Investment Ideas From the Edge of the Bell Curve
Superannuation fund AustralianSuper said today that is plans to vote against the Brookfield-led consortium’s US$9.78 billion takeover bid for Origin Energy [ASX:ORG].
AusSuper is the largest majority shareholder, with a 13.68% stake in Origin and has reiterated its position that the offer was ‘substantially below’ its estimate of long-term value.
The deal requires 75% support from the votes cast at the shareholder meeting, which means it could be enough as not all shareholders are likely to vote, and Origin has support from other shareholders.
The move comes after AustralianSuper brought in consultancy firm Frontier Economics to review the deal in an independent expert report. The report echoed what AusSuper had maintained, saying that the assumptions used to create the business valuation were ‘unrealistically low’.
The report went on to say:
‘The current offer from the Brookfield and EIG-backed consortium remains substantially below our estimate of Origin’s long-term value,’ the report said.
Shares of Origin are trading down slightly on the news as new investors who bought in for the deal now exit. Some concerns may rise if the company is forced into a long spell of heavy spending in order to meet green targets without a large capital raise in the future.
Penfolds owners Treasury Wines [ASX:TWE] is in a trading halt after announcing it is buying premium brand Daou Vineyards in California.
The deal is worth up to US$1.6 billion and is a clear sign that the Aussie winemaker is making a big move into the US market with a luxury brand purchase. The company has also made proactive moves to ready itself for the hopeful reopening of Chinese markets as the wine tariff there goes under a five-month review which should hopefully be scrapped as ties between Australia and China normalise.
Known for its Bordeaux-style red, Daou has been one of the fastest-growing premium brands of wine in the US market, which is the largest in the world.
The acquisition is being funded by a $825 million capital raise, priced at $10.80 per share. Treasury Wines are on halt at $12.10 per share.
The upfront costs of the buyout will be US$900 million, plus an earn-out revenue agreement of up to US$100 million until CY2027.
Good morning all, Charlie here
The ASX 200 opened up +0.56% to 6,810.6, as a strong rally on Wall Street lifted all boats. Fears of a broader conflict in the Middle East have eased after the ground invasion began in Gaza, bringing oil prices down.
The Dow had its best day since June while earnings season continues to punish both companies that miss earnings and those who manage double beats as it favours strong balance sheets.
A big macro week ahead for central banks with the Fed, BoJ and BoE interest rate decisions, as well as US jobs reports and US manufacturing data coming later this week.
Wall Street: The Dow +1.58%, Nasdaq +1.16%, S&P 500 +1.20%, Russell 2000 +0.63%.
Overseas Markets: FTSE +0.50%, STOXX +0.35%, Nikkei -0.95%, SSE +0.12%
US 10-year bond yields fell +6bps to 4.89%, and Australian 10-year rose +14bps to 4.95%.
Gold prices fell -0.36%, dropping just below to US$1,995.63. Silver rose +0.84% to US$23.31.
The Aussie dollar is up +0.58%, to US63.70 cents.
Bitcoin is up +0.57% to US$34,477.88.
Oil prices continue their volatility but have fallen sharply on the back of the attack on Gaza as some feared a wider conflict may have ensued, which hasn’t eventuated. Brent fell -2.84%, while WTI Crude fell -3.46%.
Iron ore is up +0.08% to US$118.55, but Singapore iron ore futures are tracking up +2.24%
We have manufacturing data out from China and Japan today, giving us a better understanding of how our big trading partners are going, so stay tuned for that a little after lunch.
11:09 am — October 31, 2023
10:58 am — October 31, 2023
10:08 am — October 31, 2023
Investment ideas from the edge of the bell curve.
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