Foster’s rejects $2.7 billion private equity offer, New home loans rise: Economy Roundup

Foster’s Group has said it rejected a $2.7 billion proposal for the sale of its Treasury Wine Estates to an unknown private equity group.

The company said the offer, which was between $2.3-2.7 billion in cash, “significantly undervalues” the company’s wine assets and it will continue to demerge the unit from its main business. The rejection of the deal sent shares up 4.7% to $6.35 early this morning.

“After considering the value range in the proposal, the board of Foster’s continues to consider that a separation of the wine business from the beer business through a demerger is most likely to represent the best outcome for all Foster’s shareholders,” Foster’s said in a statement.

“In addition, the high level of conditionality, the requirement for exclusivity and other terms of the proposal are considered to reduce the value and certainty of the proposal.”

The company also said the Treasury Wine business is in the middle of a transformation program and that the business is set to grow well over the next few years.

“The board considers the indicative proposed value range, referred to above, significantly undervalues Treasury Wine Estates and its future prospects,” Foster’s said.

Meanwhile, new figures show housing commitments grew by a seasonally adjusted 1.7% in July to 47,511, according to the Australian Bureau of Statistics.

That increase is well above market predictions, with a Reuters poll suggesting the number of loans would rise only by 1% during the month.

Total housing finance value grew by 0.7% to $20.85 billion, with the value of home loans for owner-occupied homes growing by 2.3% to $13.7 billion. The value of loans for investment homes fell 2.3% to $7.093 billion.

ACCC attacks Optus for misleading advertising

The Australian Competition and Consumer Commission has instituted proceedings against Optus for its “Think Bigger and “Supersonic” broadband promotions.

In a statement, the ACCC said it alleges Optus engaged in misleading or deceptive conduct, and made false representations in relation to both broadband plans.

“Under these plans, a customer pays a specified monthly sum and receives a specified data allowance for that month divided into peak and off-peak periods.”

“However, once the customer exceeds the peak data allowance, the internet connection is limited to a speed of 64kbps. The ACCC alleges that Optus did not sufficiently or clearly disclose, and in some cases did not disclose at all, these qualifications.”

The ACCC said it is seeking court orders, including declarations Optus breached the Trade Practices Act, injunctions, civil penalties and costs.

In the United States, HP has sued its former chief executive Mark Hurd, attempting to stop him from joining rival software giant Oracle.

Hurd was named as the company’s new co-president earlier this week. But in a civil complaint filed in a California court, HP said by moving, Hurd would be putting the “most valuable trade secrets and confidential information in peril”.

“In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP’s trade secrets and confidential information to others.”

HP has requested the court block Hurd from taking the new position.

Shares lower after disappointing Wall Street leads

The Australian sharemarket has opened lower today, following a disappointing night on Wall Street where stocks fell after a long weekend due to the Labor Day holiday.

The benchmark S&P/ASX200 index was down 21 points or 0.47% to 4551.9 at 12.10 AEST, while the Australian dollar opened lower at US91c.

NAB shares lost 0.9% to $24.18, while Commonwealth Bank shares lost 1.2% to $51.74. ANZ fell 1.1% to $23.50 as Westpac lost 1.7% to $22.63.

In the mining industry, Drillsearch Energy and Innamincka Petroleum have agreed to a “friendly merger”.

The two companies have said the new entity will have a market capitalisation over $150 million, and will create the Cooper Basin’s “leading mid-tier oil and gas company”.

“The implied value of 16 cents per Innamincka share represents a premium of 80% to the last traded price of 8.9 cents per Innamincka share on six September 2010,” the companies said.

Also in the mining industry, a new report from energy advisory firm EnergyQuest reveals liquefied natural gas production reached a record high in the 2009-10 financial year.

The report reveals LNG production grew by 7.5% to $18.7 million tonnes per annum, up from 17.4.

“The growth in LNG production was driven by growing demand for Australian LNG in Japan, China and Taiwan,” EnergyQuest chief executive Graeme Bethune said in a statement.

In the United States, stocks dropped on Wall Street due to new concerns over the stability of some European banks, with investors also awaiting details from president Barack Obama about a rumoured new plan to help businesses with plant and equipment expenditure.

The Dow Jones Industrial Average fell 107.24 points, or 1.03%, at 10,340.69.