Investment Matters

What Matters this week

As the year winds up, the news flow from the market has slowed to a trickle. Nevertheless, the boards and the banter surrounding them still provided some entertainment.

National Veterinary Care (+42.5%) reached the end of what has been a short road, in what was always a roll up and sell operation. The company has busied itself acquiring and integrating veterinary practices in both Australia and New Zealand, growing from 34 clinics at its IPO (August 2015) to 103. Much like Greencross before it, a buyer has swooped in, offering $3.70 per share, a 56.8% premium to the company’s previous closing share price of $2.36 and several miles away from its listing price of $1.00.

Likewise, Village Roadshow Limited (+19.0%) (Movieworld, Seaworld, Village Cinemas) received a conditional, non-binding offer from private equity company (and former Hoyts Group owner) Pacific Equity Partners, valuing the company at $3.90 (vs its previous close of $3.20). The announcement to the market was somewhat reserved, with the founder's (the feuding Kirby family) majority ownership likely to pose the biggest roadblock.

Sigma Pharmaceuticals (-10.4%) plunged as the company downgraded its earning guidance by 19%. This came after clawing back a $700m contract from DHL to supply Chemist Warehouse with fast moving consumer goods (FMCG), which will slow its current $100m cost out initiative. Sentiment wasn’t helped by suitor and fellow pharmaceutical wholesaler API announcing it has disposed the strategic stake it acquired in the company late last year. Sigma had previously rejected a takeover offer from API, citing that the offered premium undervalued the company given the $100m cost out opportunities it had identified.

More bad news for bank shareholders. Westpac (-0.8%) had a $500m weight tied to its ankle (in the form of extra capital requirements) while it is scrutinised by APRA over breaching anti-money laundering laws. In addition, shareholders launched a class action later in the week, with those who owned shares between December 2013 and November 2019 queuing up to tackle the lender over a lack of compliance that led to the child exploitation scandal.

Lastly, NAB (-0.8%) breathed a sigh of relief as shareholders voted in favour of its remuneration report (avoiding a second strike). This was shortly before announcing ASIC was taking it to court over the “fee for no service” scandal, with the 1811 allegations of misleading and deceptive conduct and 1609 allegations of unconscionable conduct carrying a maximum total penalty of $3.5bn.

Wishing you all a happy holiday period. We will be back to keep you up to date as to What Matters in the New Year.

Note: Price changes for the week to 10:30am Friday.