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Lateline Business -

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(generated from captions) Moore at Lateline Business. Pesch Now it's over to Ali

Thanks, Tony. Tonight -

Australia's first Indigenous

telco and building products

maker Rinker knocks back a

takeover bid from a Mexican

predator. There are three or

things readily available as a

defence strategy and I'm sure

the company will pursue as many

of those as possible given the

fact it appears the price to

date is low ball. Australian

shares hit another record high

as Cemex bid for Rinker sparked

a rally in construction stocks.

The All Ordinaries and the

ASX200 rose by 0.75%. In

Tokyo, it was a different

story. The Nikkei fell almost

2 ners in what was its biggest

one-day loss for nearly three

months. The Tokyo Stock

with the New York Stock Exchange said it was in talks

Exchange about a possible capital tie-up. Hong Kong's

market was closed for a public

holiday and the Dow, of course,

opened shortly. Ended Friday's

session down 73 points. London

is trading and we crossed a

short time ago to Justin Langer

director of -- Justin steward.

The London market has started

and week with the jitters, is

that a wash-up from Friday? It

is, not just from the Dow on

Friday, but also coming out of

Japan as well where we had a pullback there. So there was

very little incentive to

actually see London go further

ahead today. But added to that

we also had money supply

figures out higher than

expected and that's putting further pressure on people thinking about higher interest

rate rises which are likely to

go up this month later in the

month when we have the next

Bank of England meeting. What

about Europe? What have they

done this morning? Same also in

Europe again. Pretty flat

overall. No-one really pushing

ahead with any particular

strength I'm afraid. We've had

a very nice little bull run

over the past few weeks and

those figures out of the United

States showing some slowdown I

think was an excuse for people

frankly to take money off the

table. If you've got a profit,

take it. The big news in our

market today has been Cemex and

their bid for Rinker. Cemex

has been active in your market

as well? It has indeed.

Certainly when you see some of

the elements it's buying in

western Europe. It's certainly

had that impact since we heard

of that deal Hansen one of the

big aggregate operators was

pushed up on that. It shows a

similar line of actually

looking for more defensive

businesses where there's much

more interest, particularly

with the M&A activity as well.

People coming out of smaller

caps and into larger caps the

M&A is adding more pressure and and over the weekend a lot of

the press was going through a

list of games, who else could

be in the firing line. Insurer

Standard Life has been

mentioned? Standard Life which

up until a few months ago was a

mutual, it was owned by its

members and had a long history

of that. But, however, it got

into difficulty a few years

back when the global market

started falling in 2000 to 2003

and so delayed its floatation its demutualisation, rather

until this year. Now a lot of

the shareholders have obviously

had their free shares. They

could hang on for a year and

get another bonus. It's not

big enough probably to be one

of the big international boys, but equally it's not niche

either. It's just the right

sort of scale that some of the

other companies like AXA might

well be having a look at. Back

in play again for Standard

Life. Good news for

shareholders, though. There's

almost no company though that's

immune. What's the outlook for

Wall Street? Wall Street is

going to be down a little bit

here. Dodges is off 0.2%

Nasdaq off 3% and the same for

the S&P carrying over from

ideas last week where we had weaker economic growth figures.

When you look at corporate results they're stronger this

quarter, that's fine, but

everyone is concerned, of

course, about how weak they'll

get this year with this

slowdown. Anymore key results

this week? Cadburys and British

Airways. British Airways is

going to be interesting.

They'd strikes earlier in the

year. Also with British Airways whether anyone might

put in a cheeky bid for them.

Potentially emirates. It

depends on how weak the figures

are going to be. There really

is no end to it. Thank you

very much for your time. My

pleasure. The big news on

local markets today was

building supplies companies

Rinker which surged as

investors bet Mexican company

Cemex will come back with a

higher takeover offer. Andrew

Robertson reports.

materials giant Cemex Mexican-based building

celebrates its 100th birthday

this week and it's hoping

shareholders in Rinker will

come to the party. But the

invitations will have to be

more exciting than $17 a share

if its audacious takeover bid

for Australia's biggest building products maker is to

succeed. This time in the

building materials cycle

there's quite widespread pessimism about the prospect

for US housing and I think the

bid's timed to take advantage

of those gears. Perpetual

Investments is the biggest individual shareholder in

Rinker. Without its support

Cemex won't get the whole

company. On today's close of

$18.59 its offer is a long way

short. Like all companies

we've got to assess the price

relative to the quality of the

company and we'll make a -

we'll consider that at an

appropriate time. But at $17

the bid is well below what we'd

sell at. And the Rinker board

agrees, issuing a statement

today describing the Cemex

offer as opportunistic and company. material undervaluing the

Rinker was spun out of CSR in

2003 and earns 80% of income in

the United States where it

operates in 30 States with its

biggest presence in Florida.

In Australia it owns the ready

mix concrete and hooums

concrete pipes business. But as

the US housing market has

cooled so, too, has Rinker's

share price.

That, and the possibility

that rimpger may eventually

have to follow fellow building

materials company Boral and

issue a profit warning has

provided the opportunity for

Cemex to strike. The basics of

the business are in good shape,

the management team is amongst

the best we've seen going

around. So I think they've got

a strong case for defending the

company. In the end it'll get

down to those issues and also

price. Cemex has made 16

acquisitions in the last 14

years and if its bid for Rinker

is successful it will take on

at least an extra $15 billion

in debt. That's prompted

agencies such as Standard &

Poor's to warn that Rinker's credit rating could be downgraded. Andrew Robertson

reporting. Well, to get a

market view of the Rinker bid

and another market mover today,

Telstra, I spoke a short time

ago to David Halliday at

Macquarie Bank. David Halliday

many thanks for your time? Good

evening. We've heard 10% Rinker

shareholder Perpetual say $17

is not enough. What's the broader market view? Is this

offer fully priced? Certainly

doesn't look to be in the first

instance. If you look across

the board and certainly our

valuation I think most other

investment banks in the market

have valuations around the $20

or in excess of $20 and that's

reflective of where the stock

was only six or 12 months ago

now. Cemex is being pretty opportunistic? That's

absolutely right. Rinker have

said this is an opportunistic

bid and it seems to be. Cemex

would argue that the Florida building market which is where

Rinker has a big exposure is

probably going to be in

downturn for four to five

years. As such it's not

opportunistic it's just well-timed in a market

downturn. It appears to be

opportunistic at this

point. What happens next? Does

Rinker rustle up a rival? There's any number of

things they can do. A rival

would be good for a share price

and the shareholders. Finding

one that's got the balance or

the capacity to undertake a

deal of this size is difficult.

Some are talking about a French

building materials company but

look they can try and rustle up

a counterbider or try to

improve the price being offered

by Cemex or they could take

other action and try to make an

acquisition of their own to try

and block what Cemex are trying

to do in their own right. Is there any question now dhoe

that rimpger is in play? Certainly in play and the

question is whether we see a

councillor bidder, Rinker take

other action or whether we see

Cemex come back with an

improved price in the short-term, which was

speculated earlier today.

Indeed to try and get those major shareholders over the

line in the short-term. On

Friday Boral the other major

player in this sector in

Australia was forced into a

downgrade. If Rinker has to follow suite how much harder is

that going to make their

defence? Ah it always makes it

harder when a company is

downgrading earnings rather

than upgrading. The simple

fact you've got those two major shareholders that control in

excess of 10% of the stock that's creating a blocking

stake. The company has got

many things at its disposal

that it might choose to do to

defend itself. A downgrade

wouldn't be grate for its

defence but probably wouldn't

kill the deal or the

possibility of a higher price being achieved at the end of

the day. Indeed, today we saw

the whole sector move on the

back of this. Is it realistic

to expect that maybe now Boral

may be subject to a takeover

offer? Would you expect more

activity in the sector? Well, I

think at the moment it's hard

to count out any stock in the

market as being a takeover

target. We've seen a raft of

it over the last two or three

months. Every day there's a

rumour of a new company being

taken over. It's not usual to

see stocks in the same sector

move up. It doesn't

necessarily mean there's a

suitor for Boral or any of the

other building material stolen

generation. The market needs

to get excited about these

things. There has been talk of

Boral being a target that local

or overseas predators might

look at. If Rinker does fall

does this mean substantially

less range of opportunities for

investors in Australia to put

their money into? It doesn't leave that much in the sector? That's becoming an

issue for many fund managers.

Whilst the size of the market

overall is growing through new

issues and just the size of the

market and increasing company

prices the number of stocks

available in any one sector is

becoming smaller and Rinker was

such a big part of the building

materials certificate. To give

an example the movement in the

price of Rinker added 15 points

to the 40 points the market

gained. So it is a big part of the building materials sector

and indeed a big part of the

overall market. The other big

mover was Telstra, who's buying

and who is selling? This price

is rising and rising? It's hard

to say 85 million shares of volume going through in any one

day, it's hard to pin-point who

is buying and selling. The

recent rise is attributed to

the fact that large

institutions who had owned the

stock and loaned it to other

people who had been short

selling the stock or had been

selling it without owning it

had been called ahead of the

entitlement issue or ahead of

the book build which will start

17 November. As they've called

that stock back, the people who

have borrowed it have had to

buy the stock back. That's

been a big part. Most people

are saying behind the recent

rise in Telstra. That would

indicate you don't think the

price will hold? A lot of it

will depend on what that second

instalment price comes in at

it. Every is paying retail

level $1, or $2.10 -- $2. The

institutions are obviously

going to do their best to get

that price as low as possible

but market forces are in play

at the moment. We're going to

have to watch that one

carefully. David Halliday many

thanks for your time. Thank

you. To another attempted

buyout and last month

Woolworths bought a 10% take in

the Warehouse Group. We

reported at the time the deal

could stymie the plans of its

founder and majority owner

Stephen Tindall to take the

group private and that's just

what has happened. Stephen

Tindall has abandoned his $866

million New Zealand buyout of

the warehouse noting that "

there'd been a significant

change in the share holding in

the warehouse which contributed

to a markedly higher share

price. " Mr Tindall's

September 14 offer was $5.75

and the shares were trading at

$6.had 4 today. Mr Tindall

said he would assess future

options. No doubt he'll be

talking to Woolworths. To the

mining sector and goldminer

Newcrest says its first quarter

output of the precious metal

fell 5.5%. The company esaid

the reason is it mined less

rich ore from its Big Telfer

Lode in north-west Australia.

Output there was down 16%.

Costs were also up at Telfer

where the cost of production

shot up.shares rose to close at

$23.50. For more detail on

trade on our market today I

spoke earlier to David De Garis

at NabCapital. David De Garis,

thanks for joining us. Some

record territory for our market

today? Indeed, Ali. A very

good day. Investors would say

any day that produced a 40-plus

point gain in the index was

very welcome. Of course we had

the offer over the weekend for rink from the Mexican Cemex

group of $17 a share. That was

rejected by the board and

Rinker really opened up

strongly to about $18.50. It

did actually get to $18.90 at

one stage still ended up 26%

for the day. A respectable

gape, up over 40 points. Indeed, half of that

was Rinker but there was other

notable movers as well.

Telstra was pretty strong? Up

to $3.91, up another 6 cents

for the day. That was very

good as far as I think the

lead-up to the T3 offer is concerned. There were also

good gains on some of the

material stocks. BHP, Rio

Zinifex. We saw good gains in

metal prices on Friday night.

Those stocks contributed

another ten points. We saw

reasonable gains in the gold

stocks - Newcrest, Oxiana,

Lihir Gold up 2.5 to 4% . Good

gains there. We saw outsets in

finance stocks. But as you've

said Rinker accounted for

nearly half of the gains. We

still have rises, 22 points

apart from that gain in Rinker today. If we look through to

the week and looking ahead

we've got key economic numbers.

Probably of the most interest

to someone like ourself is

Reserve Bank credit figures? We're looking for

signs that that monetary policy

impact might be showing up from

August. Now these numbers are

credit numbers for September

and even though they are what

we call in the game a

coincident to lag indicator, in

other words it takes time for

the policy impact to show up in

the figures it should be

starting to show up there. We

did actually see in August a

growth of only 0.9. Tomorrow

as we get the numbers for

September. It will be

interesting to see how that

shapes up. We also get up

later in the week, retail trade

and building aprofessionals and

retail trade for September will be interesting because we did

see big falls in petrol prices

in September. I think the

analyst community wouldn't be

surprised if we saw a pick-up

in retail trade in this month.

I don't know if it will be that

much. But if that's the soft

number I think it's indicative

of consumers who might be

pulling into their shells a

little bit more. News ahead of the Reserve Bank board meeting

next week. News to come but

most people are probably

thinking an interest rate rise

next Tuesday is a dead certainty and that's helping

the dollar? The dollar's sort

of got up over that 77 cent

mark. It's been very strong.

The market is really fully

priced for that interest rate

rise now, as you said. I think

it's like a # 2 or a 94 priced

into the market now. It's got

help on Friday night by weak US

growth figures. To get on from

here it needs good news and

some expectation I think that

the Reserve Bank is going to do

more after this rise. I think

that expectation is a little

bit expensive right now. The

Aussie dollar is probably

really fully valued right now. David De Garis thanks for

your time Thanks. To the major

movers:

the drought is increasing pressure on the Federal

Government to abandon the

single desk arrangement for

selling the nation's wheat crop. Many farmers who've

managed to produce a crop

believe they'll be better off

selling their grain

independently of AWB. Rural

reporter Chris Clark has been

out and about with wheat

growers on the Eyre Peninsula

in South Australia. Across

Eyre Peninsula they're in the

middle of harvest. It's been

dry here but they're not

calling it a drought. Is that

getting any better in the

middle there? Mark Ramsay says

he'll make money - just. We're

actually still going to deliver

some grain. We'll be below

average but to still be able to

deliver some we will cover

costs and still put some in the

banks. He'll do that by selling wheat on the domestic market to

the highest bidder not into the

AWB pool as usual. Bottom line

is is we want to get as much

per tonne for our grain as we

can. That's the first thing we

look at. Losing confidence in

the AWB. If we sold to the

pools they still haven't guaranteed us that the cost of

the Cole Inquiry will not come

out of pool returns. Not every

farmer is looking past AWB to

get the best price. Yes, we are

going to sell to AWB. We will

sell into their pool and more

so now that they've announced

they're going to reduce their

charges. Paul Kaden doubts that

AWB will keep its export

monopoly but worries about

opening the trade to

competition. I hope it doesn't

pitch farmer against farmer

competing against each

other. The AWB pool delivers an

average price to farmers,

wherever they are. Those of us

who have been able to get in

and market our grain earlier

have been able to cherry pick

the market and get some pretty good prices. Those who are

going to be reaping later won't

experience the same

opportunity. And for many in

drought there'll be no crop to

sell to anyone. It's no secret

Australia's telecommunications

industry is a hard place for

any start-up, but newcomer

Message Stick is carving out a

niche by focusing on Indigenous

communities. Chief executive

Michael McLeod says Indigenous

Australians need a hand up, not

a hand out. Later this week

he'll take his message to

Israel as part of a trade

mission led by Communications

Minister Helen Coonan. Sue

Lannin reports. Michael McLeod

hasn't taken the usual path of

the corporate ladder. The

chief executive of Australia's

only Indigenous

telecommunications company is a

member of the stolen generation

and a former alcoholic and

heroin addict. I needed to do

something which was again,

unique and outside what we do

in Aboriginal Australia. A

leading Indigenous artist, he

set up Message Stick in 2004 after running an Internet

Service Provider. Now the tiny

company is turning over $1

million a year, reselling

telecommunications services to

corporate and Government clients. We provide

opportunities for corporates to

engage in their corporate

social responsibility policies

by taking us on doing business. In 2005 he was

approached by Macquarie Telecom

who agreed to become the company's alliance partner and

business mentor. It's about

business. We buy off them and

resell. There's nothing more

than that. It has to be a

commercial business that makes

sense. It's not meant to be a

subsidised business in any way

and that's the other thing with

Michael. He's very keen to

have this as a self-

sustainable business. Many told

him it couldn't be done,

including Telstra. And in one of the country's most

competitive industries, staying afloat will be the

challenge. So if you can

control the cost and you

operate in a niche market where you have loyal customers then

you've got a good chance to

survive. If that is not the

case then you are struggling.

I know what we've stepped into

I know what we've created here.

We will have a customer base

which will enable us to be

long-term sustainability. We

have to prove ourselves. The

good thing is that Message

Stick is linked to very

telecommunications company well-known and very respectable

Macquarie Telecom. Phase two of the company's business plan is

to provide telecommunications

services to remote Aboriginal communities. I think it takes

something like a Message Stick

to say alright we can

facilitate that process and

cultural appropriate to the look at solutions which are

Aboriginal communities there.

The importance of identifying

working with what their good at

in terms of working with

Aboriginal Australia and what

they should let others do like

any business, is probably their

key challenge. Above all

Michael McLeod wants to be a role model to encourage Indigenous Australians to

become part of the mainstream

economy. Our youth need to be

shown something that gives them

aspirations and dreams for the future. His message is despite

the difficulties, sometimes

dreams can be achieved. To currency markets:

For a brief look at

tomorrow's business diary:

Before we go, a look at what's making news in the

business sections of tomorrow's

papers. The 'Age' reports that

Woolworths may be invited to

take a tilt at the Warehouse

Group following the decision by

the company's founder to scrap

the planned privatisation. The

'Australian' says there may not

be another bid for Rinker with analysts playing down the

prospect of a bidding war, believing competitors are

occupied with acquisitions of

their own. The 'Australian Financial Review' says unusual

demand for Telstra is changing

the dynamics of the offer and

proceeds are certain to rise to $10 billion. And that's all

for tonight. As I leave you

the FTSE is down 39 and the Dow

still has an hour before trade

begins. If you want to review

any part of tonight's program,

you can visit our website.You

can watch the whole program

online or download it as a

vodcast. We'd love to get your

feedback.I'm Ali Moore.

Captions by Captioning and Goodnight.

Subtitling International.