Perpetual says private equity bid is too low, Shares move higher: Economy Roundup

Perpetual has said the $1.75 billion proposal from private equity firm Kohlberg Kravis Roberts is undervalued, with the company hoping to hold discussions regarding the bid.

“These discussions should allow the board to establish if an offer that would deliver acceptable value to Perpetual’s shareholders is likely to be formulated,” the company said in a statement to ASX.

The comments come after KKR made a bid for Perpetual last week in a non-binding offer. In its response, Perpetual said that the “proposed price in the range of $38-40 per share does not reflect Perpetual’s value”.

“Nevertheless, the board believes that shareholders’ interests are best served by conducting exploratory discussions with KKR in order to assess better the Indicative Proposal which, at this point, remains incomplete,” Perpetual said.

“These discussions should allow the Board to establish (whether) an offer that would deliver acceptable value to Perpetual’s shareholders is likely to be formulated.”

Meanwhile, the Australian Competition and Consumer Commission has said the rumoured deal between the Singapore Exchange and the ASX does not propose any concerns.

A source has told Reuters that SGX could offer as much as $US8.3 billion for ASX.

“I think it’s a matter between the Singapore Exchange and the Australian Exchange, and I can’t see that raising competition issues for us,” ACCC chief Graeme Samuel said on radio this morning.

“We’re much more focused on the potential for new competitors to enter into the Australian market in terms of stock exchange dealings.”

Meanwhile, construction group Leighton Holdings has approached the Takeovers Panel in order to stop a bid from Spanish group ACS for Leighton’s parent group Hochtief, in a statement to the ASX.

The company says it is concerned that ACS is trying to take control of the company through a cheap offer, thereby avoiding paying full price.

Shares higher despite mixed leads

The Australian share market has opened nearly 1% higher this morning despite a mixed lead from overseas markets late last week.

The benchmark S&P/ASX200 index was up 52 points or 1.14% to 4701.2 at 12.15 AEST, while the Australian dollar was also up to US98.6c.

AMP shares gained 0.9% to $5.51, while Commonwealth Bank shares rose 0.6% to $50.80. NAB rose 1.6% to $24.88 as Westpac gained 1.3% to $22.73.

Leighton Holdings subsidiary Leighton Offshore has signed a $733 million contract with Iraqi group South Oil Company to install pipelines in the Gulf, the company has said.

“This project is a fantastic opportunity for Leighton, and coming closely behind the recent SPM project win in Tanzania, provides strong recognition of Leighton’s strength and experience in SPM installations,” Leighton Holdings chief operating officer David Savage said.

“In recent years, Leighton has built an enviable track record on SPM’s and large diameter pipelines, having worked on some 13 SPM’s around the Asia region.”

Tabcorp has recorded a 4.1% increase in first quarter revenue, compared to the previous corresponding period, the company has announced. The company said its casino division increased by 7.1%, with wagering also up by 4.1%.

“Our wagering division is operating in a fast-changing industry with uncertain regulatory conditions,” Tabcorp managing director and chief executive officer Elmer Funke Kupper said.

Santos has now signed an agreement to supply gas to the Gladstone Liquefied Natural Gas plant in Queensland.

“The oil-linked pricing will underwrite future investment in the Cooper Basin and unlock the potential of the Basin’s remaining substantial resources,” chief executive David Knox said in a statement.

“For some time, Santos and our partners in the Cooper Basin have highlighted the enormous potential of infill drilling and unconventional gas if a sufficiently attractive price could be established…This deal achieves that.”

ANZ warns on Australian dollar

The chief executive of ANZ’s Australian business, Phil Chronican, has said the economy faces risks as the Australian dollar heads towards parity, telling the Australian Financial Review that exporters will continue to suffer.

“A sustained period of parity or above is going to make it harder and harder for people, and you’ll see the non-resources parts of the economy struggle.

“From a risk management viewpoint we have to look at those who’ll be vulnerable, and they’ll be exporters, tourism and anyone who’s in a fine-margin business,” he said.

Overseas, the G20 have said they will avoid competitive currency devaluations, but have not moved to stop trade imbalances. Finance ministers met to discuss how the top nations could work together in a world of competitive currency battles, but did not back a US-led plan to limit account imbalances.

In a joint statement, the G20 said advanced nations, including the United States, should be vigilant against volatility and disorderly moves in exchange rates.

However, US treasury secretary Timothy Geithner is frustrated that China will not let its currency rise to a point that would reduce the trade surplus with the US.

“If the world is going to be able to grow at a strong, sustainable pace in the future… then we need to work to achieve more balance in the pattern of global growth as we recover from the crisis,” he said.