MARKET CLOSE: NZ shares mixed; A2 extends gain on takeover talk; Auckland Airport, Spark fall with kiwi

Tuesday 23rd June 2015

New Zealand shares were mixed, with A2 Milk Co leading gainers on expectations the milk marketer will receive a formal takeover offer, while stocks such as Spark New Zealand and Auckland International Airport fell as a declining kiwi dollar rattled offshore investors.

The benchmark S&P/NZX 50 Index rose 0.09 points, or 0.002 percent, to 5772.140. Within the index, 24 stocks rose, 22 fell and four were unchanged. Turnover was $137 million, including $29 million of Spark shares.

A2 rose 7.6 percent to 71 cents, the highest close in a year. Freedom Foods, which owns about 19 percent of A2 Milk with a related entity, is mulling a takeover of A2 Milk, making an indicative non-binding and conditional expression of interest to buy the shares it doesn’t already own. A deal would be contingent on the consortium, which includes an “unnamed leading international liquid dairy milk company”, undertaking due diligence. Speculation is that China’s Bright Dairy, which has a cornerstone holding in A2's infant formula maker Synlait Milk Co, would be interested, or New Hope Nutritional Foods Co. Synlait was unchanged at $2.53 and the Fonterra Shareholders' Fund fell 0.8 percent to $4.91.

"A2 closed at its recent highs on more detail of Freedom Foods doing a bit of due diligence," said Grant Williamson, a director at Hamilton Hindin Greene.

Spark fell 1.4 percent to $2.79, Auckland Airport dropped 0.9 percent to $4.92, and Fletcher Building declined 0.6 percent to $8.21. Chorus shed 1.3 percent to $2.95.

"It does appear to be a bit of foreign selling in major bluechip stocks," Williamson said. "I imagine foreign investors don't want to see their recent gains eaten up by a declining New Zealand dollar."

The kiwi fell to a five year low 68.47 US cents at 5pm in Wellington on expectations the Reserve Bank will cut interest rates again this year, while the greenback is rallying.

Energy companies were mixed. MightyRiverPower rose 2.3 percent to $2.67 and Meridian Energy gained 1.7 percent to $2.135, while Genesis Energy dropped 2.4 percent to $1.84 and Contact Energy fell 1.4 percent to $5.12.

Sky Network Television fell 1.3 percent to $6.10 and Trade Me declined 1.2 percent to $3.41.

Kathmandu Holdings, the outdoor equipment retailer, fell 4.6 percent to $1.36 and SkyCity Entertainment Group gained 3 percent to $4.28. Pacific Edge, the bladder cancer test developer, rose 1.6 percent to 63 cents and Ebos Group gained 1.5 percent to $10.56.

BusinessDesk.co.nz

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