Orica trades higher due to takeover rumours

Stock

Orica (ORI) $18.36 as at 12/03/2019

Event

Mining chemicals & explosives company Orica is trading higher today, outpacing the ASX200 index with a ~2% gain this morning. The explosives space has long been the subject of consolidation whispers and news articles today suggest we are getting closer to a deal.

The Australian reported that private equity firms such Brookfield, BGH & Bain Capital have been keen watchers of the space, consisting of two major ASX listed stocks in Incitec Pivot (IPL) and Orica.

Another player expected to join the fun is Wesfarmers (WES). Rob Scott, who was shuffled into the CEO role early in 2017, has been divesting assets out of the Wesfarmers in an effort to ‘shrink to grow,’ culminating in the demerger of Coles (COL) late last year. Now a cashed up Wesfarmer’s will be eyeing bolt on opportunities to add to its existing businesses.  Prior to becoming the CEO, Rob was the head of the Wesfarmer’s industrials division and he has previously earmarked this as an area for growth.

Still though, a deal is not done, and some obvious issues to make those on the offensive nervous. Orica has suffered some operational issues at its new Burrup plant in WA, the worst of which saw the operation out of action for a whole month in the middle of last year.

Orica (ORI) Chart

Orica (ORI)

Market Matters Take/Outlook

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