GLENCORE
Genesee & Wyoming In Coal-Haulage Deal
SYDNEY -- Glencore PLC has agreed to sell its coal-haulage
business in Australia's New South Wales state to U.S. railroad
operator Genesee & Wyoming Inc. for 1.14 billion Australian
dollars (US$874 million), the latest deal by the company aimed at
reducing its debt load.
Glencore last year had promised to sell operations to cut
borrowings after a mounting debt pile and sagging commodities
prices sent its shares tumbling. The company has since agreed to
carve off parts of its operation including a 40% stake in its
agricultural business, which it sold to Canada's largest pension
fund, Canada Pension Plan Investment Board, for US$2.5 billion in
cash.
"The sale of the GRail business forms another significant part
of Glencore's debt-reduction program," the Swiss commodities trader
and mining company said in a statement Thursday.
Glencore said that after the deal is completed Genesee &
Wyoming, based in Darien, Conn., would manage much of Glencore's
coal-transport in Australia's Hunter Valley region under a 20-year
contract.
GRail, also known as Glencore Rail, currently hauls about 40
million metric tons of its parent company's coal output from mines
in the Hunter Valley to the Port of Newcastle, the world's biggest
coal-export hub, each year.
"We established GRail in 2010 and have steadily grown it to
become the third largest coal haulage business in the country,"
said Peter Freyberg, head of Glencore's global coal assets. "It has
played a very important role in reducing costs and improving the
overall efficiency of Australia's largest coal chain in the Hunter
Valley."
The deal will need approval by Australia's foreign-investment
regulator, the company said.
Genesee & Wyoming already has operations in Australia,
including running more than 3,000 miles of track in South Australia
state and the Northern Territory, according to its website.
--Rhiannon Hoyle
ALKERMES
Stock Soars on News Of Depression Drug
Alkermes PLC said its depression drug helped patients not
responding to standard treatments, news that added more than $3
billion to the company's market value in after-hours trading.
The company said that in a late-stage trial, its ALKS 5461
treatment significantly improved depression scores in patients who
had an inadequate response to standard therapies. The most commonly
reported adverse events associated with the treatment were nausea,
dizziness and fatigue.
Alkermes said it plans to request a meeting with the U.S. Food
and Drug Administration to discuss the filing strategy for the
treatment, which has a fast-track designation.
Shares of Alkermes rose 47% to $64.10 in after-hours trading. At
that price, the company has a market cap of $9.7 billion, up from
its valuation of $6.59 billion at the end of the regular session
Thursday.
--Josh Beckerman
S. KIDMAN
Australian Faction Tries to Block Sale
CANBERRA, Australia -- Nationalist lawmakers have teamed up with
local ranchers to try to counter a bid involving Chinese buyers for
the S. Kidman & Co. cattle empire, in what would be one of
Australia's biggest agribusiness deals.
Independent and small-party lawmakers courted by Prime Minister
Malcolm Turnbull to backstop his one-seat majority, threw their
influence Thursday behind a potential "all-Australian" offer for
the Kidman ranches, which cover an area larger than Ireland.
The bid by the BBHO syndicate, yet to be formalized, is expected
to value the ranches at 385 Australian dollars (US$297 million) and
would pit some of Australia's wealthiest ranchers against mining
billionaire Gina Rinehart and China-based partners Shanghai CRED
Real Estate Stock Co. They have offered A$365 million for
Kidman.
The cattle empire includes the world's largest cattle ranch:
Anna Creek Station, located beside a strategic missile range.
Surging Chinese investment in housing and trophy agriculture
assets is triggering a backlash in major economies from Europe to
the U.S., as well as Australia. The government has repeatedly
stated the country's openness to foreign, and specifically Chinese,
investment, but Mr. Turnbull has faced pressure from within his
conservative coalition and from fringe lawmakers to oppose any
foreign farm takeovers.
The government blocked last year an offer from Shanghai Pengxin
Group Co. of China to buy Kidman outright, arguing that the deal
covered too much land and overlapped the Woomera missile test
range. And in May, Treasurer Scott Morrison, who has veto power
over deals, ruled that an offer from China-based Dakang Australia
Holdings and Australian Rural Capital Ltd. was against the national
interest.
In August, Canberra blocked two rival bidders, from Hong Kong
and mainland China, from taking a controlling stake in Ausgrid, the
country's largest electricity network. The state government of New
South Wales said Thursday that it had agreed to lease the Ausgrid
network to two Australian pension funds for A$16 billion.
"Despite my name I'm not xenophobic," said Sen. Nick Xenophon,
whose NXT Party controls a crucial Parliament voting bloc. "But in
this case we must consider a credible, local alternative bid that
is commercially competitive with the one that's been put up by Gina
Rinehart and her Chinese partners."
The Kidman empire, founded in 1899, has leases covering 40,000
square miles, more than 1% of the continent, across South
Australia, Western Australia, Northern Territory and Queensland.
The family-owned empire is one of Australia's biggest beef
producers, with an average herd size of 185,000 cattle and exports
to the U.S., Japan and Southeast Asia.
The holding went on sale almost 18 months ago.
Independent lawmaker Bob Katter, a political maverick and vocal
critic of foreign farm investment, opposes the bid involving
Shanghai CRED, even though Australian Ms. Rinehart would have
two-thirds control.
"Australians should own their land," Mr. Katter said, standing
alongside BBHO syndicate leader and Northern Territory rancher
Sterling Buntine. The rival Rinehart bid "involves no development
for Australia except baubles and tomahawks and blankets," Mr.
Katter added. "That's what's on offer to us."
Mr. Buntine said BBHO syndicate members were holding talks with
bankers on Friday and expected to launch a counteroffer by the
weekend, dependent on successful talks. Other members of the group
include South Australian cattle king Tom Brinkworth, who in 2013
claimed the record for the world's largest cattle drive.
"We are fair dinkum about this," he said, using an Australian
term meaning they are earnest. "We intend to fight for these
places. It is our intention to take this great Australian company
and legacy and grow it into a global brand."
Ms. Rinehart's Hancock Prospecting Pty. Ltd. said this month
that a deal with Kidman had been reached under which her company
would control 67% of the cattle-ranch empire and Shanghai CRED the
remaining 33%. Shanghai CRED was part of the Dakang consortium that
earlier failed in its bid to buy Kidman.
--Rob Taylor
MERGER
Walgreens, Rite Aid Push Out Deadline
Walgreens Boots Alliance Inc. and Rite Aid Corp. pushed out the
deadline to close their $9.4 billion merger to next year amid
delays in selling stores the two sides have to divest to get the
deal past federal regulators.
The companies now expect to close the deal in early 2017, as the
previous timetable of completing the transaction by the end of this
year is no longer feasible. The companies expect to agree to sell
between 500 and 1,000 stores by the end of 2016, though any
transactions will also require approval from the Federal Trade
Commission.
The delay is the latest adjustment to a deal that was announced
almost one year ago after Walgreens said in September it would have
to divest more stores than it previously expected. And it comes at
a time when federal authorities have scuttled several other
transactions, including the merger of Staples Inc. and Office Depot
Inc. and Electrolux AB's acquisition of General Electric Co.'s
appliance business.
The protracted process has raised doubts as to whether the deal
will reach the finish line. Rite-Aid shares have persistently
traded well below the $9 a share offered by Walgreens and dipped
below $7 earlier this week. However, both sides have continued to
express confidence that they will eventually get the green light to
merge.
But the affirmation that the deal is on track was cheered in
markets. In morning trading Thursday, Rite-Aid shares rose 7.9% to
$7.18 and Walgreens shares rose 3.8% to $80.07.
Meanwhile, Walgreens continues to push its plan to win more
pharmacy customers, improve margins in its U.S. stores and cut
costs throughout its enterprise. Thursday, Walgreens posted an
increase in fourth-quarter profit as revenue edged higher.
In its largest division, the U.S. retail pharmacy business,
Walgreens posted a 3.2% increase in sales at existing stores, with
a stronger pharmacy sales offsetting a small decline in the
front-end of the stores, where the company sells food and other
everyday items. The company filled 3.9% more prescriptions versus a
year ago as it continues to get more volume from Medicare
patients.
Walgreens is hoping to win more patients to its pharmacies with
a string of new agreements with health-care companies that
encourage patients to use Walgreens pharmacies. Those include a
recent partnership with Prime Therapeutics, a pharmacy-benefits
manager owned by Blue Cross and Blue Shield health plans, that
makes Walgreens a preferred pharmacy where patients pay less to
fill prescriptions. It also replaced CVS Health as in-network
pharmacy for Tricare, a health-care program for military personnel
and their families.
By getting more patients into its drugstores to fill
prescriptions, Walgreens hopes they will also shop more too. "These
close partnerships are central to our strategy to increasing
volumes to our pharmacies and driving footfall to our stores,"
Walgreens Chief Executive Stefano Pessina said.
That strategy is different than the one employed by Walgreen's
main drugstore rival, CVS Health Inc., which owns a large pharmacy
benefits management business in Caremark.
"This is the beauty of being independent," Mr. Pessina said. "We
can work with everybody and we can offer our services to everybody
and we are not seen as particularly skewed to this or that player
in the market."
For the quarter, Walgreens reported a profit of $1.03 billion on
flat revenue of $28.64 billion.
--Paul Ziobro and Austen Hufford
(END) Dow Jones Newswires
October 21, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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