Flash Briefing: Bidding war for Moz gas giant; PSG at 20% discount; Rand falls sharply

By Alec Hogg

In today’s global business news headlines:

  • Energy group Anadarko Petroleum, which owns huge tracts of gas reserves in Mozambique, has become the subject of a bidding war. US major Occidental Petroleum yesterday tabled an offer of $38bn for Anadarko, topping a $33bn bid from Chevron Corporation that was accepted by the target company earlier this month. Apart from its Mozambican jewels, Anadarko also has prized shale gas assets in the US. Occidental’s CEO Vicki Hollub said yesterday that Anadarko had ignored two higher bids made in the week of the Chevron offer, raising investor concerns that the company had reacted too hastily. The Wall Street Journal reported on Tuesday that the day before announcing a deal with Chevron, Anadarko’s board boosted by millions of dollars the potential payout its CEO Al Walker and other executives would receive after a sale. The company said in a written statement yesterday its board hasn’t determined whether it views Occidental’s offer as better than Chevron, which is understood to be considering a counter offer.
  • The Jannie Mouton created investment company PSG announced solid financial results for the year to end February, disclosing recurring earnings per share up 9% and a 10% increase in the year’s dividend, to R4.56 per share. The company’s asset base is dominated by its 30% stake in Capitec Bank, which accounts for two thirds of PSG’s sum-of-the-parts valuation of R329 a share. That investment which has appreciated at a compounded rate of 27% over the past five years. PSG’s share price lost 1.5% to R265.29 yesterday, taking the price to an almost 20% discount to the underlying value of its assets.
  • Life Healthcare shares were one of the biggest losers on the JSE yesterday after the group released a trading update for the half year to end March disclosing that profit margins have fallen from 23.6% to 22% knocking headline earnings per share by around 50%. On top of this the company has to swallow foreign exchange losses of over R250m as a result of options entered into at the time of the sale of its Max Healthcare Institute investment. The Life Healthcare share price lost 6.8% on heavy trading of the stock, taking the price back to levels last seen in mid-February.
  • The South African Rand took a pasting yesterday, influenced by a continuing slide for emerging market currencies worldwide. It lost 18c against the US Dollar and 21c against the Pound to R14.43 and R18.65 respectively. Share prices on the JSE also softened with the overall index down three quarters of a percent although individually there were virtually as many winning counters as losers. Some of the Biznews favourites had a good day with RCL rising almost 4%, Italtile gaining 2% and Naspers, the cornerstone of our SA Champions portfolio, picking up one percent to a new all-time high of R3,710. Naspers has gained steadily since March 25 when disclosing the listing of its offshore assets in Amsterdam. Today’s increase takes the post announcement improvement to 15%. Blue Label Telecoms built on Tuesday’s 7% jump with another 5.5% gain yesterday. Biggest loser was Tiger Brands whose price fell 8%. Last week the company announced that it has received notice of a class action relating to listeriosis deaths due to polony produced at its factories.