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Market Update

Australian Indexes at 3-week Low, ALH and Charter in $600 M Deal

Author: Marcus Jacob
Last Update: 10:27 AM ET September 08 2014

5:00 PM Sydney, Australia – Australian indexes closed lower after China’s iron ore imports dropped to a two-year low and prices continue to hover near a five-year low causing most miners to lose money on shipment. Sigma Pharmaceuticals acquired Discount Drug Stores for $27 million.

Australian stocks took another dive after the resource price weakness continued and the latest data from the U.S. and China on late Friday did not help market sentiment. In addition, CSL and IAG traded ex-dividend.

U.S. added 142,000 net new jobs in August, far below the average of at least 200,000 monthly additions in 2014. The less than expected job increase dragged markets in Asia.

Also, China reported August imports contracted 2.4% from a year ago compared to expectation of 3.5% increase. With the falling demand in China as the construct sector faces a slowdown after Chinese banks cut down

Iron ore manufacturers are struggling at the current prices after the ore prices fell to a five-year low. Most producers are likely to face losses on the current $83.60 a ton price when adjusted for freight, quality and moisture level.

Australian dollar closed at 93.67 U.S. cents and in stock trading turnover declined to 496 million shares worth $3.37 billion.

ASX 200 index fell 21.70 or 0.4% to 5,577 and the broader All Ordinaries index slid 20 to 5,578.90.

Stocks in Review

Goodman Fielder Ltd slipped 1.5% to 63 cents after the food ingredients maker’s board advised shareholders to vote in favor of an offer from Wilmar International Ltd and First Pacific Company.

The company also said it plans to win regulatory approvals for the deal by March 2015, later than earlier expected.

Mermaid Marine Australia Limited gained 1.8% to $2.24 after the marine and logistics services provider secured a contract worth $105 million to manage a cruise vessel in Europe for twelve-months.

Sigma Pharmaceuticals Limited declined 2.4% to 82.5 cents after the pharmaceutical wholesaler and distributor acquired Discount Drug Stores for $26.7 million.

With the purchase of portfolio of stores including Amcal, Guardian and Chemist King named stores and the recently acquired Central Healthcare Service division will expand to 300 stores.

The deal is expected to add 121 new stores to the network of stores and increase annual revenues by $400 million and annual earnings between $8 million and $10 million.

Sunland Group Limited slumped 2.5% to $1.78 after the property developer agreed to acquire a prime three-hectare site in Warriewood, in northern beach of Sydney for $18 million.

Woolworths Limited rose 0.2% to $36.38 after the food and liquor retailer following its divestment strategy agreed to sell its subsidiary ALH Group and 54 hotel properties and retail liquor stores to a consortium led by Charter Hall Retail REIT for $603 million.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc