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Sky high after merger talk but Spark falls

NZ NewswireNZ Newswire 9/06/2016 Sophie Boot

New Zealand shares fell on concern Spark New Zealand would face a stronger rival should Sky Network Television, the biggest gainer on the day, conclude its merger plan with Vodafone New Zealand.

The S&P/NZX 50 Index dropped 20.96 points, or 0.3 per cent, to 6,970.55. Within the index, 28 stocks fell, 16 rose and six were unchanged. Turnover was $254 million.

Sky TV soared 17.5 per cent to $5.25 after announcing it will merge with the New Zealand unit of Vodafone Group to create the country's largest telecommunications and media group following a capital review by Citigroup.

Auckland-based Sky wants to acquire all the shares in Vodafone NZ for $3.44 billion through the issue of new shares, giving Vodafone Europe a 51 per cent share in the combined group, and cash of $1.25b, to be funded through new debt, the companies said .

"There have been rumours swirling for a while about what would come out of the review," said David Price, a broker at Forsyth Barr. "We like the deal, the way it's structured, and you've seen the market's reaction which cements that view."

Spark fell 5 per cent to $3.31, a three-month low.

Westpac fell 2.8 per cent to $31.57 and ANZ dropped 2.5 per cent to $25.60. The banks have imposed new restrictions on overseas property buyers.

In a statement, Westpac said it would no longer lend to non-resident borrowers with overseas income, while the maximum allowed loan to value ratio for New Zealand citizens and permanent residents with overseas income would be reduced to 70 per cent from 85 per cent.

ANZ is also overhauling its home loan policies for applications that rely on overseas income, applying a maximum loan to value ratio of 70 per cent and no lending on investment properties. No interest-only mortgages will be issued and boarder income won't be taken on board.

Coats Group dropped 5.8 per cent to 57 cents, Tower fell 3.9 per cent to $1.47 and Orion Health Group shed 3.7 per cent to $4.90.

A2 Milk fell 2.7 per cent to $1.47, having gained 7.9 per cent on Wednesday in continued volatile trading.

Steel & Tube Holdings gained 2.6 per cent to $1.99.

Kathmandu Holdings rose 1.4 per cent to $1.48.

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