KEY POINTS:
SGM
Sims Group (SGM) has had to explain why its share price is rising and has told the Australian Stock Exchange (ASX) it is holding talks about a possible acquisition in North America or Europe, but nothing is finalised. It is also facing a profit downgrade for the first quarter. However, the Sydney-based company, which recycles metal from products such as cars, whitegoods and computers, expects an earnings rebound in the second quarter. Sims was responding to a query from the ASX about why its share price had risen more than 24 per cent in two weeks. Sims said it was looking for takeover opportunities but nothing had materialised yet. Sims has long been a solid investment but has really come into its own in the metal boom. The share price is going up not only because of takeover speculation but because ferrous metal looks to be strengthening with robust metal prices around the world.
MFT
Logistics giant Mainfreight (MFT) has acquired listed United States company Target Logistics for $77.2 million, adding to its US logistics network. It paid a premium price of US$2.50 ($3.36) a share, which is 37 per cent higher than Target's closing price of US$1.83 on Monday. Information from a US share trading site shows that at the US$2.50 price, Target is trading at 28 times earnings. This is very expensive when one considers that Mainfreight shares are only at 12 times earnings. Clearly Mainfreight is gearing up to become a serious player in the US and is prepared to pay the premium to do so in a strong share market. Target Logistics provides freight forwarding and logistics services across US and international supply chains. It has more than 3000 customers and a network of 34 offices across the US. Target Logistics' sales revenues in the financial year to next June are expected to exceed US$180 million.
