Stock takes: Eye on sky

The move by Rupert Murdoch's News Corp to take full control of Britain's BSkyB has some in the market speculating that a similar move might be in the offing for New Zealand's Sky TV.

Last month News Corp, which owns 39 per cent of satellite broadcaster BSkyB, launched a bid to take over the listed company which would put its value at £12 billion ($25.8 billion).

According to Reuters reports the offer was rebuffed as being too low but BSkyB, of which Murdoch's son James is chairman, is said to be looking at its options.

One New Zealand fund manager said that the activity in Britain had spurred speculation that a similar offer would be made locally.

Sky TV's share price was trading around $4.55 before the news emerged and suddenly spiked up over $5 on June 16 - the day after the bid emerged.

It has since fallen back down.

Forsyth Barr analyst Rob Mercer said News Corp's move in Britain was an interesting one that should be taken into account by New Zealand investors. A similar move could not be ruled out here, he said.

But at this stage there has been only speculation.

GOOD BUY

Sky TV is seen to have done very well during the recession.

"Revenue has held up well," said Mercer. At the same time the company's share price is seen as undervalued, making it a good time for potential acquisition. Mercer said that Sky TV was also in a good cash position.

The company had already done its big spending on developing MySky and hi-definition and was still able to spend $145 million this year without increasing its debt levels.

News Corp owns 43 per cent of Sky TV and a full takeover would allow it to control all streams of the business and potentially do content-buying deals, those in the market say.

However the company's other minority shareholders might not be so keen.

The Todd family owns about 11 per cent - enough to block any potential full takeover - and have been long-time investors.

Sky TV shares closed down 2c yesterday at $4.64.

DRIVING FORCE

PGG Wrightson's big presentation in Christchurch this week has been welcomed by analysts as setting a strong growth path for the business.

The meeting was held to help the company talk about restructuring plans that will see the business split into two main divisions - Agri-tech and Agri-services.

Analysts have noticed a big shift in direction for the business since the board shake-up which took place a few months ago.

Craig Norgate, the former chairman who left the board completely this year, was seen to have had quite a strong focus on growing the company's Uruguay business.

But now the firm seems more determined to focus on increasing its export potential. Market sources say the new driving force behind the board is Sir Selwyn Cushing, who remains a director.

The split of the business into two - although PGG Wrightson Finance is being seen by some as a third leg - is also being seen as a natural place to start for a potential split of the business.

PGG Wrightson's shares closed flat on50c yesterday, up slightly on its year low of 47c.

ROYAL OBSESSION

Auckland Airport's decision to buy a 24.9 per cent stake of Queenstown Airport has some joking about the company's affinity for areas with a Queen in the title.

In January Auckland Airport bought a 24.55 per cent stake in North Queensland Airports, which owns Cairns and Mackay airports in Queensland, for $166 million.

What could be next on the radar, Stock Takes wonders? There's always Queen Alia International Airport in Jordan. Analysts weren't very happy with the Queensland addition and it seems the market hasn't been thrilled by the Queenstown buy-up either. Shares in Auckland Airport closed steady yesterday at $1.93.

TWICE BITTEN

One investor that will surely be hoping May Wang's capital injection into Genesis Research and Development helps the biotech company get back on its feet is the Accident Compensation Corporation.

ACC's stake in the company has dropped from 11.63 per cent to 9.73 per cent after Genesis issued 7.4 million new shares to Wang's UBNZ Funds Management and UBNZ Trustee companies for 6c a share or $446,278 last week.

The increase in shares saw the share price fall from 5c to 3c, instantly dropping the value of ACC's stake from $221,3171 to $133,823.

But let's face it - it's not the first time ACC has seen its investment in Genesis shrink.

ACC was one of the original investors in the company's float in 2000 when investors paid $6 a share.

Shares rose over $7 before falling back again. ACC sold out around the $5 mark before buying back in at about 45c to 55c.

The media-shy ACC wouldn't comment on its hopes for the company but it obviously has a strong belief that one of Genesis' strategies will come up trumps and result in the bounce-back of its shares.

Wang is keen to see the business get involved in dairy research.

Genesis shares closed at 3c yesterday.

SINGLE DIGITS

The penny dreadful price of Genesis shares isn't the only investment ACC has which is listing in single digits. Stock Takes notes that the still-listed Dominion Finance Holdings is also held by ACC.

Dominion is in liquidation but according to the market its shares are still worth 1c a share. ACC has a 7.23 per cent stake and at that price it would be worth $1.2 million.

But the latest liquidators' report, filed at the beginning of March, shows the company has just $318,000 in cash available and even the liquidators have complained about lack of funding.

"Up to this point, the liquidators have not had adequate funds to conduct an investigation into the company's affairs and we are owed substantial fees," the report by Corporate Finance's John Cregten and Andrew McKay states.

BOUNCE-BACK

The share price of stock exchange operator NZX has bounced back in the wake of its plans for a share buy-back.

The company will begin buying back up to 3,571,428, or just under 3 per cent, of its shares on issue from today.

NZX's share price hit a year low on July 1 of $1.42 after an overload of bad news when the major energy companies decided not to back its new energy hedge trading system, the Chicago Mercantile exchange launched its dairy derivative trading ahead of the NZX and the loss of key staff.

But a decision to back itself by buying shares has won some confidence from the market. Shares bounced up to $1.56 on the day of the announcement and yesterday closed up 5c at $1.60.

BEST OF BOTH WORLDS

Infratil hasn't been afraid to tout its New Zealand-owned status when it comes to its ownership of Shell, which it bought this year in conjunction with the New Zealand Superannuation Fund.

And now it seems the Kiwi company is also keen to get some Aussies on board to further its growth ambitions.

The infrastructure investor this week released documents in preparation for its dual-listing across the Ditch thismonth.

While the paperwork presented a generally pretty picture of the business, it also provided a couple of points of note about its new petrol business.

In accordance with listing rules, it ran through business risks, including those faced by its Greenstone Energy division - owners of Shell - which it bought in April with the Super Fund, contributing $210 million each.

It reveals just how tight the margins are in the petrol game with retailers getting 5c a litre on a retail price of around $1.90 a litre.

"Accordingly, if competitive forces, poor management, rising costs or other external events force that margin to shrink, then Greenstone Energy's profitability will quickly erode."

And another worry on the horizon for anyone in the filling station business is an expected reduced demand and need for oil-based transport fuels as crude oil reserves diminish, more fuel-efficient engines are adopted, public transport services increase and new alternative fuels (especially electricity) become more economic.

However, Infratil says it took this into consideration when assessing the value of Shell.

"While Infratil expects this trend, it believes that it is some years away from having a material effect on Greenstone Energy."

Infratil shares closed steady yesterday on $1.61.