NZ stocks: Market spurred higher by activity

The rush of takeover and restructuring activity which kicked the week off yesterday continued this morning, pushing the sharemarket higher despite a slightly softer overseas tone.

By 11.30am the benchmark NZSX-50 gross index was 18.43 points or 0.58 per cent higher at 3182.42 while the NZSX all capital index was 4.66 points higher at 996.81.

"Corporate activity is spurring the market along, and further progress is being made by those companies that are involved in that," First NZ Capital research manager Barry Lindsay said.

Stocks in play at the moment include Feltex, Carter Holt Harvey, Ports of Auckland, The Warehouse and NGC Holdings.

Feltex rose 7c to 58 by late morning, bid higher following a stand in the market for 10 per cent by brokerage UBS New Zealand on behalf of a mystery investor.

Broker Malcolm Davie, also of First NZ Capital said the rumour was that Feltex's rival in Australia, unlisted carpet company Godfrey Hirst, was behind the bid.

"They may see a chance to consolidate a fairly fractious industry structure," he said.

The offer is due to close at 5pm today unless terminated earlier, UBS said. Feltex has been under pressure since releasing two profit warnings in the current quarter.

But Mr Lindsay observed that relatively few Feltex shares -- around 1.2 million -- had been traded this morning relative to the numbers sought . "My feeling was that that was going to be the case. Feltex shareholders that have stayed thus far are pretty resilient people as they haven't been flushed out on the back of the significant downgrade to earnings that has happened on two occasions, they've decided to tough it out."

Meanwhile, Carter Holt Harvey quickly added 9c to yesterday's 28c gain taking it to 230. Yesterday the company said its 50.5 per cent owner, International Paper, was exploring "strategic alternatives" for its stake.

Investors interpreted that call as an opening for a possible takeover bid, although there could be other reasons.

Analysts say the move could spark interest from China, which has been a New Zealand forestry investor in the past, or offshore hedge funds.

The Warehouse was up 5c to 373, it also gained 28c yesterday after it confirmed it was in talks with Australian rival Millers. Investors were cheered by the prospect the talks may result in The Warehouse exiting the difficult Australian market.

NGC was flat at 372 having pushed as high as 380 this morning, adding to yesterday's 22c gain on Auckland lines company Vector's announcement it would offer shares and cash valued at $3.40 a share for NGC for the 32.8 per cent it does not already own.

The offer would open on July 11 and close on August 10.

Vector itself is about to list a quarter of its shares in the biggest public offering in six years.

Ports of Auckland was up 12c to 800 this morning after Auckland Regional Holdings (ARH) today declared its takeover offer for the company unconditional. The offer, for $8 per share, is set to close on July 15.

Elsewhere, Contact Energy was up 10c at 775. Mr Lindsay noted prices on the spot electricity market prices had firmed a little lately.

Also on the move this morning were Freightways up 5c to 305 and Waste Management up 7c to 638. Market leader Telecom was unchanged at 592.

There were 36 rises and 25 falls among 112 stocks traded by 11.30am and total turnover at that point was worth $49.63 million.

- NZPA