ASX Market Wrap: DJs takeover offer and stocks surge on EU news


The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) rose 1.2%, closing at 4,094.6, after the EU Leaders summit resolved to create a single supervisory body for its banking sector and a plan to recapitalise struggling banks from its bailout fund, without the need for harsh penalties.

The announcement immediately sparked a rally across equity markets, with most ASX sectors up on the news, following an uneventful, flat morning on weak leads from Wall Street.

Unfortunately, that wasn’t enough to save us from a poor financial year. Over the twelve months to June 30, the ASX 200 index has produced a 10.7% fall.

David Jones Limited (ASX: DJS) shares rocketed up over 14%, after the company advised the market that it had received a $1.7bn takeover offer from British-based EB Private Equity (EBPE). EBPE is a European real estate investor and private equity partner, and the company looks to have its eyes on DJs’ property portfolio. As my colleague Scott Phillips outlined this morning, DJs’ property portfolio is on the books at over $400 million – but some analysts are speculating it could be worth $1 billion.

Somewhat overshadowed by the news from Europe and the DJs takeover offer was an announcement from WA gold-miner St Barbara Limited (ASX: SBM) that it had agreed terms with Allied Gold Mining Plc (ASX: ALD) for a friendly takeover. Investors in the former seemed unimpressed with shares in St Barbara falling 15%. The same can’t be said for Allied shareholders, whose holdings gained 60% today on the news.

Hardly surprising, but Fairfax Media Limited (ASX: FXJ) was in the news again. Gina Rinehart sent a personal letter to Fairfax’s chairman, Roger Corbett, asking him to agree to performance milestones, which included returning the company’s share price to 87 cents, and reversing the five-year decline in paid circulation and revenue. The target date was set as the November 2012 Annual General Meeting, and if Mr Corbett did not meet those milestones, Ms Rinehart has asked him to tender his resignation at that meeting. It’s unlikely that Mr Corbett will agree to the milestones, but it certainly adds more pressure onto the Fairfax board. The company’s shares ended up 2.8% at 55.5 cents.

Winners and losers

The EU Summit news was good for resources stocks, with our big miners, Rio Tinto Limited (ASX: RIO), BHP Billiton Limited (ASX: BHP) and Newcrest Mining Limited (ASX: NCM) all up more than 2.3%.

The big four banks shares all rose, Australia and New Zealand Banking Group (ASX: ANZ) was the best performer, rising 2.5%, with Westpac Banking Corporation (ASX: WBC)  gaining 1.5%, and both Commonwealth Bank of Australia  (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB) up 0.9%.

The consumer staples sector was down with both Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES) ending in the red.

Foolish takeaway

While one day’s trading can seem like forever when you’re losing, and feel wonderful when your portfolio is gaining, it’s just one day. As Benjamin Graham would remind us:

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.”

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Motley Fool writer/analyst Mike King owns shares in BHP and Woolworths. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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