Airline battle to keep market busy

By ELLEN READ Sharemarket writer

The proposed buying in to Air New Zealand by Qantas Airways and the release of more news about Fisher and Paykel's planned healthcare division spin-off are likely to dominate local sharemarket news this week.

The market is closed today for Queen's Birthday but it will be business as usual tomorrow.

The Air NZ ownership debate is expected to continue to generate plenty of news but is thought unlikely to be resolved in the short term.

JP Morgan's Arthur Lim thinks Qantas will continue to push hard to get the Government to agree to its proposal.

"I think the resolution will be that Air New Zealand sells Ansett Australia to [Singapore Airlines] and that will be positive for Air New Zealand's share price."

But JB Were broker John Cobb disagrees, believing that the deal will face serious difficulties.

"There are just too many hurdles: you've got regulatory hurdles, you've got ownership hurdles, you've got competition issues."

Thursday's release by Fisher and Paykel of its financial results, and more details of the proposed split of its healthcare and whiteware divisions, which needs 75 per cent shareholder approval, will be keenly awaited.

The result is expected to be good, following strong whiteware sales, but main interest will focus on the split.

Mr Lim wants to know "how far down the track they have gone with it and how has the marketing of the potential float of 20 per cent of the healthcare unit in the US gone."

"I assume they would have done some preliminary work, trying to gauge some demand, and that's what the market's eagerly looking forward to."

Another ownership battle, this time between British meat magnate Bernard Matthews and New Zealand meat company PPCS over meat processor Richmond, will also be in the spotlight.

"That's going to be interesting," Mr Cobb said.

"It's a very small company, though, in terms of the overall market."

Thursday also brings the scheduled release of the Commerce Commission's decision on Carter Holt Harvey's application for clearance to acquire CNI assets.

Interest in this will be muted as Carter Holt has openly said the application is designed to keep options open and is not a positioning move. More interest will centre on when the receiver declares the assets are actually up for sale.

The tussle for ownership of Montana between Lion Nathan and Allied Domecq will continue but until the stock exchange market surveillance panel releases its decision on Lion's acquisition of some shares in the winemaker, little action is likely.

The fortunes of Telecom will shape the overall movement of the NZSE 40 index simply because its weighting makes up almost a quarter of that index.

The company has been under pressure since it placed $500 million of new shares with institutional investors recently. The stock is also at the mercy of telecommunication trends around the world, which have been downbeat of late.