Bloomberg News

Noble Seeks Investment Opportunities After Failed Arrium Offer

November 08, 2012

Noble Group Ltd. (NOBL), Asia’s biggest publicly listed commodity trader, said it’s looking at investment opportunities after reporting profit that missed estimates and a failed bid for Australian steelmaker Arrium (ARI) Ltd.

Net income was $75.2 million in the three months to Sept. 30, from a loss of $17.5 million a year earlier, the Hong Kong- based company said yesterday in a statement. That missed the $154.6 million mean estimate of seven analysts surveyed by Bloomberg.

A group led by Noble and Posco, Asia’s third-biggest steelmaker by output, last month terminated a A$1.2 billion ($1.25 billion) offer for Arrium after the target’s board rejected two bids and refused to engage. Noble will receive $810 million from asset sales by January, it said in a separate presentation yesterday.

“Given our financial strength, and the stress occurring in markets, we continue to see very attractive investment opportunities across many of our products,” Chief Executive Officer Yusuf Alireza said in a separate statement.

Noble fell 1.5 percent to S$1.275 at the close in Singapore yesterday, before the earnings were announced. The stock has advanced 13 percent this year, compared with a 14 percent gain in the benchmark Straits Times index.

Sydney-based Arrium said on Oct. 31 it rejected the second, higher offer by the consortium which included Noble, Posco and other Korean investors because it undervalued the company. The group, known as Steelmakers Australia, had offered 88 Australian cents a share, up from an original bid of 75 cents.

Moved On

Noble wanted Arrium for its iron ore assets, Alireza, a former Goldman Sachs Group Inc. co-president who joined Noble as CEO in April, said yesterday on a conference call. The company has now has “moved on” from the Arrium bid, he said.

The company continues to have “close partnerships with Posco (005490), investors in Korea” which are valuable on both the business and investment aspects, Alireza said.

There are investment opportunities across all its businesses including shale gas and nonferrous metals, Alireza said on the call. It has a big “geographic footprint” in Asia and Latin America, and sees opportunities to expand in Africa and Russia, he said.

Adverse Markets

Noble “has tended to be more countercyclical. They do tend to invest even when the market is adverse,” said James Koh, an analyst at Maybank Kim Eng Holdings in Singapore. “The focus would probably still be looking at all different pillars.”

Operating income from supply chain at its energy business, its largest unit, expanded 42 percent to $219.3 million, and 38 percent to $26.8 million at its metals division, in the quarter, Noble said. The agriculture unit, the second-biggest by revenue, posted a 35 percent decline in sales to $3.7 billion.

Noble will target agricultural assets in the U.S. as it seeks to meet demand from China and sees potential for deals across its units, Alireza said Aug. 21 in an interview with Bloomberg Television.

“Our focus remains on ensuring we build out our three main business lines while at the same time maintaining a strong and liquid balance sheet,” Alireza said yesterday. “All our businesses are at different stages of maturity and our strategy is not a one month, one quarter, or even one year strategy but one that we are confident will build shareholder value over the next few years.”

To contact the reporter on this story: Michelle Yun in Hong Kong at myun11@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net


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