH) said a previously announced strategic review of the UK venture had now concluded and it was in discussions with News UK about a proposal to quit its agreement to operate Sun Bets. “These discussions remain ongoing and an agreement has not been reached at this stage,” Tabcorp said in a statement to the Australian Securities Exchange said. “Tabcorp has commenced collective consultation with Sun Bets employees regarding the proposal, which is in line with UK employment law obligations.” Tabcorp could be forced to pay News UK a break fee worth up to £30m to get out of the partnership. Chairman Paula Dwyer had previously said Sun Bets was not delivering on what Tabcorp had planned for the venture and warned that if the performance did not improve to meet forecast expectations, serious consideration would be given to exercising Tabcorp’s contractual right to exit operations from December 31, 2019. News UK is a subsidiary of News Corp, which also owns The Australian.
Wesfarmers Ltd (WES):
Rob Scott will refashion the Wesfarmers empire into a conglomerate that can drive superior earnings growth from its existing portfolio of businesses rather than a quick hit from a large acquisition, and has called on his managers to inject some entrepreneurial spirit back into the 104-year-old group. In his maiden briefing to the investment community for Wesfarmers’ strategy day, after becoming chief executive last year, Mr Scott set out his agenda for the year ahead, seeking to defy critics who claim many of its businesses, from Bunnings to Kmart, Target and chemicals, have hit maturity and are ex-growth. Mr Scott said he believed there was plenty of growth still left in the divisions and that despite it selling coal, demerging Coles and walking away from its failed British hardware expansion, there was still “plenty of runway ahead”. “The most compelling opportunities that I see to generate surprise returns from capital allocation reside in our existing businesses,’’ Mr Scott told analysts and investors yesterday. Bunnings, which will assume the role of Wesfarmers’ engine room of profit after the Coles demerger, has lifted its addressable market to more than $52 billion as it seeks out new segments such as assisted living and home automation while predicting a slight pick-up in store rollouts to as many as 14 new stores a year. Kmart sees further expansion into home & living products, apparel and children’s general merchandise, while Officeworks is eyeing broader market opportunities, including products and services, which takes in a market worth as much as $55bn.
(Source: AIMS)
Energy giant AGL is to cut electricity prices across NSW, Queensland and South Australia from July 1. It follows Origin Energy price cuts earlier this week, which sent out a challenge to rivals. For residential customers the AGL (AGL) cuts will mean an average 0.3 per cent fall in NSW, 1.6 per cent drop in Queensland and 0.4 per cent cut in SA. Queensland small businesses will save one per cent off their bills, while the cut will be 0.1 per cent in NSW and 0.3 per cent in SA. “While these price cuts are slight, they’re part of a downward trend that is emerging as more investment in new sources of supply comes into the market,” AGL chief customer officer Melissa Reynolds said.
Atlas Iron Limited (AGO) AND Fortescue Metals Group Limited (FMG):
The fate of both Mineral Resources’ $280 million takeover bid for Atlas Iron and the embattled miner itself are hanging in the balance after Andrew Forrest’s Fortescue Metals made a shock move on to the Atlas register. Fortescue shapes as both a potential white knight and grim reaper for Atlas, which is losing millions of dollars each quarter amid ongoing weakness in lower-grade iron ore prices. Fortescue yesterday announced it had spent $55 million acquiring a 15 per cent stake in Atlas at 4c a share — a premium to the scrip-based takeover from MinRes that valued Atlas at around 3.3c a share — as well as a cash-settled swap equivalent to another 4.9 per cent interest. Fortescue Metals chief executive Elizabeth Gaines said the company did not intend to support the scheme of arrangement between Atlas and MinRes “on its current terms, but reserve the right to do so”. While the arrival of a cashed-up third party on the share register of a company already subject to a takeover would typically prompt a share price rally in anticipation of a bidding war, Atlas shares instead fell more than 12 per cent to 2.8c as investors bet that Fortescue’s blocking stake would instead spell the end for any transaction.
Bubs Australia Ltd (BUB):
Shares in baby food supplier Bubs Australia have shot up as much as 5 per cent after the company announced it has struck a deal with Chinese e-commerce giant Alibaba to launch a flagship store on its Tmall.com platform. Bubs (BUB) told the ASX it expects the global merchandise value its new Bubs online store to be at least five million yuan ($A1.03 million) for the first 12 months of trading. Bubs says infant nutrition cross-border sales on Alibaba increased 8.8 per cent last year. Bubs’ new deal comes days after the company said its revenue would “at least double” next financial year after striking a deal with New Times Asia to supply products to up to 20 online platforms in China. The company also announced today a “critical step” forward in achieving China Food and Drug Administration registration by entering into a manufacturing agreement with Australia Deloraine Dairy, which is one of 15 licenced facilities in Australia authorised to produce infant formula eligible for importation to China. “This strategic partnership is a crucial step in achieving CFDA registration, enabling us to advance our China expansion strategy for physical export of Bubs Chinese labelled infant formula products into Mother and Baby stores in China,” chairman Dennis Lin said. “The manufacturing agreement will also enhance visibility over our supply chain and product provenance for both our domestic and Chinese labelled products.” The agreement will see Bubs purchase a minimum of 500,000 tins in the first year post registration, with annual increments throughout the term, reaching 1.5m tins in the fifth year. For the first half, Bubs delivered a net loss of $3.9m, due to costs related to its NuLac Foods acquisition, while revenue surged 87 per cent to $3.3m. At about 11.15am (AEST), Bubs shares were trading up 5 per cent at 84 cents.
FlexiGroup Limited (FXL):
It has been some time since listed lender FlexiGroup has made headlines, but while the group’s board is lying low, some wonder whether another privatisation attempt is back on. Rumors have surfaced in the past fortnight that the consumer and commercial lender may be heading for a delisting in a move that would no doubt be prompted by its founding chairman Andrew Abercrombie, who controls just over 24 per cent of the stock. The timing may seem odd, given shares in FlexiGroup have just started to rally after a boardroom bust-up about two years ago. But Abercrombie has been rumored before to have considered such a move and market analysts and shareholders say it would come as no surprise if he was working something up behind the scenes with a private equity firm. In 2015, TPG Capital, Kohlberg Kravis Roberts and investment bank Macquarie were all said to have approached the company.
Gage Roads Brewing Co Limited (GRB):
West Australian craft brewer Gage Roads will acquire Broome brewery Matso’s for $16 million. The company (GRB) says it will undertake a $10m placement to institutional shareholders and a $2m share purchase plan to help fund the transaction. Gage Roads, which brews Little Dove, Sleeping Giant and Single Fin beers, said the purchase agreement comprises $13.25m plus deferred consideration of up to an additional $2.8m in cash or scrip, subject to the achievement of performance criteria over three years. It comes amid rising demand for craft beer, with an annual growth rate at 9.7 per cent, according to the latest IBISWorld data. Matso’s is known for its ginger and mango beer varieties and has the largest market share of the alcoholic ginger beer category.
Inghams Group Ltd (ING):
Analysts at Macquarie have cut their recommendation on poultry producer Inghams after chief executive Mick McMahon announced his resignation sooner than they had expected. “Management uncertainty is likely to persist until permanent CEO announcement,” they said. Analysts downgraded their recommendation on Inghams stock from “outperform to neutral”. Yesterday, Inghams (ING) announced that chief commercial offer Quinton Hildebrand would be appointed interim CEO when Mr McMahon steps down after the release of the company’s full-year results. The announcement triggered a 9.05 per cent plummet in the company’s share price. Macquarie analysts said the share price tumble reflected the strong regard in which Mr McMahon is held. Mr McMahon, who has been in the role for two-and-a-half years, oversaw the company’s transition from a privately owned business to an ASX-listed company. At about 1.30pm (AEST), Inghams shares were trading 0.67 per cent lower at $3.70.
OZ Minerals Limited (OZL):
OZ Minerals chief executive Andrew Cole says he’s not worried about the copper and gold miner becoming a takeover target and would instead see any approach from a suitor as a compliment. “If somebody thinks they can use our assets more effectively than we can, that’s fine. I would see it as a compliment, in fact, if someone wanted to buy our portfolio of assets,” Mr Cole said at a mining lunch in Melbourne ¬yesterday. “It would need to be for the right price, of course, because we’ve got plans to expand Prominent Hill and Carrapateena — plans that are not yet valued in the marketplace. So we would want to see value for those being realised if someone was going to buy them today … but I’m not worried about being purchased. And we won’t have a defence strategy — we’ll have a response strategy to make sure we get the right price for our shareholders.” Citibank analysts last week named OZ Minerals as one of their five most likely takeover targets in the industry, saying the miner “could have many suitors”. Other targets named by Citi were Whitehaven, Resolute, Perseus and Galaxy. Mr Cole’s comments come as OZ Minerals stares down the deadline for its takeover of ASX-listed copper junior Avanco Resources. The miner requires a 50.1 per cent stake in Brazil-focused Avanco for the bid to be successful, in a deal that would boost OZ Minerals’ copper production and expand its operations outside Australia. OZ Minerals is offering Avanco shareholders 8.5c in cash and 0.009 of its shares for each Avanco share.
Rio Tinto Limited (RIO):
Miner Rio Tinto has announced a joint venture with Minmetals to explore for world class mineral deposits in China. The joint venture, which remains subject to regulatory approvals, was signed off this week. In a statement released on Friday morning Rio Tinto said the immediate priority for the joint venture would be mineral targets in China identified under a technical collaboration agreement between the parties. But Rio also signalled that the scope of the joint venture would eventually be widened, saying that "the future collaboration of the parties will expand to exploration of global resources". Rio Tinto chief executive officer Jean-Sebastien Jacques welcomed the agreement. "The formalisation of the exploration joint venture is an important milestone in our growing partnership with China and Minmetals, which is an increasingly important player in the global mining industry. Our complementary strengths in exploration put us in the best possible position to find metals and minerals essential to human progress," he said. China Minmetals Corporation president Guo Wenqing said the partnership was very significant to his company. "Rio Tinto has rich prospecting experience and great discoveries worldwide, while Minmetals has solid technical expertise and extensive experience – the two strong partners will drive breakthroughs, pioneer progress, and promote the exchanges and collaboration of the global resource industry," he said. Rio Tinto said the registered capital of the joint venture would be RMB200M (US$31.3 million).
Tabcorp Holdings Limited (TAH):
Australian wagering giant Tabcorp is looking to dump its British Sun Bets joint venture with News UK after the business struggled to hit targets. Tabcorp updated the market today following reports from the UK overnight that it had told Sun Bets staff that it was preparing to exit the project. Tabcorp (TAH) said a previously announced strategic review of the UK venture had now concluded and it was in discussions with News UK about a proposal to quit its agreement to operate Sun Bets. “These discussions remain ongoing and an agreement has not been reached at this stage,” Tabcorp said in a statement to the Australian Securities Exchange said. “Tabcorp has commenced collective consultation with Sun Bets employees regarding the proposal, which is in line with UK employment law obligations.” Tabcorp could be forced to pay News UK a break fee worth up to £30m to get out of the partnership. Chairman Paula Dwyer had previously said Sun Bets was not delivering on what Tabcorp had planned for the venture and warned that if the performance did not improve to meet forecast expectations, serious consideration would be given to exercising Tabcorp’s contractual right to exit operations from December 31, 2019. News UK is a subsidiary of News Corp, which also owns The Australian.
Wesfarmers Ltd (WES):
Rob Scott will refashion the Wesfarmers empire into a conglomerate that can drive superior earnings growth from its existing portfolio of businesses rather than a quick hit from a large acquisition, and has called on his managers to inject some entrepreneurial spirit back into the 104-year-old group. In his maiden briefing to the investment community for Wesfarmers’ strategy day, after becoming chief executive last year, Mr Scott set out his agenda for the year ahead, seeking to defy critics who claim many of its businesses, from Bunnings to Kmart, Target and chemicals, have hit maturity and are ex-growth. Mr Scott said he believed there was plenty of growth still left in the divisions and that despite it selling coal, demerging Coles and walking away from its failed British hardware expansion, there was still “plenty of runway ahead”. “The most compelling opportunities that I see to generate surprise returns from capital allocation reside in our existing businesses,’’ Mr Scott told analysts and investors yesterday. Bunnings, which will assume the role of Wesfarmers’ engine room of profit after the Coles demerger, has lifted its addressable market to more than $52 billion as it seeks out new segments such as assisted living and home automation while predicting a slight pick-up in store rollouts to as many as 14 new stores a year. Kmart sees further expansion into home & living products, apparel and children’s general merchandise, while Officeworks is eyeing broader market opportunities, including products and services, which takes in a market worth as much as $55bn.
(Source: AIMS)
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