Stock Takes: Tasty pickings

Griffin's may be for sale but if so, not this year. Photo / Janna Dixon

It seems it's not just Chinese investors that are looking to buy food-producing companies in New Zealand.

United Arab Emirates-based Emirates Investments Group has said it is looking to buy food and agriculture assets in Australia and New Zealand.

"We've started exploring and we're going to explore across the board, in Australia and New Zealand and this entire region," chief executive Raza Jafar told Bloomberg this week while at a conference in Sydney.

Emirates Investments already holds Australian assets such as a stake in the Palazzo Versace luxury hotel on Queensland's Gold Coast and says it has appointed external advisers to help it find other opportunities.

Stock Takes wonders how the National-led Government would react to interest from UEA.

Labour certainly weren't keen when Dubai Aerospace made a bid for Auckland Airport in 2007.

NO IPO THANKS

One food company that is definitely on the block is Tegel. Australian Private equity owner Pacific Equity Partners appointed investment banks Morgan Stanley and Greenhill Caliburn several weeks ago to review the business.

Industry sources say the choice of advisers sends a very clear signal that PEP is looking for international buyers and that an initial public offering in New Zealand is not an option.

Neither Morgan Stanley or Greenhill Caliburn have capital markets capability in New Zealand.

"They obviously don't want people thinking that [an IPO] is an alternative."

IPOs are definitely in the hard basket at the moment and PEP will be wanting a good price for the asset.

Speculation has also been floated that biscuit maker Griffin's will also be sold by PEP. But Stock Takes understands it's definitely not up for sale this year.

SLOW BURN

The collapse of sale talks by Yellow Pages Group this week shows just how hard it is to get a deal off the ground at the moment.

But hopefully there will be some improvement as signs are that internationally deal-making is picking up.

Bloomberg figures show multibillion-dollar takeovers made a comeback in the three months to September 30.

The quarter was the busiest in two years, with US$562.6 billion ($764 billion) of announced transactions.

BHP Billiton made an unsolicited US$40 billion offer for Potash, Sanofi-Aventis began its pursuit of Genzyme for at least US$18.5 billion and Intel announced its largest acquisition - the US$7.7 billion takeover of security-software maker McAfee.

MORE OR LESS?

Stock Takes has been surprised to see the number of shares traded in New Zealand Farming Systems Uruguay this week after the Olam offer closed.

Last week investors could have sold into the offer or just traded on the market and got 70c a share but this week the share price plummeted to 62c, showing there are some who have sold up for less (shares closed yesterday at 63c).

It seems an odd move to make given it was clear from Monday last week that Olam was going to go ahead after it went unconditional.

Forsyth Barr analyst John Cairns says it's hard to know why people would have waited to sell until after the end of the offer but investors sometimes have their own reasons - including the need to turn the shares into cash quickly.

He says the share price is also still relatively high compared with the 40c Farming Systems was trading at before the takeover bid began.

Now that Olam owns 78 per cent of the company, Cairns predicts it will become increasingly illiquid. "It will no longer have a base in New Zealand. I think the information flow and whole profile of the business will diminish."

DELIST LIKELY

Cairns also believes it is likely Olam will delist Farming Systems from the stock exchange over time, although the company says it is not thinking about buying the rest of the shares just yet.

"I don't think they will do anything in the immediate future," Cairns says.

"But I would think in due course it would be delisted. It's reasonably expensive to maintain a listing and having to comply with all the listing requirements is quite a lot of work."

Farming Systems seems likely to join Affco, which has been edging ever nearer the point where takeover bidder Talley's can compulsorily acquire the rest of the shares and delist it this week.

Talley's Group's latest substantial shareholder notice on Wednesday shows it is up to 88.57 per cent - just shy of the 90 per cent it needs to make its move.

Stock Takes understands most of the remaining shares are owned in small parcels so it could be a slow grind from here. The offer doesn't close until November 2. Affco shares last traded at 36c.

IN THE FAMILY

Stock Takes notes that Air New Zealand chief Rob Fyfe has been buying shares in candle-maker Ecoya for his children.

Fyfe, who is an independent director of Ecoya, spent $225,000 buying more shares in the placement held by the company for its acquisition of skincare firm Trilogy.

He acquired 233,334 shares through his family trust and a further 33,333 each for his daughter Christie and son Nichol.

Stock Takes is all for helping children learn more about investing but is not sure this is a good place for beginners to start.

Ecoya shares have fallen 20 per cent since they were listed in May. Yesterday they closed steady at 80c.

SMALL COUP

Online portfolio information provider Sharesight has made a big step up after signing a joint venture deal with ANZ's Direct Broking.

The Wellington company, which launched in 2007, will provide performance reporting and accounting services to Direct Broking's clients, allowing investors to monitor how their shares are performing and easily work out how much tax they need to pay on dividends.

Stock Takes is sure investors will be keen to make the most of any service that means they don't have to pay their accountant to work it out.

ON A HIGH

Energy and infrastructure investor Infratil has snuck up and hit a year-high.

The company touched $1.82 this week - the highest it has been since August last year.

First NZ Capital's Rob Bode says the share price has picked up on the back of the rising market and growing expectations that its half-year result will be an improvement.

Infratil has had a couple of years of poorer results but its investment in the downstream Shell assets are being seen as a positive as well as moves to sell off its low-yielding energy assets and Luebeck airport.

It still has shares in several other European airports but Bode reckons it will be when, not if, that Infratil sells them as well.

"It's been an easy stock not to own. But now it's back on the radar."

Analysts will be looking closely at the performance of Infratil's Australian energy assets. The interim result is due out in November.

Shares closed up 1c yesterday at $1.78.