Investment Matters

What matters this week: takeovers galore

It was a week of takeover news.  Accor (French hotel group listed on the CAC, with brands from budget to luxury - Ibis to Sofitel) made a bid for Mantra.  It started as speculation on Monday, and boom, by Thursday the Board had accepted the offer and recommended shareholders vote in favour.  The $1.3 billion deal, at $3.96 cash per share, is at a healthy premium (22.6%) to the close last Friday.

The embattled dairy company Murray Goulburn, which basically put itself up for sale, is getting closer to finalising who will win the day.  Many bidders purportedly put up their hands, but the media (The Australian) is reporting it is down to two - a Canadian dairy giant Saputo and Bega Cheese.

The global engineering firm WorleyParsons will expand into the North Sea (UK), with the acquisition of Amec Foster Wheeler’s British upstream oil and gas business for $303m.  The company is doing a capital raising to fund the deal.

Not all companies are open to suitors, with almond producer Select Harvests rejecting a $5.85 per share cash offer from Abu Dhabi based sovereign fund Mubadala Investment Company.  It said the offer was too low.  The offer was also conditional and tried to tie the company's hands (no dividends, exclusive due diligence, etc).

Additionally, Monash IVF is purportedly being chased by a Chinese bidder.  No announcement from the company.  So could be something in it (but early days).  But maybe not.

In other news this week,  Bellamy's (organic baby food manufacturer) upgraded FY-18 guidance, and not by a little bit.   Results early in the year led the company to increase revenue expectations to 15-20% growth (was 5-10%), and an increased profit margin.  This translated into earnings ~17% higher than the consensus estimate for the year.  The company, which has been through many troubled times this year,  had a share price increase as a result of this week's announcement.  And also not just by a bit: up 28% over this week. 

Bellamy's also got $66,000 fine from ASIC in relation to continuous disclosure obligations contraventions from 18-Oct to 2-Dec-16; without admitting any liability.  Yep, why would the company not pay a slap-on-the-wrist fine?  Shareholders might not be so forgiving though, with a class action underway.

Woodside's Wheatstone (WA) LNG plant started production.  It comes at a time when any LNG producers with uncontracted volumes are high-fiving.  The spot price for LNG has spiked, on the back of the government-initiated changes to the Australian domestic gas market changes.  Any spare Aussie gas is likely to be utilised domestically.

Whitehaven Coal increased coal sales 23% in the Sep-17 quarter (versus Sep-16).  The government will be pleased (with the associated tax intake...).

And finally, Domino's Pizza is targeting the performance of franchisees, after numerous issues (especially underpayment of workers).  The company has been at the forefront (globally not just in Australia) of customer-facing technology.  Franchisees will now be the subject of new technology aimed at improving standards and productivity.  Other initiatives were also announced, including hot lockers, drones for delivery and the use of GPS in ordering online.