MARKET CLOSE: Shares rise as Z Energy surges 22% to record

New Zealand shares rose, led by Z Energy, after the petrol chain announced a deal to buy Chevron NZ's stores. Spark New Zealand gained after announcing a share buyback scheme.

The NZX 50 Index rose 18.794 points, or 0.3%, to 5863.743. Within the index stocks were evenly split: 24 rose, 24 fell and two were unchanged. Turnover was $193 million.

Z Energy soared 22% to a record close of $6.20. The chain announced the acquisition of Caltex and Challenge! brands from Chevron in a $785 million deal announced this morning after details leaked to the Australian market late on Friday. The deal is expected to be "earnings-accretive" from day one, adding 34% to earnings per share before counting anticipated synergy benefits of between $15 million and $25 million a year starting in 2017.

"Z Energy being up 20% on the back of this deal they had lined up with Caltex certainly has put a lot of support under our market," said Paul Harrison, head of equities at Salt Funds Management. "If they can get it through the Commerce Commission, there appears to be significant upside in the earnings. It certainly appears to be earnings accretive, so it's good news for shareholders if they can complete the deal."

Telecoms retailer Spark advanced for the third consecutive day, rising 3.3% to $2.855 as it rebounded from a one-year low last week. This morning the company said it plans to buy back as many as 40 million shares on market for up to $100 million this year after a series of asset sales left its balance sheet under-leveraged.

"That buyback it announced today has helped put a line underneath that share price, which has been quite weak for a little while," Mr Harrison said.

Across the Tasman, the ASX/S&P 200 Index fell 1.6% in afternoon trading. The weakness flowed through to dual-listed stocks, Harrison said. Fletcher Building, the construction and building supplies firm, fell 1.6% to $8.62. Australia and New Zealand Banking Group declined 2.2% to $35.02. Westpac Banking Corp slipped 3.1% to $35.14.

Precinct Properties New Zealand declined 0.5% to $1.115. The property investor, which raised $174.1 million in March to help fund major developments, sold a Wellington building in the central business district for $36.1 million, just below book value, and has affirmed its earnings forecast for the 2015 financial year.

Meridian Energy was the worst performer on the benchmark index, down 3.9% to $2.22. Contact Energy dropped 1.6% to $6.05. Genesis Energy slipped 0.8% to $1.865.

(BusinessDesk)