NZ stocks: Shares down - all eyes on Richmond takeover fate

11.30am

The sharemarket was off to a sluggish start this morning, but all eyes were on the fate of a takeover bid for meat company Richmond.

By 11am the NZSE-40 capital index edged down 4.63 points to 1980.06 on $22.1 million.

Turnover was dominated as usual by market leader Telecom, which fell 6c to 462 on $9.7 million worth of shares.

Another 6c fall yesterday was put down to profit-taking as the stock regains some of the composure it lost due to negative earnings sentiment late last year.

But brokers said Richmond was the talk of the town, as the revelation that Lowe Corporation had taken an 8 per cent stake in the company sunk in.

Lowe now holds 10 per cent of the company, which could prove to be a blockage for rival meat company PPCS's takeover bid of $3.05.

The offer requires a minimum 90 per cent control of the company, and the Lowe move "would appear to eliminate the likelihood of the PPCS bid being successful," Andrew McDouall of McDouall Securities said.

Richmond shares raced up 50c when the Lowe transaction took place two days ago, but have since lost 5 per cent of their value, sinking 9c to 276 this morning.

Elsewhere the market was looking fairly flat in line with a slight sell off on Wall St.

New Zealand's number 2 stock, Carter Holt Harvey, crept up another 3c this morning to 188 as investors adjusted their portfolios more favourably towards New Zealand stocks.

Another stock which has been quietly improving is Tower, up 2c to 227 today. Mr McDouall said there was a "growing appreciation that it had been oversold".

Credit recovery agency Baycorp Advantage fell 5c to 229, which brokers viewed as a correction after a 13c jump yesterday on the resignation of executive director David Grafton.

Australasian food maker Goodman Fielder was also being closely watched this morning after the company announced it might have to pay tax and penalties of up to $111 million on an old refinancing deal.

As Australia's markets opened, Goodman's share price in New Zealand fell 10c to 181.

Analysts said the news made Burns Philp's takeover bid for Goodman even more attractive. Ingredients maker Burns Philp is controlled by New Zealand billionaire Graeme Hart, who also owns New Zealand Dairy Foods.

Other moves included Sky City, down 8c to 810, while Fletcher Building was up 4c to 348, Tranz Rail down 2c to 105 and Auckland Airport up a cent to 545.

So far falls have overtaken rises 27 to 26 on 82 stocks traded.

On Wall St, a profit warning from computer company Gateway and a disappointing result from aluminium giant Alcoa sent the Dow Jones industrial average down 145.28 points, or 1.66 per cent, at 8595.31.

The broader Standard & Poor's 500 Index was down 12.99 points, or 1.41 per cent, at 909.94, and the technology-laced Nasdaq Composite Index was down 30.48 points, or 2.13 per cent, at 1401.

- NZPA