Intoll receives $3.5 billion bid, US retail sales drop 0.5% in June: Economy Roundup

Intoll Group shares have surged 31% this morning after the Canada Pension Investment Board announced a $3.5 billion takeover offer for the company.

This morning Intoll’s shares jumped 30.5% to $1.46 at 11.00 AEST, which is still below the CPIB’s offer of $1.535 per share – coming in at $3.5 billion. In a statement, Intoll said the offer incorporates cash or an unlisted scrip alternative – but has said security holders should take no action.

“The directors of Intoll have not formed a view as to the adequacy of the Proposal and accordingly recommend that Intoll security holders take no action at this time,” Intoll chairman Paul McClintock said in a statement.

The companies have entered a confidentiality agreement, in which CPPIB has been granted access to information to carry out due diligence over a period of three weeks.

“During this period, the boards will engage with CPPIB in order to determine whether an acceptable transaction can be agreed and put to security holders,” McClintock said.

Meanwhile, the Australian Bureau of Statistics has revealed new vehicle sales dropped in June by a seasonally adjusted 1.2%.

National sales came in at 87,877 vehicles, although this is up by 8.2% from the same period 12 months ago.

Leighton Holdings has secured a $700 million contract adjustment in order to increase production at the southern Mongolia Ukhaa Khudag coal mine.

Energy Resources LLC has requested Leighton Asia expand production at the mine to 15 million tonnes a year by January 2013, according to a company statement. Managing director Hamish Tyrwhitt said in a statement the deal is a “testament to Leighton’s strong performance since 2009”.

“It further demonstrates our ability to deliver world class mining solutions to our clients, both through the quality of our people and the safety and reliability of our operations. Our strong working relationship with Energy Resources and the local communities in the South Gobi region will ensure the continued success of this project.”

Shares open lower after weak Wall Street lead

The Australian sharemarket has opened lower this morning after weak Wall Street leads overnight, caused by disappointing retail sales figures.

The benchmark S&P/ASX200 index was down 1 point or 0.04% to 4460.5 at 12.20 AEST, while the Australian dollar was up to US88c.

Commonwealth Bank shares dropped 0.4% to $51.29, while NAB fell 1% to $24.56. Westpac lost 0.9% to $22.77 as AMP gained 0.2% to $5.45.

Meanwhile, the Westpac-Melbourne Institute index of unemployment expectations dropped in July following two consecutive rises. The index fell 6.9% in July to 111.99 following a 6.6% rise.

“We assess this index via a smoothed trend deviation from its full history average as a guide for annual employment growth seven months ahead. With the ongoing uptrend in the index, that deviation measure rose for the fourth consecutive month, to –8.6% in July from –11.0% in June, up from a trough of –18.1% in March.”

Meanwhile, inflation expectations actually eased for the third consecutive month from 3.4% to 3.3%, although this figure is still above the RBA’s target band of 2-3%.

“Inflation expectations of managers and professionals eased to 3.4% in July from 3.9% in June. They have trended down from 3.71% in January to 3.51% in July, but like consumers’ expectations, remain above their long run average of 3.10%.”

As reported by the Australian Financial Review, Prime Minister Julia Gillard is set to announce an interim carbon price.

The publication reported the cabinet has conceded that it cannot get a short-term agreement on an emissions trading scheme. It is expected an announcement regarding an interim carbon price will not be made until after the election – which is still yet to be announced.

Fed warns of sluggish US recovery

Stock markets have finished flat in the US after the Federal Reserve suggested new measures may be required in order to help the country’s sluggish economy and beat a long-term high unemployment rate.

“As a result of the change in financial conditions, most participants revised down slightly their outlook for economic growth,” the Fed’s minutes of its latest meeting state.

“The committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably.”

These comments weren’t helped by new data from the Commerce Department, which revealed June retail sales fell by 0.5% – well over the 0.2% forecast by economists.