KEY POINTS:
ABN Amro analyst Geoff Zame believes the takeover offer for SkyCity from an as yet unidentified bidder has negative implications for Canada Pension Plan's bid for Auckland International Airport.
"We view the probability of control of two of the NZX's top five companies passing as unlikely given regulatory
hurdles, difficulties associated with satisfying the requirements of diverse share registers and wider implications with regard to the depth of NZ's capital markets," Zame said in a recent research note.
A successful SkyCity bid would make any offer for Auckland Airport, including CPP's, more difficult to execute, he believes.
SkyCity shares closed at $5.05 yesterday. Auckland Airport closed at $3.16.
This time it's personal
The antipathy of Viking Capital boss Brent King towards Dorchester Pacific and its management continues to be a talking point for market watchers, but appears to be doing shareholders in both companies no favours.
King, who founded Dorchester but left the company late last year along with another former Dorchester insider Mark Simpson, spent much of Viking's annual meeting last week rubbishing the company.
Viking had built up a 9 per cent stake in Dorchester, as recently as April paying over $2 a share. Yesterday, the shares were at $1. 05 and Viking's stake was down to 7 per cent. King told the meeting Viking had lost $4.2 million on its Dorchester holding for which he apologised.
At least Dorchester, whose share price has also probably been hammered by recent finance company failures, is able to execute its current share buyback at sharper prices. While some believe King is bagging Dorchester in order to justify selling out to free up more cash to put into ICP Bio, a company King is far more upbeat about, others wonder whether his judgment on the issue is clouded.
"It's increasingly clear that the whole thing has got very very personal for him," said one market watcher this week.
Zip Zap
It's a pretty safe bet that Sir Ron Brierley's Guinness Peat Group copped some attention from NZX this week.
Although not named, GPG was clearly one of the subjects of a ticking-off NZX issued for insufficient or poorly timed disclosure.
GPG left to the newswires the job of informing the New Zealand market of the $230 million fine its big British subsidiary Coats copped from European regulators for its part in a zipper-market cartel last week.
The disclosure issue aside, the fine has market observers wondering how much provisioning the threadmaker has set aside to cover the long-anticipated penalty, and how much of an impact it would have on GPG.
Those questions were tackled by Goldman Sachs JBWere analyst Rodney Deacon.
Last week GPG's Tony Gibbs declined to tell the Business Herald the extent of Coats' provisioning.
"You don't go signalling to the court what sort of provisions you've got in your accounts. That's asking them to whack you with that."
However, it seems Coats has been doing exactly that.
"We note that at June 30, 2007, Coats had US$220 million of total provisions on its balance sheet," said Deacon.
"We believe the vast majority of this relates to the potential fines, so it is possible that even if Coats has to pay the full amount, it may be already fully provided for."
In New Zealand dollars, Coats' provisioning is just shy of $300 million, and when you add last week's EC fine for anticompetitive behaviour in the European zipper market to a previous one by the same regulator for similar offences in the sewing needle market, you get a figure of close to $270 million in penalties.
Coats was able to get the sewing needle fine reduced on appeal, which is what the company is likely to attempt to do with the latest penalty, but before that reduction the total penalties would have stood at $287 million.
Deacon notes that given the likelihood Coats will appeal, a process that will probably take more than 12 months, and the fact that the company is not obliged to pay up until the matter is settled, "near term cashflow impact could be minimal".
However, the additional debt required to fund the fine payments has the potential to reduce Goldman Sachs' Coats valuation from US$940 million to US$800 million.
Goldman Sachs' current net asset value for GPG is $2.47 a share, the impact of the fines at maximum levels would drop that 5 per cent to $2.35.
GPG shares closed at $1.94 yesterday.
Building up
Fisher Funds Management is backing a resurgent Delegat's, this week extending its stake in the winemaker from 9.7 per cent to 10.8 per cent, effectively shutting out potential suitors.
While, like most exporters, Delegat's tends to be sensitive to the exchange rate, the kiwi's latest leg higher doesn't seem to have hurt its share price.
Since hitting a one-year low of $2.10 in late July, Delegat's shares climbed as the dollar fell against the greenback, but kept on rising even when it started climbing again early this month.
Shares hit a one-year high of $2.85 last week and yesterday closed at $2.75.
At the company's full-year result late last month, chief executive Jim Delegat talked up the company's prospects as it focuses on growing its exports of premium product to the Australian, North American and British markets.
Even news of yet another legal challenge from persistent Marlborough businessman Peter Yealands, who has fought Delegat's for control of Oyster Bay since 2005, hasn't slowed the company down.
Excellent, Dude
US Fortune 500 medical supplies giant Henry Schein's takeover bid for local dental IT outfit Software of Excellence got past the 90 per cent mark this week.
Henry Schein's initial offer of $2.70 a share, at the lower end of the valuation, was recommended by the company's independent directors in what they said was "a fine judgment call".
In any case, sufficient minority shareholders showed what was probably finer judgment of their own in not accepting the offer, forcing Henry Schein to lift it to $2.90.
Some shareholders are less than impressed with how the saga played out and Stock Takes understands more intriguing details are likely to emerge.
