NZ sharemarket up on Manawa takeover proposal

Energy generator Manawa surged more than 30% on the New Zealand sharemarket after receiving a takeover proposal from Contact valued at $1.86 billion and supported by major shareholders.

Wednesday, September 11th 2024, 6:51PM

by BusinessDesk

The S&P/NZX 50 Index ended slightly ahead after an up-and-down day.

According to the NZX at just after 6pm, the NZX50 has gained 9.64 points or 0.08% to 12,642.47 with 26 million shares changing hands worth $103.7m.

“I think half the market was listening to the amusing presidential debate in the United States,” Matt Goodson, managing director of Salt Funds Management, said.

Manawa and Contact

Tauranga-based Manawa (formerly Trustpower, which earlier sold its retail business to Mercury) rose $1.32 or 32.75% to $5.35 after joining a scheme of arrangement with Contact, which will buy 100% of the shares at a total offer price of $5.95 a share, a premium of nearly 50%.

The offer is made up of 0.5719 Contact shares for each Manawa share, equivalent to $4.79) and a cash payment of $1.16 per each Manawa share.

Manawa shareholders will finish up with 18.5% of Contact. Manawa owns and operates 25 hydro schemes with generation capacity of 500MW and has 1,200MW of secured development options in wind and solar.

Major shareholders Infratil, with 51%, and Tauranga Energy Consumer Trust, 26.8%, are supporting the scheme of arrangement.

Infratil, up 14c to $12.19, told the market it will receive $186m from the sale and have a 9.5% stake in Contact. Infratil said integrating Manawa’s hydro assets with Contact’s diversified energy portfolio will create a more resilient and flexible generation platform.

Contact was down 27c or 3.2% to $8.18. Elsewhere in the energy sector, Meridian was up 12.5c or 2.07% to $6.15; Genesis gained 1.5c to $2.25; and Mercury declined 19c or 3.02% to $6.10.

Goodson said the Contact takeover offer was a surprise and “I think the market is still coming to grips with what it all means.”

He said Contact is getting a complementary set of generation assets at a discount to replacement value – “it’s preferable to invest in yourself. But there’s a question mark over the (energy) market concentration which goes over the Electricity Commission’s 20% hurdle.

“But Contact has highlighted its greater ability to offer hedging products to other players in the market.”

Goodson said it was a good, little deal for Infratil which has been stuck with an historic shareholding position in Manawa. “Still, there’s a lot of water to pass under the bridge with the scheme of arrangement.”

Other stocks

Briscoe Group, unchanged at $4.94, reported record half-year sales of $372.08m, up 0.77%, and a net profit of $33.21m, a decline of 22.31%. Briscoe is paying an unchanged interim dividend of 12.5c a share on Oct 9.

Homeware sales for the six months ending July 28 were up 0.28% to $230.03m and sporting goods increased 1.58% to $142.05m. Online sales reached 18.77% and gross profit margin declined 76 basis points to 42.97%.

Briscoe remained cautious about the retail environment – “we are hopeful the lower official cash rate will mark the beginning of improved consumer confidence” – and warned it will not repeat last year’s net profit of $84.2m.

Goodson said Briscoe is an outstanding retailer but the tough economic conditions reflect the latest results.

KMD Brands declined 3c or 5.77% to 49c following a weaker trading update from Australian clothing retailer Premier.

Market leader Fisher and Paykel Healthcare was up 12c to a new all-time high of $37.55, beating its previous best close of $36.85 on August 1, 2020.

Freightways increased 13c to $9.53; Chorus was up 19c or 2.12% to $9.16; Ebos Group gained 49c to $35.99; Vulcan Steel improved 16c or 2.03% to $8.05; and AFT Pharmaceuticals added 10c or 3.07% to $3.36.

Restaurant Brands was up 11c or 3% to $3.78; Tower gained a further 4.5c or 3.8% to $1.23; Blackpearl Group added 3c or 2.21% to $1.39; and Burger Fuel increased 1.5c or 5.17% to 30.5c.

Dual-listed banks ANZ was down 73c or 2.12% to $33.77, and Westpac declined 87c or 2.47% to $34.30. Heartland Group decreased 2c or 1.87% to $1.05.

In the property sector, Vital Healthcare Trust decreased 3.5c or 1.77% to $1.94; Argosy was down 2c or 1.75% to $1.12; Stride shed 2c to $1.39; and Investore declined also declined 2c to $1.22.

Skellerup was down 8c to $4.80; Auckland International Airport decreased 9c to $7.40; Steel & Tube shed 6c or 6.35% to 90c; Move Logistics fell 2c or 7.55% to 24.5c; Green Cross Health declined 4c or 4.76% to 80c; and 2 Cheap Cars was down 2c or 2.41% to 81c.

Tags: Market Close