PRESS DIGEST-Australian Business News - Feb 1 07:24, Tuesday, 1 February 2005
(Compiled for Reuters by Media Monitors)
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
Global beverages company, Foster's Group , is cutting as many as 100 jobs from its head office structure following a review by management consultants, McKinsey & Co. McKinsey is reported to have been paid A$1.6 million for the first phase of the review, which began last August as part of Foster's drive to achieve cost savings of 20 percent. Most of the jobs being made redundant are in information technology, finance and taxation, human resources and corporate affairs. Page 14.
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Patrick Corp has asked the Australian Securities & Investments Commission (ASIC) to waive regulations that could force it to increase its A$1.1 billion takeover offer for budget airline, Virgin Blue . The request was prompted by the purchase of Virgin Blue shares at up to A$2.06 by Cricket SA, a company of Sir Richard Branson's Virgin Group, after Patrick announced its offer of A$1.90 a share last Friday. Patrick has told ASIC that although Virgin Group [VA.UL] is an associate company, they are not working together on the takeover. Page 14.
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Intense import competition in the lawnmower market forced GUD Holdings yesterday to deliver its second profit warning in as many months. GUD reported a 9.1 per cent decline in first-half trading profit before interest, tax and amortisation, and warned that second-half profit would be 'in line' with that of the previous year. GUD's share price fell A60 cents to A$8.03, the lowest for eight months. Managing director, Ian Campbell said he expected growth of about 10 per cent in 2006. Page 17.
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Shane Clinton, former head of institutional sales at the Commonwealth Bank of Australia , is suing the bank, claiming entitlement to A$142,000 as a cash bonus and shares worth approximately A$50,000 at the time he was sacked last year. Documents filed with the New South Wales Supreme Court say CBA's failure to deliver the performance bonuses was in breach of Mr Clinton's contract. Page 51.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Mining contractor, Henry Walker Eltin , entered voluntary administration after Swiss commodity trader, Glencore International, withdrew from a plan to invest A$100 million in the company. Analysts said it was unlikely HWE would find another party to underwrite it and, as a result, it would lose its A$1.7 billion coal contract in Indonesia. Glencore's Sydney office referred all inquiries about its decision to headquarters in Switzerland. Page 19.
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The price of shares in National Australia Bank rose to six-month highs yesterday when a feared profit downgrade did not materialise at the bank's annual meeting in Melbourne. Chief executive, John Stewart, told shareholders at the meeting that NAB would return to acceptable profits in the second half of 2006. The shares finished 44 cents higher at A$29.63, a level not seen since the bank's profit warning last July. Page 19.
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Analysts believe the full-year results of giant miner, Rio Tinto , to be released on Thursday, will show whether the company is likely to mount a counter offer against Xstrata's takeover bid for WMC Resources . They say that a bumper profit could be expected after the past year but a smaller than expected dividend or payout could indicate that Rio Tinto was gearing up for a bid for WMC. Page 21.
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Budget airline, Virgin Blue, said yesterday it had legal advice that Patrick Corp could be required to increase its bid for Virgin Blue shares by another 16 cents a share. It said this was the difference between Patrick's offer of A$1.90 last Friday and the price paid subsequently for 5.1 million shares by Virgin Group subsidiary, Cricket SA, which could be deemed an associate. Patrick said it would seek a waiver from any such ruling. Page 21.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Toll-road operator, Transurban Group , made an offer worth more than A$2 billion yesterday to buy out Hills Motorway Group , driving up the price of securities in both companies by more than 20 per cent. Transurban's stapled securities rose A$1.49 to A$8.25, while Hills securities rose A$2.54 to A$12.05. Transurban Managing Director, Kim Edwards, said: "We've opened the lines of communication (with Hills) and we hope this will be a friendly and sensible merger." Page 19.
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Former National Australia Bank (NAB) chief executive, Nobby Clark, attacked the current board yesterday for lack of leadership, poor corporate governance and disastrous investment decisions over the past four years. Mr Clark, who led the bank from 1985 to 1990, was one of 1320 shareholders who attended yesterday's annual general meeting in Melbourne. He was given rousing applause after declaring that 'the bank has under-invested in its people and infrastructure for years in pursuit of short-term profit.' Page 19.
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The Australian Securities & Investments Commission (ASIC) will determine whether Patrick Corp is obliged to raise its offer price for budget airline, Virgin Blue, as a result of hostile share purchases by Sir Richard Branson's Virgin Group, Patrick's partner in Virgin Blue. A Virgin Group company bought Virgin Blue shares at up to A$2.06 on Friday after Patrick announced its offer of A$1.90, and under the Corporations Act Patrick may have to pay the higher price to all comers. Page 21.
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Investment bank, Babcock & Brown , is sounding out investors on plans to move into the Japanese real estate market through a possible A$300 million listed vehicle. B&B entered the Japanese market in 1998 and has established a successful office there which would be the springboard for the new investment plans. It is proposed that the investment trust be listed in Australia, but open to local and overseas investors. Page 21.
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The latest Ernst & Young Transaction Trends survey found that 93 per cent of private companies did not expect any negative impact on merger and acquisition activity this year, even if interest rates rose one percentage point. Twenty per cent of respondents said that such a rise would create more buying opportunities for companies with financial muscle and strong balance sheets. Almost 94 per cent of the companies expected higher turnover in 2005. Page 22.
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THE AGE (www.theage.com.au)
Federal Communications Minister, Helen Coonan, said yesterday that in the second half of this year the Government might consider legislation enabling it to sell the rest of Telstra , without being committed to going ahead with the sale. The Government will have a Senate majority after July, guaranteeing the passage of such legislation. Senator Coonan said, however, that the Government still wanted to see that services in rural and remote areas were adequate before any sale. Page 10.
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Australand Property Group reported a 52.4 percent rise in net profit to A$145.1 million for the year to December 31, vindicating its 2003 decision to diversify into the property trust and investment sector by way of its wholesale vehicles. However, managing director, Brendan Crotty, said the decline in demand for investment apartments had convinced the group to halve its capital allocation to the sector to around A$300 million in the next few years. Page 10.
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Andrew Stuart, former co-chairman and managing director of Goldman Sachs in Australia, and more recently joint head of Goldman Sachs JB Were, will retire this month at the age of 37. Stuart will leave less than two years after New York-based Goldman Sachs merged with Melbourne broker JB Were, which was then Australia's oldest partnership. Stuart will remain an adviser to Goldman Sachs JB Were, which will now be headed by Craig Drummond as chief operating officer. Page 10.
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Energy Resources of Australia , 68.4 per cent owned by Rio Tinto, yesterday reported a profit of A$38.61 million for the year to December 31, up from A$19.87 million in the previous year. The result was boosted by booming uranium prices and an A$11 million gain from a High Court victory over the Australian Taxation Office relating to the valuation of ERA trading stock in 1993. Page 11. --
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