NZ stocks end weaker, but Fonterra rallies sharply after deal

Fonterra’s shares rallied after the co-op announced that it planned to sell its consumer business to French dairy giant Lactalis, while the broader sharemarket ended weaker, driven by a decline in market leader Fisher and Paykel Healthcare.

Friday, August 22nd 2025, 7:15PM

by BusinessDesk

The S&P/NZX 50 Index closed 151.31 points (1.15%) down at 13,042.76, with 63.9 million shares, worth $144.3m trading. There were 90 falls and 48 rises on the main board.

Global view

In the big picture, international investors were focused on what US Federal Reserve governor Jerome Powell’s message would be at this weekend’s symposium at Jackson Hole, Wyoming.

Expectations are that Powell will indicate when the Fed will start cutting rates in the face of weak US labour data and given pressure from US President Donald Trump.

F&P down

Fisher and Paykel Healthcare (FPH), which has the most significant bearing on the S&P/NZX 50 Index, ended 80c or 2% down at $37.65 after a strong run on Thursday.

At this week’s annual meeting, FPH said its outlook for the full year remained unchanged, with operating revenue in the range of $2.15 billion to $2.25b and net profit after tax in a range of $390m to $440m.

Fonterra shakes it up

Fonterra’s shares, which can only be owned by farmers, rallied by 98c to $6.00 while the units, which are open to individual investors, gained 19c to $7.15 after the divestment news.

At $3.845 bill, the purchase price was well over market expectations and would count as one of NZ’s biggest ever corporate transactions.

The market took some encouragement from Fonterra’s sale, which will put $3.2 billionor $2 a share into farmers' pockets if it goes ahead.

“It looks to be a pretty good deal,” Hamilton Hindin Green investment adviser Jeremy Sullivan said.

“It was a very competitive bidding process, and it certainly came out at the top end of analyst expectations.

“A tax-free capital return at $2 a share, that’s a decent amount of money that’s going back into the farmer’s back pocket. Lactalis is paying top dollar for these assets, and it gives them the ability to build their own brands in this part of the world.

“It shows why it’s much easier to go out and pay a premium for a brand than it is to build one and compete in the same market.”

Dairies rise

Dairy was the theme of the day, with a2 Milk, which this week outlined an ambitious plan to buy Yashili NZ’s plant at Pokeno, gaining 7c to $9.75.

Synlait Milk, which is about 20% owned by a2, gained 7c to $71c.

Sky falls

SkyCity Entertainment, which completed a capital raise despite opposition from Australian fund manager and cornerstone shareholder Allan Gray, dropped 20c or 22% to 71c.

SkyCity raised $159m from a non-renounceable entitlement offer and $81m from a placement.

In the long run, Sullivan said the Reserve Bank’s 25 basis point cut in the official cash rate to 3% this week would be supportive of the market, which has a high proportion of interest rate-sensitive stocks.

Looking ahead, results are due on Monday from Chorus, Tourism Holdings, Steel and Tube, Vector, Property For Industry and Scales.

Tags: Market Close