THE DISTILLERY: Wheat serial goes on

No political comment again this morning. It's more of the same, as the writers insist on taking the election seriously. Some would have been better off pondering how the global economy seems to have changed in the past week, especially with the news yesterday that Japan's economy has slowed to a halt, with growth slumping to 0.1% in the second quarter from 1.1% in the first. At the same time China reckons it's now close to being the world's second-biggest economy. But more broadly, we now have the world's three major economies; the US, China and Japan, all cooling and losing growth momentum at the same time. Surely that would have been more interesting than telling us something about the election that we were told last week, or the week before. The AFR says that with China on the way to overtaking Japan, "Australia is strapped on for the ride". But on the other side, Japanese nominal GDP is approaching the levels it was in 1993, so it's no wonder faster growing China is about to overtake.
 
But we also had some big corporate news yesterday. Leighton's result, a new bid for AWB, Sigma's debt-busting deal: all were covered. Fairfax's Adele Ferguson liked the Leighton result, sort of: "This record $612 million profit, up 39 per cent on last year's impairment-ridden result, makes Leighton one of the bright lights of the current profit season, which so far has produced disappointing earnings from the banks, telecommunications and smaller stocks such as Computershare and James Hardie Industries. But Leighton still has a lot of ground to make up. Its share price is down a whopping 24 per cent since the start of the year, compared with an 8 per cent fall in the overall stockmarket." 
 
Yesterday The Australian's John Durie said: "Canada's Agrium has blown Graincorp's bid for AWB out of the water with a $1.2 billion counter offer at $1.50 a share. The Agrium offer is subject to due diligence and changes to the AWB constitution, which restricts ownership of more than 10 per cent of the company without approval. Another big Canadian, Viterra, was earlier snapped by ABB and was considered a potential counter bidder for AWB. Given Viterra was granted FIRB approval, it would seem Agrium would have no problem, and by year's end the Canadians will end up effectively controlling much of Australia's grain trade, with west coast co-op ABH and Graincorp the two locals left." This morning Durie says: "If the only issue is value -- and that should be the only question -- then lack of synergies aside, the Agrium deal should be welcomed with open arms by the AWB board."
 
And Business Spectator's Stephen Bartholomeusz says the face value of the new bid isn't quite as big as it seems: "The GrainCorp-AWB deal is a real merger that would generate substantial synergies – more than $40 million a year the parties have said – and which would create a large Australian-owned diversified agribusiness. While there have been some reservations expressed by farmers and their associations about the implications for competition of the merger, there is a 'national champion' element to the deal that might influence growers and shareholders in both groups if they are concerned about the rate at which Australian agribusinesses are being consolidated by the big international groups." And all we Australians are left to wonder why corporate Australia and its short-sighted attendant advisers can't see the value that the Canadians can."
 
At least one writer queried Agrium's credentials. Ian Verrender of the Sydney Morning Herald: "Exactly what Agrium plans for AWB remains to be seen. The Canadian group has no presence in international grains marketing. It specialises in the manufacture and distribution of fertilisers in North and South America and retailing agricultural goods." The Australian's Bryan Frith answered: "AWB's Landmark business is obviously a key attraction to Agrium and the group said as much yesterday, stating that it saw significant potential to enhance the product and service offerings to the Australian and NZ grower, particularly through Landmark by utilising Agrium's fertiliser and crop protection capabilities." And Chanticleer in the Australian Financial Review said: " The Canadian love affair with Australia's infrastructure, property and agricultural sectors has shifted to a new level with the $1.2 billion cash takeover offer for AWB by Agrium, the largest rural retailer in the United States."

Fairfax Insider David Symons, in his comment yesterday, saw the sense of Sigma selling part of itself: "Sigma Pharmaceuticals has acted smartly in moving to offload its pharmaceuticals division to South Africa's Aspen Pharmacare for $900 million, but there's no immediate bonanza for shareholders. However, from here it's going to be a long road back for Sigma, which raised $297 million at $1.02 a share last September." This morning he says: "Sigma Pharmaceuticals' move to sell its pharmaceuticals division to Aspen Pharmacare of South Africa brings to a close the guessing game over how the company's debt crisis will be resolved, but the $900 million deal is no bonanza for shareholders."

According to this morning's comment from Adele Ferguson, ASIC faces a loss this week: "The Australian Securities and Investments Commission is bracing itself for a king hit in the courts this week after a judge indicated that it would lose its claim to suppress critical documents which allege the collapsed property group Westpoint was wound up while still solvent."

Finally, from page 1 of The Australian, a good explanation of the financial woes that have hit the head of the ACCC, Graeme Samuel: "Competition tsar Graeme Samuel faces a $50 million-plus wipeout of most of his personal fortune. The DFO discount shopping-centre empire is teetering on the brink of insolvency and the chairman of the Australian Competition & Consumer Commission, whose interest in the DFO holding company Austexx is held in a blind trust, said yesterday he had only discovered the full extent of the group's problems in recent weeks." It's a very Melbourne story in that some of those involved are rich, live there and are deeply involved in the business and social life of the city. When friends and advisers fall out...