Air New Zealand has purchased 14.9% of Australia’s Virgin Blue airline, the second largest in the country, as part of the company’s strategy of increasing its business in the Australasian market.
Virgin Blue shares were up by just over 1% when the deal was announced this morning. Air NZ said it purchased the stake for $145 million, at 44 cents per share.
“Further shares were acquired off-market last night which increased Air New Zealand’s relevant interest to 14.9%,” the company said in a statement. “The purchase of the shareholding was completed from existing cash resources.”
Air NZ was given permission from the Australian Foreign Investment Review Board to complete the purchase, with chief executive Robb Fyfe confirming the company has no intention to increase its stake beyond 14.99%.
“This is simply an investment in Virgin Blue that reinforces Air New Zealand’s strategy to grow its business in Australasia which is continually evolving as a single aviation market,” Fyfe said in the statement.
“This investment cements the important relationship between our two airlines and demonstrates the confidence we have in Virgin Blue and its management to grow their business both within the Tasman alliance and beyond the scope of the alliance.”
The Commonwealth Bank business sales indicator, compiled from the value of credit and debt transactions, remained flat in December following 12 months of consecutive declines.
CommSec economist Craig James also noted that only five of the 12 sectors covered in the survey recorded declines. “The biggest industry category, retail stores, rose by 0.5% in December, its fourth straight gain,” he said.
James noted the results were pleasing, given there was restrained business activity in New South Wales and Queensland during December.
“While growth in economy-wide spending remains elusive, the good news is that the majority of industry sectors are still expanding rather than contracting,” he said.
“The BSI had previously fallen on a trend basis since December 2009, meaning that the latest figures paint a much better picture for business sales as we begin the New Year. The job market has strengthened in recent months in NSW, serving to boost business sales.”
Google has announced that co-founder Larry Page will take over as chief executive from Eric Schmidt, in a move that some analysts are dubbing a defensive tactic against fast-growing start-ups.
“Day-to-day adult supervision no longer needed!” Schmidt said in a tweet after the announcement was made this morning.
Page will take control on April 4, with Schmidt to remain as executive chairman, focusing on deals and government outreach. Co-founder Sergey Brin will be focusing on strategic projects.
“Larry is ready. It’s time for him to have a shot at running this,” Schmidt said this morning.
The announcement came as Google reported a 29% increase in both revenue and profit for the fourth quarter, with the former coming in at $US8.75 billion. Profit came in at $US2.85 billion.
Chief financial officer Patrick Pichette also confirmed in the conference call that a 10% pay raise awarded last year to all employees was an attempt to stop talent from leaving to other start-ups in Silicon Valley.
The Australian sharemarket has fallen this morning following a weak night on Wall Street overnight.
The benchmark S&P/ASX200 index was down 36 points or 0.76% to 4747.1 at 12.15 AEST, while the Australian dollar also fell to US98c.
AMP shares gained 0.2% to $5.10, while Commonwealth Bank shares lost 0.2% to $51.54. ANZ gained 0.9% to $23.26 as NAB rose 0.1% to $24.17.
Shares in Village Roadshow have gained over 5% this morning after it confirmed the business is in discussions to sell a stake of the company to Austereo Group.
Shares were up 5.26% to $2.60 this morning, with Austereo shares also up 4.7% to $1.89.
“VRL confirms that it is in discussions in relation to a potential transaction regarding its shareholding in Austereo,” the Village statement said. “The discussions may result in a transaction which, if completed, may result in a disposal of VRL’s shareholding in Austereo.”
“There is no certainty that the discussions will result in a transaction or that any transaction will be completed.”
As reported by The Australian, Gina Rinehart has doubled her stake in Fairfax Media to nearly 4%, valued at around $120 million.
The report follows a move by Rinehart in November to acquire 10% of Ten Network Holdings.
Wall Street stocks fell overnight due to poor performances from tech and materials businesses, although Morgan Stanley reported higher than expected revenue.
The Dow Jones industrial average dipped 2.49 points, or 0.02%, to 11,822.80.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
