Big acquisitions lift NZX 50

Business acquisitions by two of the sharemarket’s top stocks helped the NZX50 end the week with a small gain.

Friday, December 10th 2021, 6:32PM

by BusinessDesk

The S&P/NZX 50 Index rose 78 points, or 0.6%, to 12,849.68. Turnover was $226 million. The NZ dollar was trading at 68.95 US cents today, down from 68.05 cents yesterday.

Tourism Holdings led the market higher, jumping 6% to $3.02, after announcing it would absorb its ASX-listed competitor Apollo Tourism & Leisure in a deal valued at $144m.

But instead of stumping up cash, the NZ company will issue enough new shares to give Apollo shareholders an approximately 25% stake in the enlarged group.

Tourism Holdings said it hopes to cut as much as $19m of costs from the combined operations and apply for a foreign-exempt listing on the ASX so Australian investors can buy in easily.

The merger will provide some safety in numbers as the group navigates the recovery of tourism as the pandemic fades into the background of daily human lives.

Pharmaceutical group Ebos came off a trading halt this morning having successfully raised $674 million in an institutional share placement.

New shares were issued a 5.5% discount to the previous NZX closing price of $36.50, but the on-market price lifted 5.5% to $38.50 in afternoon trading.

Ebos is using the cash to buy medical device distributor LifeHealthcare, which operates in Australia, NZ and Asia, for A$1.2b in cash and A$23m of shares.

“The acquisition of LifeHealthcare accelerates EBOS’ medical devices strategy and creates a platform for Ebos to capitalise on additional future growth opportunities,” said chief executive John Cullity.

An investment advisor at Craigs Investment Partners, Peter McIntyre, said the dual acquisitions were helping to hold the index up, with traders otherwise waiting for US inflation data to be released overnight.

“There is a little bit of uncertainty with that inflation coming out overnight. If it gets to be above 7%, things could get quite difficult for markets,” he said.

Wall Street expects the consumer price index to be up 6.7% from last year, its highest year-on-year level since 1982.

A fairly equal number of NZ stocks were up and down today, with Vista Group the worst affected with a 2.2% decline to $2.25.

Meridian Energy dropped 1.7% to $4.72 and Auckland International Airport was down 1.5% at $7.72.

Fonterra Shareholders' Fund Units climbed another 4.1% to $3.85.

McIntyre said the new capital structure would result in a “cleaner investment” with the overall performance of the cooperative better aligned with unitholders in the fund.

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