NZ stocks: Fletcher Building acquisition dominates market focus

Fletcher Building hogged the limelight on the New Zealand sharemarket today, with an announcement that it was to buy Australian building products firm The Laminex Group.

Fletcher Building plans to pay $A645 million ($NZ761 million) for the purchase, which will be funded through a mixture of bank debt and an equity placement of 43.7 million shares to institutional investors in New Zealand and Australia.

Brokers said market turnover was low as institutions spent much of the day assessing the deal while the shares remained on a trading halt.

"People were really just getting their heads around that. It looks to be a pretty good acquisition, gives some more geographic diversity, more earnings diversity," said Craig Robins of Salomon Smith Barney.

"Outside that it was really just (order) flows."

That left the NZSE-40 capital index down 7 points to 2038.82 on a paltry total turnover of $34.8 million.

Among those on the upside, Sky Casino also flexed muscles, up 6c to 721 as its 60 per cent-owned cinema subsidiary Force announced it was changing its name to Sky City Leisure. Force, which closed up 0.4c to 7.6c, also announced a 25-for-one consolidation of its shares.

Auckland Airport also continued to strengthen, up 8c to 440 as investors repositioned themselves ahead of the company's capital repayment.

Stocks on the downside included Baycorp Advantage down 13c to 385, BIL International down a cent to 54, Carter Holt Harvey down 2c to 172, Cedenco down 10c to 190, and Restaurant Brands down 10c to 183, despite announcing yesterday that its second quarter sales were 17.7 per cent higher than for the same period last year.

Telecom topped the total turnover with $15 million worth of shares, but fell 4c to 487, as rumours persisted that major stakeholder Verizon might be considering a fresh selldown attempt.

Certified Organics slipped 4c to 32 despite announcing three new marketing and distribution deals in Europe.

There were 53 falls and 36 rises on 128 stocks traded.

Another factor pegging back investor sentiment was a weak night on US markets. US stocks sagged to six-week lows as a stream of profit warnings from companies including fast food giant McDonald's and a surprise drop in industrial output doused an early rally sparked by Iraq's agreement to admit weapons inspectors.

Iraq's decision gave an initial fillip to the market but it fizzled as the Bush administration expressed scepticism.

Grim US economic data and corporate profit warnings also swivelled back into the spotlight. The Dow Jones industrial average fell 172.63 points, or 2.06 per cent, to 8207.55 and the technology-laced Nasdaq Composite Index fell 15.94 points to 1259.94.

- NZPA