Millennium hotel takeover offer bright spot in quiet sharemarket - Market close

Shares in Millennium & Copthorne Hotels NZ rose 34c or 18.89% to $2.14 after receiving a takeover offer from its major shareholder. Photo / William Terite

A takeover offer for Millennium and Copthorne Hotels NZ brightened an otherwise quiet day on the New Zealand sharemarket that started the week with a 0.3% decline.

After falling at the opening, the S&P/NZX 50 Index traded steadily and closed at 13,088.31, down 42.12 points or 0.32%. Volumes were light with 16.72 million share transactions worth $59.62m.

Asian markets were strong following better-than-expected gross domestic product growth in China during the fourth quarter of last year.

The economy grew 5.4% on the back of government stimulus measures and for the full year growth was on target at 5%. Industrial output increased 6.2%.

The Hong Kong Hang Seng Index had risen 2.33% to 20,041.09 points by 6pm NZ time, and the Shanghai Composite was up 0.48% to 3257.24 points.

The Japanese Nikkei 125 Index had gained 1.18% to 38,905.83 points and across the Tasman the S&P/ASX 200 Index was up 0.48% to 8350.3.

ASB Bank said the consumers’ price index release on Wednesday will confirm that New Zealand inflation is comfortably contained, with the December quarter increasing 0.4% for an annual inflation rate of 2.1%, in line with the Reserve Bank forecast.

“In the background, non-tradable inflation is easing through the impact of the muted housing market and softening service sector. Core inflation pressures are on the way down as the impact of past monetary tightening has taken effect,” ASB said.

“Over 2025 we expect inflation will hover reasonably close to 2%, though there will be changes in the mix of inflation. Tradable inflation will rebound a bit from very weak levels, and non-tradable inflation should continue to moderate.”

Millennium & Copthorne Hotels NZ rose 34c or 18.89% to $2.14 on trade worth $59,649 after majority shareholder Singaporean City Developments gave notice of an offer to buy the remaining 24.14% at $2.25 a share.

The takeover offer is being made through subsidiary CDL Hotels Holdings NZ which increased its stake in Millennium to 75.86% in October through the purchase of a further 5% at $1.73 a share. The offer represents a 25% premium to Friday’s share price close of $1.80.

Land developer CDL Investments, down 3c or 3.85% to 75c, is not impacted by the takeover offer though its parent company is City Developments.

Matt Goodson, managing director of Salt Funds Management, said the takeover bid was well below Millennium’s estimated net asset value (NTA) of around $4.

“Millennium owns a lot of valuable property and its carrying value won’t have been revalued by the market. But its hotel business has been struggling since Covid and has faced significant cost increases.

“The NTA is very real but it is not reflected in the profitability of the business. Shareholders will have to weigh up whether they will ever see the value or accept a takeover price that is materially below the NTA.

“It will be a fascinating independent valuation report on the takeover offer. For the first time in a decade, Millennium is the highlight of the market,” said Goodson.

Contact Energy was down 13c to $9.54; Meridian declined 16c or 2.65% to $5.88; Vector shed 14c or 3.38% to $4; and Mercury was up 3c to $6.03.

Goodson said there is now some speculation over whether Contact will replace Mercury in the MSCI World Index. “There are different elements to the pricing (in the index review) and it depends on which ones they apply.”

Mainfreight was down $1.11 to $70.30; Ebos Group shed 16c to $36.77; a2 Milk decreased 7c to $6.43; Precinct Properties declined 4c or 3.2% to $1.21; and Port of Tauranga eased 10c to $6.22 after broker Forsyth Barr downgraded its rating for the company to neutral from outperform.

Seeka fell 12c or 3.5% to $3.31; South Port NZ declined 15c or 2.56% to $5.70; Argosy Property was down 2c or 1.92% to $1.02; and Kiwi Property decreased 2.5c or 2.65% to 92c.

Synlait Milk shed 1.5c or 3.57% to 40.5c; Scott Technology was down 5c or 2.22% to $2.20; AFT Pharmaceuticals decreased 6c or 2.11% to $2.79; and Radius Residential Care declined 0.007c or 3.55% to 19c.

In the retail sector, KMD Brands was down 3.5c or 8.05% to 40c; Michael Hill decreased 2c or 3.23% to 60c; and The Warehouse shed 2c or 1.94% to $1.01.

Auckland International Airport was up 11c to $8.78; ANZ Bank increased 60c or 1.88% to $32.60; Ryman Healthcare gained 6c to $4.46; and Third Age Health collected 9c or 3.36% to $2.77.

Fonterra Shareholders’ Fund added 14c or 2.9% to $4.97; General Capital Collected 1c or 4.17% to 25c; Accordant Group was up 2c or 4.26% to 49c; and Move Logistics rose 2.4c or 12.24% to 22c.