China Inc has its sights set on Australia’s resources sector once again, with state-owned metals company Minmetals launching a $2.6 billion takeover offer for OZ Minerals, just days after Chinalco said it will invest $US19.5 billion in mining giant Rio Tinto.
OZ Minerals shares have jumped over 26% to 69 cents after the announcement of the takeover, which the company says is the best deal it can do in difficult circumstances.
OZ Minerals chief executive Andrew Michelmore said that without the offer, the company may have been heading into receivership or voluntary administration.
“The transaction is unanimously recommended by OZ Minerals’ board of directors, subject to no superior competing proposal and confirmation by an independent expert that the transaction is in the best interest of OZ Minerals shareholders,” the company said in a statement.
More rate cuts
Meanwhile, the Reserve Bank of Australia says more interest rates are on the way as it attempts to save Australia from a recession.
“Members noted that market expectations were for an easing in the official cash rate of 100 basis points at (the February) meeting, with the trough in the cash rate now expected to be around 2% later in the year,” the bank said in the minutes of this month’s meeting.
The RBA also said that this month’s 100-basis point cut to the official cash rate – bringing it to 3.25% – took into account the Government’s $42 billion stimulus package
“Members noted that the package of fiscal measures to be announced by the Government later that day would result in a significant boost to demand during 2009.
“Even so, given the contractionary forces coming from abroad and the clear evidence that inflation was on a downward trend again, members judged that another substantial easing of monetary policy at this time was appropriate. They supported the recommendation for a cut of 100 basis points.”
Shares flat
The Australian sharemarket has opened slightly higher today with no guidance from Wall Street, which is closed for the President’s Day public holiday.
The benchmark S&P/ASX200 index was up 0.6 points or 0.02% to 3517.5 at 12.00 AESDT. The dollar has also slipped back to US64 cents.
Commonwealth Bank shares have jumped 0.7% to $29.83, while ANZ shares have lost 1% to $12.85. Westpac have gained 0.4% to $17, and Wesfarmer shares have lost 0.2% to $16.20.
Foster’s Group announced it will separate its $4 billion wine business from the beer, spirits and cider units in a major restructure of the company. Around 300 jobs will go as a result.
The group has recorded a first half net profit of $411.3 million – up 3.2% on the corresponding half.
Chairman David Crawford said the review of wine operations shows the multi-beverage business model is ineffective.
“The board has determined that shareholder value will be maximised by retaining the wine business,” Crawford said.
“The current difficult conditions in debt and equity markets mean this is not the appropriate time to sell or demerge Foster’s wine business.”
Brendan Nelson quits
Former Liberal Party leader Brendan Nelson says he will quit politics by the next federal election, but told Sky News about the plans before informing party leader Malcolm Turnbull.
But Nelson says he supports Turnbull’s leadership, saying “I think he’s doing an extremely good job… Malcolm Turnbull will need all of the support he can get.”
“It has been an enormous honour to serve Australia through what is now 13 years in the Parliament.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
