Another industrial stock to feel the heat yesterday from an earnings downgrade was FKP Property Group.
The market didn’t like the news and the shares plunged, losing more than 19% to close at $3.85, compared to the 4%-plus fall in the wider market.
It issued a statement suggesting its modest 10% rise in earnings this year had disappeared, despite forecasting such an increase as recently as August 28.
That forecast was of course subject to the usual riders of there being "no further deterioration in market conditions, and no undue delays in regulatory approvals".
"With the unprecedented turmoil in global capital and credit markets in the past two weeks, it is reasonable to assume there will be some effect on the property markets, and this makes it hard to read the year ahead with certainty.
"However, FKP believes it prudent to advise that, at this time, an operating profit after tax in line with last year’s result ($150m) is a more realistic outlook, still subject to there being no undue delays in regulatory approvals.
"This takes into account expectations that the institutional markets will find liquidity harder to obtain, making the trading of quality commercial property even more difficult than it has been.
"At this time, FKP does not see any significant impact on its Retirement, Land or Funds Management businesses, but will continue to watch trading conditions carefully and keep security holders informed."
And to think lend Lease proposed a merger at $5 a share earlier in the year, just before it was forced to reveal lower earnings!
And the BHP Billiton bid for Rio Tinto is back on track with EU antitrust regulators saying they had restarted an investigation into the bid after a month’s delay.
The regulators said they will now rule on the bid by January 15, 2009.
The European Commission halted its in-depth investigation into the deal on September 2, saying the companies had not given in the information it needed to assess how the bid would affect competition and customers.
The commission started looking more intensely at the takeover in July, saying it was worried about higher prices and reduced choice for European customers for metals and minerals.
Billiton’s unsolicited takeover of Rio Tinto would merge the world’s second and third ranked iron miners and exporters and allow them to overtake Vale (or CVRD), the world’s largest iron ore miner.
Rio Tinto opposes the bid, saying BHP Billiton’s offer undervalues it. BHP Billiton made a hostile, all-equity bid in February, then valued at $US147.4 billion ($A178.07 billion), for Rio Tinto.
At 3.4 BHP shares for every Rio Tinto share, the value of the deal fluctuates with share prices.
BHP shares fell in yesterday’s down market, closing at $31, down $3.42, or more than 9%. Rio shares closed at $84.50, down a huge $1, or 11.5%.
The shares in both companies fell sharply in late trading.
The BHP bid valued Rio at $105.40, so the offer is heavily underwater by around 20%. Investors reckon it won’t happen in the current unsettled market and that BHP will withdraw.
If it does pursue the bid, investors in it will be upset as they reckon the company might be able to do a deal at a lower price if the global recession worsens and China slows further.
And ABC learning Centres had a busy day yesterday for a company whose shares remain suspended because it can’t get its 2008 results sorted out.
It revealed that the founder, Eddie Groves and his wife, Le Neve Groves were departing. It also revealed a $70 million acquisition and further postponed the release of those 2008 results into October, instead of the expected release by the end of last month.
The company said in its third statement yesterday that while it had previously advised that 2008FY results would be released by the end of September in accordance with the Corporations Act, ABC now anticipates that the results will now be released during October.
"The outstanding issues are consistent with previous announcements. The company is working to conclude the final outstanding matters as soon as possible which will enable the release of the full audited statutory accounts with the Appendix 4E.
"Upon receipt of the final report from our auditors, and the release of the 2008 results, ABC expects to resume normal trading on the ASX. This further delay does not impact the on-going operation of more than 1200 ABC centres throughout Australia and New Zealand."
The second statement was the most curious. At a time when things are obviously tight, ABC has gone ahead and bought the 123 Careers childcare recruitment business in Australia and New Zealand for $70 million.
Several years ago, ABC received $46 million for selling that exclusive deal, but now it’s paying $70 million. According to media reports this deal unwinds the earlier $46 million deal. The owner of 123 is said to be a Mr Don Jones. (Source)
Payment will be from existing cash with a proposed settlement date of 10 October. "$40 million has been paid by way of deposit with a further $25 million being paid on completion. The remaining $5 million will be paid by five monthly payments of $1 million each," ABC said in the statement.
What makes it more amazing is the fact that ABC sold the exclusive rig
