15 Dec 2017
Takeover activity spikes as Santa comes early for some
Markets
- Equity markets finished mixed this week.
- In a surprise deal, Disney is buying a large part of the Murdoch family’s 21st Century Fox in a $73bn deal. The deal includes film and TV studios, cable and international TV businesses, which will enable Disney to better control how they deliver their content to consumers.
- In local stock news, we saw a rise in takeover activity this week with shareholders rubber stamping the Tabcorp takeover of Tatts, Westfield Corporation (global assets) agreed to a takeover by a European property giant, Cleanaway lobbing an offer at Tox Free, and Mineral Resources looking to trump a Chinese bid for AWE.
- Transurban is raising nearly $2bn of fresh equity to part-fund the cost of the West Gate Tunnel project in Melbourne. Project starts in January. Transurban is funding $4bn of the $6.7n cost, which will see them get an extra 10 years of toll concessions on the road.
- ANZ Bank has agreed to sell its life insurance business to Zurich for $2.85bn. The deal follows the bank’s recent sale of most of their wealth management business to IOOF Holdings. Both sales will free up capital for the bank which may be returned to shareholders.
- CBA has revealed that AUSTRAC intends to make further allegationsrelated to the breaches of money laundering and counter-terrorism laws. The move comes after CBA indicated they would fight AUSTRAC’s initial allegations…..not the best idea.
- The competition regulator has opposed the acquisition by BP of Woolworths’ retail service station sites on the basis of reduced competition. The decision is a blow for Woolworths’ who were looking to put the proceeds to work in strengthening their balance sheet and reinvesting in their core business.
Economics
- The Australian unemployment rate came in at 5.4% in November, as expected by the market. Over 61,000 jobs were added in November, the majority of which were full time.
- The US central bank raised interest rates by 0.25% at their December meeting. The rise was fully expected by the market. The Bank made no changes to its forward forecast of rate rises, reiterating their projection for 3 rises in 2018 and 3 more in 2019, before a long-run rate of around 2.75-3% is reached.
- The US printed another strong payroll number with 228,000 new jobs in November with broad gains in hiring. The unemployment rate remained steady at 4.1%, with average hourly earnings rising but coming in below expectations.
- Chinese exports surged over 12% in November from a year earlier, more than double the forecast, while imports climbed almost 18%. Global economic growth is recovering nicely.
Politics
- Britain and the European Union struck a divorce deal paving the way for talks on future trade ties, easing immediate pressure on PM May and boosting hopes of an orderly Brexit. Unlikely, but we can all hope.
