Adbri shareholders have approved a $2.1bn takeover of the company by Irish cement and concrete giant CRH.
Almost 98 per cent of votes cast by independent shareholders at a meeting on Wednesday were in favour of the CRH acquisition of the 57 per cent of Adbri shares not controlled by Victoria’s Barro family.
Adbri’s lead independent director and chair of its independent board committee, Samantha Hogg, said the approval represented a “strong endorsement from shareholders on the compelling value realised through the transaction and for the next chapter of Adbri”.
“Once the scheme is implemented, Adbri will be part of a global building materials business,” she said.
“A combined CRH and Adbri will bring growth opportunities, new talent and innovation to continue to strengthen Adbri’s product offering in Australia.”
CRH made its $3.20-a-share offer for Adbri in December, valuing the company at close to $2.1bn.
As part of the deal, which is subject to court approval on Friday, Barro Group will retain its 43 per cent stake in the company.
It will result in Adbri leaving the ASX after 62 years of trade on the exchange.
CRH, which is listed in New York and London, operates in 29 countries and has 75,800 staff worldwide.
ASX 200 falls for second day before US CPI data, interest rate decision
ASX 200 down for a second day before US inflation data and the Fed's interest rate decision. Upgrade boosts Woodside. Nickel Industries dives. SkyCity Adelaide licence probe resumes. China inflation data mixed.
That's all for Welcome to the Trading Day blog for Wednesday, June 12. The ASX 200 index closed down 0.5 per cent to 7715.5 points, with all sectors lower except energy. US stocks were mixed before CPI data and the Fed meeting.
The Aussie dollar is trading around US66.15c.
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Adbri takeover gets green light
ASX 200 ends down 0.5pc before US events
Australia's stocks fall for a second day on interest rate jitters and commodity price weakness before US CPI data and the outcome of the FOMC meeting.
The FOMC policy statement is due at 0400am AEST Thursday and its revised economic projections and chair Powell's statement are due at 0430am.
The S&P/ASX 200 index closed down 0.5 per cent at 7715.5 points after hitting a six-day low of 7699.2, which was right on its 100-day moving average.
"Last week's 2 per cent rally after the Canadian rate cutwas not justified and in the first two days of this week the market has sobered up," said Bell Potters' Richard Coppleson. "Also the first of the big 4 banks caused a lot of worries yesterday after ANZ said no rate cut in 2024 and the first RBA cut will now be in Feb 2025 – it is just a matter of when all the other big banks follow."
"I still firmly believe that there is no way the RBA will be cutting rates in 2024."
Falls were broad-based with all sectors except energy down.
Underperforming sectors included utilities, tech, health care, industrials, discretionary and materials, with Origin down 0.9 per cent, WiseTech down 2.7 per cent, CSL down 1.4 per cent, Transurban off 1 per cent, Wesfarmers down 1.3 per cent and Fortescue down 1.3 per cent. CBA fell 0.7 per cent.
Nickel Industries dived 7.6 per cent on a Reuters report that indonesia may scrap its permits to use rotary kiln electric furnace smelters.
Woodside rose 2.6 per cent as Macquarie upgraded to Outperform.
Australia has labour force data at 1130am AEST on Thursday.
China property worry drags on iron ore
Sharply weaker iron ore prices in recent days have pushed Australian iron ore miners down to multi-week lows contributing to a selloff in the local share market despite fresh record highs on Wall Street.
BHP, Rio Tinto and Fortescue are down 0.8-1.5 per cent with Fortescue and Rio Tinto weakest, while BHP has roughly halved its early fall.
Singapore iron ore futures are trading around $US105 a tonne after hitting a five-week low of $US103.35 overnight, having fallen as much as 16 per cent since hitting a 2.5-month high of $US123 on May 30th. Spot iron ore fell over 4 per cent to about $US104.00 on Monday, its lowest level since April 5th.
"The fall in iron ore prices likely reflects growing worries that China’s property sector will continue to remain a headwind despite attempts by policymakers to rescue the property sector," says CBA commodity strategist Vivek Dhar.
He says that for iron ore to trade sustainably above $US110 a tonne, the market would probably need more announcements on China stimulus.
He thinks additional infrastructure stimulus announcements are likely towards the end of the year if China is on track to "meaningfully miss" its 5 per cent economic growth target in 2024.
"Conversely, we think iron ore prices will struggle to sustainably remain below $US100 a tonnet given seaborne supply will likely exit the market below these levels," Dhar says.
"We believe seaborne supply needs to remain stable to support our view that China’s steel demand and output will remain fairly flat this year."
Nickel Industries drops on Indonesia news
Nickel Industries shares have dived on a Reuters report saying Indonesia is considering terminating permits for some nickel pig iron production.
NIC shares are down 7.3 per cent at $0.8525 after hitting a two-month low of $0.84 this morning.
Morgan Stanley notes that Indonesia has announced a comprehensive evaluation of permits for Rotary Kiln Electric Furnace smelters, which produce ferronickel and NPI used in stainless steel production. It aims to conserve nickel ore reserves for higher-value nickel chemicals such as mixed hydroxide product and nickel sulphate used in EVs, says Morgan Stanley analyst Amy Gower.
She notes that Indonesia's NPI production accounted for over 90 of the country's nickel output in 2023 – with MHP accounting for 6 per cent – and 35 per cent of global nickel supply.
Since the ban on nickel ore exports in 2020, Indonesia's overall nickel output is up 98 per cent, with NPI output nearly doubling, driven largely by Chinese investment, and much of this is finding its way to China, with Indonesia accounting for 94 per cent of China's NPI imports in 2023, she adds.
Nickel Industries holds an 80 per cent interest in the Hengjaya Nickel, Ranger Nickel and Oracle Nickel rotary kiln electric furnace projects located within the Indonesia Morowali Industrial Park and the Angel Nickel RKEF project located at the Indonesia Weda Bay Industrial Park.
Morgan Stanley says these plants make up $0.70 a share of its base case valuation of $0.95 a share and that if the if NPI permits are terminated it could significantly affect valuation.
Woodside up 2.3pc on broker upgrade
Woodside Energy shares jump 2.3 per cent to a five-day high of $27.73.
The energy giant is having its best day in two months after Macquarie Equities upgraded to Outperform based on its assessment that Woodside shares now offer good value relative to its earnings outlook.
Macquarie analyst Mark Wiseman said Woodside was trading on an estimated dividend yield of 6 per cent with 18 per cent upside to his price target, as the market was "excessively pricing commodity, project and climate risks."
Petrol prices hit a record in April
Petrol prices rose to a record high in April after a drop in the March quarter, according to the consumer watchdog.
The Australian Competition and Consumer Commission said average retail petrol prices across the five largest cities – Sydney, Melbourne, Brisbane, Adelaide and Perth – were 193.2c per litre in the March quarter, down 1.7c from the December quarter.
"Daily average retail petrol prices increased across the five major cities in April following increases in international refined petrol prices and as petrol price cycles in several cities moved towards the highest point of the cycles,” ACCC commissioner Anna Brakey said.
On April 30, seven-day average retail petrol prices across the five largest cities moved to a record high in nominal terms of 215.2c per litre, the ACCC said.
The ACCC said that while average retail petrol prices in April were below the highest price levels seen in the past in real (inflation-adjusted) terms, the effects of recent international factors and geopolitical events on benchmark prices continued to influence relatively high Australian retail petrol prices.
Concerns over super changes: Morgan Stanley
Self managed super fund members and investors are concerned at the federal government’s plans to tax unrealised gains on superannuation funds of more than $3m, Morgan Stanley’s co-head of investment banking in Australia, Tim Church, has warned.
Speaking at the Morgan Stanley Australia Summit in Sydney on Wednesday, Mr Church told Treasurer Jim Chalmers that there was considerable concern about the proposals which would see the tax rate on super funds of more than $3m double to 30 per cent with the tax levied on unrealised gains in the funds.
The new tax, which has yet to pass the Senate, is set to come into operation from July 1 next year.
Mr Church said “one of the concerns that is very apparent is the issue of capital gains taxes on unrealised capital gains on balances over $3m". “Has that been investigated enough?” he asked.
Dr Chalmers said the government was determined to press ahead with its proposals to increase the tax on larger super funds, including having the higher taxes levied on unrealised gains.
He said the government had done several rounds of consultations on the proposal ,which had included discussions about the issue of unrealised capital gains. Dr Chalmers said the government and Treasury believed this was the best way to go.
“We want to make sure we can continue to provide very generous tax breaks in superannuation,” Dr Chalmers said.
“It means people with larger balances – about half of one per cent of people in the system who have funds of more than $3m, will still be able to get generous tax breaks – albeit a little bit less generous – it will help us fund paying superannuation on paid parental leave or other important initiatives.”
China inflation data mixed versus estimates
China's monthly inflation data are mixed versus estimates for May.
PPI inflation is minus 1.4 per cent year-on-year versus minus 1.5 per cent expected and minus 2.5 per cent year-on-year recorded for April.
CPI inflation remains at 0.3 per cent year-on-year versus 0.4 per cent expected.
ASX 200 down 0.7pc as falls broaden
Australia's share market continues to retreat sharply after approaching record highs in a strong rebound at the start of the month.
The S&P/ASX 200 index is down 0.7 per cent at a six-day low of 7704.9.
The index is down 2 per cent so far this week after rising 3 per cent in six days.
"It's the fourth time in three months we have seen this type of sell order hit the market from out of left field, starting on March 11 and followed by similar occurrences on April 3 and May 9," says IG market analyst Tony Sycamore.
"We suspect the culprit is a large offshore account that is either getting out of longs in the ASX200 or establishing shorts in preference for a long position in another equity market, possibly with more tech exposure."
Losses broaden to include all sectors except energy.
Tech, discretionary, materials, and health care are underperforming.
Migration to fall without economic jolt: Chalmers
The government wants to lower immigration without jolting the economy or worsening a skills shortage, according to federal Treasurer Jim Chalmers.
Speaking at Morgan Stanley Australia Summit in Sydney on Wednesday, Dr Chalmers said the government aims to lower migration from over 500,000 last year to the mid 200,000 next year.
“We want to get migration down to more normal levels and we have to do it in a considered, responsible and methodical way,” he said.
“We take our responsibility in migration very seriously.
“We want to manage it down to more normal levels in a way that doesn’t jolt the economy or make our skill shortage worse.
“You don’t fix a housing shortage by making the skill shortage worse.
“Migration has always been an important part of our economy and it will continue to play an important role but we are going to manage it down to something which looks more normal,” he added.
ASX 200 hits record close after soft CPI data
RBA unlikely to hike rates next week with core inflation heading south. CBA shares reach intraday record of $137.34. Rio Tinto lifts on first-half profit jump. Telix, Origin among losers. Asian buyer circles Rex.
ASX declines; Super Retail CEO, chair sued
Super Retail ex-exec alleges bullying, harassment. Fortescue crashes after mystery stake sale. BHP, Lundin bid $C4.1bn for Filo Corp. Ramsay taps Woolworths Supermarkets boss as next CEO. Credit Corp's top gainer. Rex halts 737 bookings amid financial woes.