Small Cap Monitor:

Oil Search Sells Assets To Fund LNG Project.

Oil Search Ltd has sold a package of its Middle Eastern and North African assets for $US200 million to focus on the development of a Papua New Guinea liquefied natural gas project.

The oil and gas producer sold eight of its assets, three of which are in Egypt and five in Yemen to Kuwait Energy Company KSC. The completion of the transaction is expected to take place around mid 2008.

“The likely sale of some of our Middle East/North Africa assets was signalled to the market in March, following the completion of our major strategic review,” managing director Peter Botten said.

“One of the main conclusions of the review was that, while the company had successfully built a valuable, diversified portfolio of assets in the Middle East/North Africa (MENA) region, a number of the licences were not material in the context of our growing gas portfolio.”

Oil Search said the sale of these assets will provide cash and reduce near term capital requirements. This will free up funds to facilitate the delivery of Oil Search’s share of the PNG LNG project.

In addition, it will enable the company to refocus its organic growth programme on areas of greater materiality going forward.

The company has retained a number of assets in Yemen, Libya, Tunisia and Kurdistan, Iraq.

Oil Search shares fell 22 cents to $4.99.

Amcor To Pack Up Its Swedish And UK Packaging Plants.

Packaging company, Amcor (AMC) is to sell its two flexible packaging plants located in Sweden and United Kingdom to a Swedish equity group, Accent Equity 2008.

The plants are primarily invved in the production of unprinted films for the meat and fish segments and have combined sales of about €85 million.

Amcor did not disclose the sale price.

These divestments are part of the previously announced program of rationalisation and restructuring of the overall flexible operations in Western Europe.

Amcor said the primary objectives of this program are to strengthen market positions through better leverage of technology and manufacturing capabilities among others.

“The overall restructuring program continues to make solid progress and remains on target to deliver an estimated PBIT benefit of €30 million per annum for an estimated cash cost of €60 million, with the majority of the benefits realised in the 2009/10 financial year.

Amcor is one of the world’s largest packaging companies, offering its customers the highest standards in innovative packaging solutions, reliable service and partnerships built on excellence. It has 217 plants in 34 countries and is the world’s largest producer of PET containers. Amcor has a broad range of plastic, fibre, metal and glass packaging products;

Shares in AMC ended 6 cents up at $6.67.

QBE’s Merger Proposal With IAG Rejected.

Australia’s largest insurer by premium income, QBE Insurance Group said today its proposed merger with rival insurance group IAG has been rejected.

QBE’s proposal was 0.142 shares and $0.70 cash for each IAG share which is approximately 12% above IAG’s share price.

“A merger is expected to realise significant pre-tax synergies and diversification benefits for all the shareholders in the enlarged QBE,” the company said.

Frank O’Halloran, QBE’s chief executive officer, said “we approached IAG because we believe that a merger would be positive for IAG and QBE shareholders.”

“A merger would be transformational for both companies and create an enlarged group which would be in the top 15 global general insurers with a strong base in personal and commercial lines business in Australia.”

He further added, “we believe the combination of around 12% premium to the last three months’ VWAP, the existing acquisition premium in IAG’s share price and the merger synergies, together with our long track record of growth and profitability, will provide IAG and QBE shareholders with immediate and long term benefits.”

However, IAG disagreed with QBE’s proposal.

In its response to the ‘unsolicited and incomplete proposal’ QBE board rejected the proposal saying it was clear it was not one which was in the best interest of shareholders, and therefore not one it could recommend.

“In particular, the prices were inadequate,” the board said.

IAG’s chairman James Strong said, “IAG is a unique asset with leading insurance franchises in Australia and New Zealand supported by a number of iconic brands.”

“Whilst we recognise that the synergies available through a combination with QBE are considerable, the price needs to reflect the value that the IAG businesses would contribute to QBE, including the synergies to be generated,” he said.

Shares in QBE slumped 30 cents to $22.90, while IAG shares surged 33 cents or 8.5% to $4.19

This Information is provided to you by the Australasian Investment Review (AIR).
Subscriptions are free at www.aireview.com.au

AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decisions.


 

 
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