KEY POINTS:
It appears that the catalyst for the surge in The Warehouse share price may have been the start of talks between Stephen Tindall and Woolworths.
It is no secret that Woolworths has been trying to get Tindall to the table for some time.
The first meeting - understood to have taken place last week - seems the most likely reason for the sudden enthusiasm for the shares, which pushed their price from $6.51 on Wednesday to $7.05 by the close on Friday.
Tindall had cancelled his own bid to privatise The Warehouse a week earlier, and there had already been several days of media speculation that Woolworths was about to pounce.
There is also some suggestion that Tindall has come to the table with interest from two other potential bidders - a shrewd move which should ensure Woolworths will have to pay a healthy premium if it is to capture the jewel in the New Zealand retailing crown.
Warehouse shares closed at $6.85 last night.
Telecom split
The market clearly wasn't perturbed by the Business Herald story on Tuesday which tipped that the select committee looking at deregulation of the telco market is planning to recommend that Telecom split its retail and wholesale divisions. One of the unnamed sources was from within the select committee and another was from the upper echelons of Telecom.
The split is a tougher measure than had been previously put forward as part of the Telecommunications Amendment Bill. That surely can't be a good thing for the stock.
Sometimes breaking up a company can add value for shareholders, as the sum of the parts adds up to more than the whole.
But telco experts warn that isn't the case for Telecom, because a split could destroy any competitive advantage its retail business is able to extract from owning the wholesale business.
The select committee is due to deliver its recommendation to Parliament on December 5.
Telecom shares went onwards and upwards this week to peak at $4.80, driven by international institutions correcting the short positions they took after the unbundling announcement and by some enthusiasm for the Yellow Pages sale.
They slipped yesterday to close at $4.62
Coke isn't it
At least one potential buyer for Independent Liquor and its stable of popular ready-to-drink tipples can probably be counted out following the news that Coca-Cola Amatil (CCA) has bought global spirits distributor Maxxium.
CCA was understood to be one of the bidders for Independent and it is now evident it was very serious about getting into the alcohol market. Maxxium brands include Absolut Vodka and Cointreau as well as Jim Beam - which gives CCA access to Australia's most popular ready-to-drink beverage Jim Beam and cola. Mmmm ... nice synergies.
Market watching
Forsyth Barr has started covering the NZX - the listed stock. Despite popular fears that companies on the exchange are being consumed by Australian predators, Forsyth Barr analyst Guy Hallwright is optimistic.
New Zealand's equity market capitalisation is only about 40 per cent of GDP which suggests big potential for growth, he writes.
"We believe potential listings from the primary sector and SOEs, as well as early-phase businesses from other sectors, should enable NZ market capitalisation to increase faster than nominal GDP."
More specifically, the report highlights NZX's Smartshares passive funds management business, its Link registry business and its new Australian Electronic Communications Network as avenues for significant earnings growth.
Capital expenditure for the NZX is likely to increase, the report says, but so will its free cashflow and net cash balance. There is potential for it to increase its dividend payout from the current 60 per cent of earnings.
With that in mind Hallwright gave the stock an "accumulate" recommendation and a valuation of $6.60 a share. NZX shares closed at $6.28 yesterday.
Grape expectations
Shares in listed wine exporter Delegat's have risen more than 20 per cent this month, and have nearly doubled in value since they listed at $1.40 in April.
The latest rise seems to have been kicked off by some reassuring management words at the annual meeting on October 31. First-quarter revenue was up 53 per cent and it looks like the company is on track to meet its prospectus forecasts.
Managing director Jim Delegat took the unusual step of offering investors in his wine company a $22 million sweetener from his own pocket if prospectus targets are not met.
By the time the company listed, the New Zealand dollar was in freefall - always good news for an exporter - and Delegat's money looked very safe. But the surprise rebound of the dollar put the pressure back on the company to meet those targets through a strong performance.
The tone at the annual meeting seems to have been enough to reassure investors that this is happening. Delegat's shares closed yesterday up 13c at $2.75.
Beneficio grande?
Given the market expectation that Craig Norgate was about to lead a PGG Wrightson charge across the Tasman, the news last month that he had shifted focus a few thousand kilometres to the east came as a bolt from the blue.
NZ Farming Systems Uruguay will acquire farms and fund their development into New Zealand-style dairy and beef farms.
The logic looks sound. Australian agriculture is still blighted by drought and once you get past stereotypes about small South American nations, Uruguay is an intriguing prospect.
A quick internet check reveals that the temperate nation of 3.5 million is one of the most politically stable on the continent.
It has a well-educated workforce and a developed industrial sector but its economy is heavily dependent on agriculture.
Labour and other input costs make it one of the lowest-cost agricultural producers in the world but it is just starting to make attempts to add value to its products.
That sounds like familiar territory - language aside, it could be New Zealand 10 or 15 years ago. A market crying out for the Norgate touch.
Goldman Sachs JBWere analyst Rodney Deacon has taken a look at the prospectus. He agrees that the strategy makes good sense on paper.
But he raises a few questions about the extent to which it may distract management from PGW's core business.
The capital raising will aim for up to $150 million with the issue of 75 million shares at $1 and the right to oversubscription for another 75 million.
Payment will be made in two instalments - 50c a share this December and another 50c next December.
After that management will use their "best endeavours" to list the company on the NZX.
Deacon notes that the lack of guarantee about listing could be a deterrent to some institutions.
If the oversubscription is not filled, then PGW and Norgate's Rural Portfolio Investments would control 35 per cent of NZFSU. If it is fully oversubscribed that stake would be 19.6 per cent.
Either way, the deal structure provides significant upside for PGW in return for a relatively small investment - through management fees and participation in the success of the venture.
But it is still too early to revise PGW's forecasts or valuation, Deacon says.
He retains a market perform/hold recommendation and a valuation of $1.79. The shares closed up 2c at $1.69 yesterday.
Life after death for Feltex
The flashy Feltex hospitality tent at the Melbourne Cup on Tuesday turned the heads of a few New Zealand punters who were under the reasonable impression that the company was in no shape for that kind of high-class carry on. But though Feltex might be dead as a listed company, the brand lives on.
The Feltex tent has been a regular feature at the cup for several years and is one that the brand's new owner, Godfrey Hirst, was more than happy to pay for even though it doesn't actually take control for a few more days.
Despite its demise as a corporate entity, Feltex's carpets are still selling - apparently at the same volume they were before its collapse. It looks as if the previous management team really couldn't do any worse.
Meanwhile, further fallout from the carpet collapse was noted this week as resins manufacturer Nuplex said it would take a $500,000 hit on net profit this year because of a bad Feltex debt. Nuplex shares closed at $6.82, up 7c, yesterday.