Market close: Eroad shares surge on takeover offer, ‘shocker’ day for Pacific Edge

Shares in Pacific Edge fell 1.2 cents, or 14.1 per cent, to 7.5 cents.

New Zealand’s sharemarket edged down even as shares in transport fleet management software firm Eroad flew up by almost 60 per cent after the company’s announcement of a full takeover offer at $1.30 a share.

The S&P/NZX 50 Index edged down 37.2 points, or 0.3 per cent, to 11,739.05.

Turnover on the entire market was $119.4 million and 41 stocks rose while 84 fell.

Eroad’s shares were put in a trading halt this morning before the company announced the takeover offer from Toronto stock exchange-listed Constellation Software through an Australian subsidiary of the Volaris Group.

Eroad’s board told the market it would act in what it considered to be the “best interests” of the company and its shareholders in assessing the merits of the non-binding indicative offer from Volaris.

When Eroad’s trading halt lifted after noon, shares in the firm rocketed up by 46 cents, or 59.7 per cent, to $1.23, and by early evening, almost $21.8m in shares were traded.

Even though it was a considerable jump, Hamilton Hindin Greene investment adviser Tim McBride said Eroad’s share price still had some way to recover before it got close to its previous share price highs.

The stock was floating around the $5 mark at the end of 2021 and was $4.23 per share the day before Eroad’s chief executive Steve Newman abruptly quit in April 2022. Since then, the share price has been in steady decline.

McBride described Volaris’ offer as a “reasonable deal” for the acquirer – but not so much for the shareholders considering where the share price used to be.

Cancer diagnostics firm Pacific Edge released its annual report today and the stock fell 1.2 cents, or 14.1 per cent, to 7.5 cents in response.

McBride said the company had had another “shocker” of a day, thanks to the annual report not providing much certainty about its future.

It could be the nail in the coffin when it came to investor sentiment, he told BusinessDesk.

But he noted that Pacific Edge had enough cash to burn for two years, and the firm could become a leaner operation as it figured out its next steps.

In other company news, tech firm Solution Dynamics said it now expects its full-year profit for the 2023 financial year – previously forecast to be in the range of $2.7m to $3m – to be around the top end of its guidance.

The stock ended the day down 1 cent, or 0.5 per cent, to $2.13 in very light trading. Scott Technology was up 1 cent, or 0.3 per cent, to $3.04. Travel software company Serko was down 2 cents, or 0.6 per cent, to $3.60 and cinema tech firm Vista Group rose 2 cents, or 1.2 per cent, to $1.69.

Telco Spark confirmed this afternoon that Connexa had completed its acquisition of the tower assets of 2degrees Mobile and 2degrees Networks.

Connexa is an independent mobile towers business that is co-owned by Spark and the Ontario Teachers’ Pension Fund. Spark edged down 1.5 cents, or 0.3 per cent, to $5.09 at close.

General insurer Tower jumped 2 cents or 3.3 per cent to 62 cents, while NZX Limited was up 3 cents, or 2.7 per cent, to $1.14. Oceania Healthcare turned over almost $900,000 during the day and rose 1 cent, or 1.4 per cent, to 75 cents.

Mainfreight was up 59 cents, or 0.8 per cent, to $72.99 and seafood company Sanford rose 10 cents, or 2.5 per cent, to $4.17. AFT Pharmaceuticals climbed 7 cents, or 2 per cent, to $3.65.

Agricultural firm Seeka fell 15 cents, or 6.1 per cent, to $2.30 while A2 Milk was down 13 cents, or 2.3 per cent, to $5.44.

On the currency front, the NZ dollar was trading at 62.18 US cents at 3pm in Wellington, from 61.69c on Tuesday.