The NZX has announced it has referred unusual trading in Allied Farmers shares to the Securities Commission for further investigation after its share price slumped almost 30% to 20 cents in heavy trading on Thursday and Friday morning. (Updated with Allied Farmers MD Rob Alloway saying GPG appeared to be the seller) Hanover Finance investors will get Allied shares in exchange for their Hanover debentures if they vote in favour of Allied's merger proposal next Wednesday, but the amount of shares they receive will be determined by the Allied share price on the five trading days before next Wednesday's vote. It appears a large Allied shareholder either has no faith in the deal or someone is trying to drive down the Allied share price before the vote, given it would ensure Hanover shareholders get more shares. The current deal is that Hanover shareholders will receive 72 cents worth of Allied shares. The lower the share price, the more shares they receive. Allied Farmers Managing Director Rob Alloway said: "I have it on reasonably good authority that GPG is the seller." GPG was not immediately available for comment. He described the actions as mischievous and apparently designed to 'sell high' before buying back in at a lower price after Hanover Finance shareholders receive their shares and start selling. Here's the NZX's statement below.
NZX advises the market that it has taken three actions with respect to unusual trading in Allied Farmers Limited Ordinary Shares (ALF) yesterday. 1. NZX has made an enquiry of the company. ALF's response to the market can be found here. 2 Made an enquiry of the originating broker; and 3. Referred the matter to the Securities Commission for urgent enquiry under the Commission's statutory powers.