Sigma sells drugs division to Aspen for $900 million, Shares slip: Economy Roundup

Sigma Pharmaceuticals has finally agreed to sell the drugs division of its business to South African Aspen Pharmacare for $900 million, with the company’s shares jumping 8% to 54c this morning.

Aspen has offered 55c per share for the company, which has struggled over the past year due to a large write down and pressure to sell its assets. The company says it will hold on to the wholesale and retail arms of the business.

“The anticipated proceeds from the transaction exceed Sigma’s net debt, including securitised debt,” Sigma said in a statement.

There are a number of conditions, including a two-year non-compete clause between Sigma and the new business, but chairman Brian Jamieson said this was the best outcome.

“The board has concluded that Aspen’s proposal to acquire the pharmaceuticals division is the best alternative for Sigma shareholders,” Jamieson said.

“Sigma will emerge after the sale in a financially powerful position for future growth and business improvement under the company’s new management team led by Mark Hooper.”

The group’s long-time chief executive Elmo de Alwis is about to step down, while its chairman and chief financial officer also quit.

Meanwhile, Leighton Holdings has recorded a 39% increase in full-year profit and says it remains positive about the 2011 financial year.

The firm posted net profit of $612 million for the year ending June 30, up from $440 million during the 2009 financial year. Revenue rose by 2% to $18.6 billion.

“We remain positive for the 2011 financial year and expect to report an increased revenue and operating profit,” Leighton chief executive Wal King said in a statement.

Newcrest Mining recorded a massive 124% increase in full-year statutory net profit of $556.9 million, with EBITDA also up 38% to $1.43 billion, the company said this morning.

Underlying profit increased to $763.7 million from 483.1 million during 2009, with sales revenue up by 11% due to higher gold sales volumes and prices.

“A strong second half performance helped deliver a record profit and operating cashflow for the year ended June 30, 2010, driven by increased gold sales, higher realised metal prices and lower cost of sales,” Newcrest said in a statement.

Sharemarket falls after weak US performance

The Australian sharemarket has opened lower this morning following negative sentiment in the United States and Europe late last week.

The benchmark S&P/ASX200 index was down 0.87% or 38.8 points to 4420.7 at 11.55 AEST, while the Australian dollar has fallen to a three week low of US88c.
AMP shares lost 0.8% to $5.29, while Commonwealth Bank shares fell 3.6% to $49.63. Westpac lost 1.4% to $22.21 as NAB fell 1.8% to $23.44.

Meanwhile, Lend Lease Group has posted a statutory net profit after tax of $345.6 million, following a $653.6 million loss during 2009. Operating profit after tax was $323.6 million, from $307.5 million, with revenue down 28.5% to $10.57 billion.

“Construction markets offshore remain difficult and construction volumes in Australia are likely to decline as government stimulus spending softens,” Lend Lease chief executive and managing director Steve McCann said in a statement.

“However, it is very clear that the group is well placed for growth and we expect our strong project pipeline to deliver over the medium-term.”

Bluescope Steel has recorded a net profit of $126 million for the year ending June 30, but says it expects soft demand during the first quarter of the 2011 financial year.

“Overall, we are planning for a significantly improved market conditions over the medium- to long-term, despite the short-term concerns,” Bluescope chief executive Paul O’Malley said in a statement.

“We are seeing a modest real-time increase in export steel prices in our region for Q2 delivery.”

Woodside makes new gas discovery in WA

Woodside Petroleum has said it has made a gas discovery in Western Australia, increasing hopes it will make an investment decision to expand its Pluto project.

“Initial analysis of drilling fluids suggests the gas could be comparatively liquids rich, but this requires confirmation by further analysis,” Woodside said, although it confirmed extra testing and analysis will be needed.

Virgin Blue has announced the first stage of the airline’s network revenue, including moves to pull out of the NZ domestic market and increase its long-haul flights to the US, South Africa and Thailand.

“We are adding capacity to routes with strong revenue potential and accordingly, removing capacity from services which are underperforming,” chief executive John Borghetti said in a statement.

“These changes will maximise yields, increase aircraft utilisation and also provide a more attractive schedule for the business market, including better integration of our international and domestic schedules.”

But investors overseas have been disappointed with new Japanese economic data, showing the country’s growth slowed during the second quarter with GDP at 0.1%. Economists say the Government will move to strengthen the Yen.

“I think the Bank of Japan and the government need to take decisive action against currency moves. Solo currency intervention is possible if the yen approaches ¥80 to the US dollar,” chief economist at Norinchukin Research Institute, Takeshi Minam, told Reuters.

“If that is accompanied by monetary easing by the Bank of Japan, it may have a certain effect.”