Market News – 23 June 2025

Johnny Lee writes:

Tourism Holdings is the latest to announce a takeover approach, with the recreational vehicle company disclosing an imminent offer from a bidder based in Australia.

The approach is from a group comprising an Australian private equity firm, BGH Capital, and the family interests of Tourism Holdings’ executive director Luke Trouchet.

This presents an immediate conflict. THL has confirmed that Trouchet will step back from his role temporarily while the offer is considered.

BGH Capital may trigger a memory in some long-term investors. The company was part of a consortium with the Ontario Teacher Pension Fund that launched a successful, but drawn-out, takeover of New Zealand dentistry company Abano Healthcare in 2020.

The consortium now plans to formally bid for Tourism Holdings. It already controls 19.99% of the company, with major shareholders ACC and Wilson Asset Management having agreed to a sale price of $2.25. Separately, ANZ Bank has agreed to sell at a price of $2.30.

The share price soared following the announcement, climbing over 50% to $2.27.

The board has not yet endorsed the approach. A sub-committee will be established to determine the merit of the offer, alongside the company’s adviser Jarden. The board has also stated that the bidder may accept a holding below 100 percent, but will only proceed if the board unanimously recommends it.

Tourism Holdings was one of the hardest hit during the pandemic. The company lost over 60 percent of its value in the month of March 2020, before staging a strong recovery until 2024, when the price capitulated back towards COVID lows. Like many companies, the abysmal share price performance is attracting interest from the private equity sector, which is clearly taking a different view on the long-term value of our listed companies.

The steady stream of overseas bidders looking to acquire New Zealand businesses has naturally led to questions regarding other potential targets. We have no shortage of mid-caps trading in the doldrums, particularly in the retail, technology and construction sectors. The next six months may see more offers emerge from out of the woodwork.

If the Tourism Holdings offer results in another departure from our exchange, the index will see a new entrant to the NZ50. The recent quarterly rebalance saw Briscoes replace The Warehouse Group, despite the large holding from Rod Duke.

The offer for Tourism Holdings has not yet been formalised. It remains in the “NBIO” or Non-Binding Indicative Offer stage, but the share price response has been immediate. Shareholders will hear from the board in due course with the company’s recommendation regarding the offer.

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Fruit grower Seeka and clothes retailer Kathmandu each published updates to the market last week.

Seeka’s update was more encouraging.

The kiwifruit harvest was particularly strong, totalling 47 million trays, compared to last year's 43 million. Both fruit quality and labour availability have been satisfactory.

The company now forecasts a profit midpoint of $35 million, up 17% from last year's result.

Seeka joins a number of stocks in the primary industry enjoying 2025. The share price is up 25% this year.

Retailer KMD Brands (formerly Kathmandu) also posted an update, which was received with considerably less cheer than the Seeka report.

The company is guiding for underlying earnings in the range of $15 million to $25 million for August’s result. Last August saw earnings of $50 million.

Oboz, the company’s shoe brand, continues to struggle. It hopes that new products released ahead of the North American summer hiking season, combined with an easing rhetoric on tariffs, will see Oboz rebound in the second half of the year.

The outdoor clothing side, Kathmandu, is hoping the colder New Zealand weather and the approach of ski season will serve as a shot in the arm. The company noted that June had started strongly.

KMD expects net debt to rise from $60 million to $70 million at August’s result.

It remains a difficult market at the higher end of retail. The poor guidance shows that there is not yet any light at the end of the tunnel. Balance sheets will be tested.

The share price fell further after the announcement, reaching 27 cents, a record low.

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A brief update for Manawa shareholders.

The takeover has now been approved by shareholders. Pending customary approval from the High Court, New Zealand shareholders should expect the matter to be concluded on the implementation date, currently set for 11 July.

This conclusion will result in a modest cash payment of $1.12 per share, and a less modest allocation of Contact Energy shares at a ratio of 0.583 Contact shares per Manawa share held. This equates to a value of around $6.30 at current pricing.

There is also an implication for bondholders of the three series of listed Manawa bonds: MNW170, MNW180 and MNW190.

Contact Energy’s scheme booklet has confirmed that all Manawa retail bonds will be repaid on the implementation date at the greater of market value or par. This value varies across the three bonds. One is trading at about par, one at $1.02 and one currently at $1.07.

Holders of the Manawa 2029 bonds (MNW170), for example, should receive approximately $10,700 per $10,000 held.

This will mean hundreds of millions of dollars entering bondholder bank accounts far earlier than expected. It comes at a time when bond liquidity is poor, and the lack of new issues (along with scaling of recent ones) has left a significant amount of unsatisfied demand. Bond investors seem particularly reluctant to sell at the moment.

Manawa bondholders and shareholders will both see their investments conclude next month, barring an improbable obstacle. Shareholders will become Contact Energy shareholders. Bondholders will see their bank accounts unexpectedly flush.

Investors will be hoping a new bond issue appears soon.

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Travel

Ashburton – 24 June (pm) – Chris Lee

Timaru – 25 June – Chris Lee

Auckland (North Shore) – 25 June – Edward Lee

Auckland (Ellerslie) – 26 June – Edward Lee

Auckland (CBD) – 27 June – Edward Lee

Palmerston North – 1 July – David Colman

Lower Hutt – 9 July – Fraser Hunter

Christchurch – 23 July – Fraser Hunter

Please contact us if you would like to make an appointment to see any of our advisers.

Johnny Lee

Chris Lee & Partners