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Merger talks hits Spark's bottom line

NZ NewswireNZ Newswire 8/06/2016 Jonathan Underhill

New Zealand shares fell, led by Spark New Zealand on concern it will face a stronger rival if talks between Sky Network Television and Vodafone Group result in a formal alliance.

SkyCity Casino Group rose after completing its $263 million capital raising.

The S&P/NZX 50 Index fell 45.80 points, or 0.7 per cent, to 6991.51. Within the index, 23 stocks fell, 18 rose and nine were unchanged. Turnover was $172 million.

Spark dropped 4.3 per cent to $3.485 after Sky TV said it is in talks with Vodafone about potentially combining their New Zealand assets. Sky TV kept its shares in a trading halt after the announcement, having last traded at $4.47, having said the two companies were in discussions "regarding a potential transaction involving a combination of the businesses of Sky and Vodafone New Zealand."

The stock price move "correlated with the news that Sky TV and Vodafone were looking at each other and what that would mean as a stronger competitor for Spark," said James Lindsay, senior portfolio manager at Nikko Asset Management.

SkyCity rose 2.4 per cent to $4.73.

Kathmandu fell 2.7 per cent to $1.46. Kathmandu is suing its biggest shareholder, Briscoe Group, in an effort to recoup what it spent fending off the rival retailer's failed takeover attempt.

The Christchurch-based outdoor equipment chain has filed a claim in the High Court to claw back $2.7 million and A$446,000 of expenses racked up when it fended off Briscoe's hostile takeover.

A2 Milk gained 7.9 per cent to $1.51, having tumbled about 9 per cent on Tuesday in continued volatile trading. Lindsay said the stock is popular with retail investors, "and their optimism bids it up and vice versa when sentiment falls."

Cavalier was unchanged at 66 cents after rival Godfrey Hirst lost a High Court appeal against a wool scouring merger that would give a Cavalier-linked business dominance of the New Zealand industry.

Meridian Energy fell 2.6 per cent to $2.63, Mighty River Power dropped 1.6 per cent to $3 and Contact Energy fell 1.1 per cent to $5.34.

Tower fell 2.6 per cent to $1.53, Orion health Group dropped 1.9 per cent to $5.09 and Ryman Healthcare declined 1.7 per cent to $9.62.

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