KEY POINTS:
Graeme Hart is clearly sick of waiting for Burns Philp shareholders to sell. In full-page newspaper advertisements this week he declared his intention not to extend the November 9 closing date for his takeover bid. He has already extended the date three times.
Hart also sent his declaration
of intent out to all shareholders but seems to have taken out the ads to ram his point home.
On face value this might seem like a sign of desperation. There was certainly nothing subtle about the black and white poster blaring the word "Accept" in a large bold font. The design work was so simple Hart could have probably run it up himself on Microsoft Word.
Those with multimillion-dollar advertising budgets might snigger but these tactics have worked for Hart in the past. About this time last year he was in a similar situation - waiting on tediously unpunctual Carter Holt Harvey shareholders to deliver him full control of that company. His strategy then included sending shareholders Christmas cards - which duly explained why it was a good idea to accept.
As of yesterday, Rank had 86.66 per cent of Burns Philp shares sewn up and, given the tendency of many institutions to accept in the last couple of days, it looks like he shouldn't have too much trouble getting the 3.34 per cent he still needs.
Burns Philp shares are still trading on the ASX at A$1.09.5 - just below his offer of A$1.10.
Bee alert - things are buzzing as Comvita gathers more honey
Health products company Comvita graduated to the main board of the NZX this week.
The company, which sells pollen, royal jelly and other bee-related products, is in growth mode. It raised $1 million in August with a private placement to Fisher Funds, a vote of confidence in itself in light of Fisher's record of picking winners.
This week, Comvita said it had raised another $10 million through a renounceable rights issue to existing shareholders.
The money will be used to strengthen the balance sheet after acquisitions this year, including a stake in Derma Sciences, an American specialist wound care company. Some money will also be used for further expansion, the company says.
In its first half-year result, Comvita reported sales had increased by 26 per cent and revenue was up to $18.3 million from $14.5 million in the same period a year ago. Its net profit dropped 7 per cent to $602,000, but that is not unusual for a company focusing on growth rather than short term returns.
Comvita shares have risen 77.5 per cent this year. They closed yesterday up 10c at $3.55.
Bargain hunting
After drifting as low as $6.42 after Stephen Tindall withdrew his takeover offer on Monday, shares in The Warehouse went through the roof yesterday. They leaped 31c to close at $6.81. That's well ahead of the $6.50 Woolworths paid for a 10 per cent stake - the move which effectively killed Tindall's offer of $5.75.
The expectation, from across the Tasman, is that Woolworths is about to pounce with a full takeover bid.
Australian commentators have been extremely bullish, interpreting Tindall's withdrawal as a green light for Woolworths to take control.
There is still some talk that Tindall and Pacific Equity Partners may be trying to stitch together a deal, perhaps with input from Foodstuffs or some other white knight.
But which ever way you crunch the numbers it looks like Woolworths has the firepower to make a killer bid.
One shareholder who decided that $6.50 looked good enough was chief financial officer Luke Bunt.
He disclosed this week that he had sold all of his 14,473 shares for at that price on October 27 - cashing in to the tune of about $94,000.
That sale is completely legitimate and, as part of the staff share scheme, Bunt has since been issued new shares. But it is interesting, given that as CFO he must have good insight into the true value of the company based on its operational performance (presumably a long way short of its current value, which includes a hefty takeover premium).
Obviously not many others have been prepared to follow Bunt's lead this week, with the shares up 33c since Monday.
Market surge
It is true that corporate action - such as the play for The Warehouse - has been a key in driving the NZX-50 to record levels. But there is also an elephant in the room, so to speak.
Telecom has steadily crept its way back to respectability in the past two months. Representing about 25 per cent of the NZX market cap, a Telecom comeback was something of a prerequisite for any market revival.
Since hitting a low of $3.95 on August 28 Telecom shares spluttered back to a high of $4.67 on Wednesday. Investor jitters about today's first-quarter result knocked them back down to close at $4.52 yesterday, but the woes of a sub-$4 share price now look like ancient history.
There are a few factors that had helped the telco return to form, said Stephen Wright of ASB Securities.
A late August announcement that a sale of The Yellow Pages was being considered renewed interest, he said. Meanwhile, there had been no major bad news announcements during the period - with a decision on regulation of the mobile market effectively delayed. Also it may just be that it had been over-sold.
International investors that had exited because of the uncertain regulatory environment were now starting to return and the stock was also getting a bit of momentum from the generally strong market.
"They tend to feed off each other," he said.
Wellington broker Ian Waddell agreed that the prospect of a good price for The Yellow Pages had also been a strong enticement for investors.
Whether selling the profitable business was the best strategy in the long term was another matter, he said.
But, in management's favour, they had been proactive in their efforts to grab broadband market share in advance of the final Commerce Commission decision on pricing, he said.
And that had probably also been a factor in the renewed investor interest.
Snakes and ladders
Last week Stock Takes noted that Plus SMS shares were still pretty volatile following its September meltdown.
That turned out to be a bit of an understatement. The shares soared as much as 81 per cent on Monday - from 16c to 29c.
They have since shed almost all that gain, closing at 16.5c yesterday.
The spike followed the "good" news that a new management structure had been put in place and some market analysts were left were unconvinced that this was enough to justify the rise.
A close look at Monday's trading revealed that it didn't take a particularly large investment to get the price soaring.
The share price was shunted from 20c to 25c on trading of just 6000 shares, or $1500 worth. It then leaped from 25c to 29c on 8000 shares - or $2320 worth.
The full effect of the buying was tempered by Direct Broking selling 1000 shares at 27c. But even so, it took just $4090 or 15,000 shares, to drive Plus SMS's market cap up $24 million or 35 per cent. If nothing else that is an illustration of how volatile market minnows can be.
Meanwhile, the NZX yesterday confirmed that the spike had been noted and the matter had been referred to the Securities Commission to be included in the ongoing investigation into Plus SMS trading.
Sky TV
Sky TV's AGM last Friday delivered a few positives but not enough to warrant an upgrade to earnings expectations at this stage, writes Rodney Deacon at Goldman Sachs JBWere.
Key messages included confirmation of forecasts for 2007 (net profit between $80 million and $90 million and total subscribers between 700,000 and 710,000); the delay of studio upgrades pushing $20-$30 million of capital expenditure into 2008; news that subscriber numbers for the first quarter of 2007 were 18 per cent up on the same period last year and that Prime's total audience share had improved.
While none of those points was strong enough to alter Goldman Sachs' 2007 forecasts (net profit of $86.3 million off ebitda of $225.7 million) the trend was looking good, Deacon noted.
If subscriber growth was maintained for the rest of the financial year (and assuming those subscribers were residential satellite customers) then it would be reasonable to add about 2 per cent to net profit forecasts, he said.
However, no reason was provided for the strong first quarter and until that becomes clear Deacon is sticking with his recommendation of market perform/hold and valuation of $5.89. Sky TV shares closed yesterday at $5.75.