Today was another broadly flat day for the S&P/ASX 200 (INDEXASX: ^AXJO) (ASX: XJO), which rose 0.33% to 5205 points at the time of writing
The following shares all rose significantly further however, and here’s why:
Pacific Brands Limited (ASX:PBG) leapt 23% to $1.16 on news of a $1.1 billion takeover bid made by NYSE-listed Hanesbrands at an all-cash offer price of $1.15 apiece. Management unanimously recommended the bid, and the offer appears likely to go ahead as it is not subject to financing or due diligence processes. Curiously, shares in Pacific Brands now change hands for $1.16 apiece, which seems strange given that a higher offer does not appear likely to materialise.
Pacific Brands shares are up 150% in the past 12 months.
Yowie Group Ltd (ASX:YOW) rose 4% to $0.79 after the company announced that it was the #1 novelty candy item in the US marketplace, as well as the #3 overall total seller in the US. However, as I wrote in the linked article, I’m not sure that today’s announcement materially reduces the risks associated with an investment in Yowie, which are higher than average. It’s good to have a great selling product, but Yowie has other risks besides those involved in selling chocolate.
Nevertheless, it’s good to see the company doing well and shares are up 10% in the past 12 months.
Woolworths Limited (ASX: WOW) was up 4% to $22.14 on rumours the supermarket operator could be planning to divest its multi-billion dollar liquor portfolio, which has been a strong performer in recent years. Management has elected to change the name from ‘Woolworths Liquor‘ to ‘Endeavour Drinks Group‘ because: ” The term ‘liquor’ doesn’t fully encompass how our customers feel about our business…” . To be blunt, I doubt if most customers have ever heard of Woolworths Liquor, being more familiar with the flagship Dan Murphy’s and similar brands. This potentially lends some credence to the divestment rumour.
Woolworths shares are down 26% in the past 12 months.
Fortescue Metals Group Limited (ASX: FMG) gained 8% to $3.30, despite falls in the value of iron ore overnight, and for the past four days running. The price rise is disconnected from the market’s usual reaction to falling ore prices, and appears to reflect Fortescue’s recent early debt repayment. Thus, today’s rise appears to be a result of investor belief that the company has become de-risked – which is partly true, although Fortescue’s earnings remain as vulnerable as ever to swings in the iron ore price.
Fortescue shares are up 34% in the past 12 months.