Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) lithium shares have been staging a remarkable rebound in recent weeks.

As you’re likely aware, virtually every ASX lithium stock large and small got walloped in 2023 as lithium prices crashed some 80% from their November 2022 highs.

This came as the global supply growth of the battery-critical metal outpaced the world’s demand growth.

However, with some producers having reduced or entirely paused lithium production and with EV demand still growing (albeit at a slower pace) there are early signs of a turnaround.

While prices remain well below the late 2022 highs, lithium carbonate prices are up around 5% so far in 2024.

And that improving outlook has helped spur a big recovery for these battered ASX 200 lithium shares.

Here’s how they’ve performed over the past month:

• Pilbara Minerals Ltd (ASX: PLS) shares are up 32%
• Core Lithium Ltd (ASX: CXO) shares are up 34%
• IGO Ltd (ASX: IGO) shares are up 22%
• Liontown Resources Ltd (ASX: LTR) shares are up 51%

For some context, the ASX 200, which notched new all-time highs today, has gained 6% over this same period.

But even with these outsized gains in the bag, there could be more outperformance ahead for ASX 200 lithium shares.

Here’s why.

Chinese demand could fuel ASX 200 lithium shares

Much as with iron ore (and many of Australia’s top commodities), the ebb and flow in demand from China has a major impact on spot prices.

When it comes to lithium, China is the world’s top EV producer and also leads the world in battery production.

So it’s not surprising that higher-than-expected Chinese EV demand in February has Macquarie Bank analysts bullish on lithium demand.

In what could be good news for ASX 200 lithium shares for the remainder of 2024, Macquarie said (quoted by The Australian Financial Review), “We believe lithium demand growth could outpace that of batteries in 2024.”

Indeed, some Chinese battery manufacturers have upped their production by up to 80% over the past month.

“We believe that the significant month-on-month increase in battery production plans in March may indicate that demand is better than market expectations,” they said.

“The spot price has shown an early sign of improvement,” Macquarie’s analysts added.

Chilean-based Sociedad Quimica y Minr de Chile (NYSE: SQM), which has operations in Western Australia in a partnership with Wesfarmers Ltd (ASX: WES), has not been immune to 2023’s lithium price crash, with profits in the December quarter down sharply.

But SQM CEO Ricardo Ramos (quoted by the AFR) believes demand will increase in the second half of 2024, potentially sending the lithium price up by 20% from current levels.

“We foresee stable prices in the short-term … we are more optimistic, more positive, for the second half of this year,” Ramos said.

A 20% increase in the lithium price could see the past month’s rebound in ASX 200 lithium shares continue apace.

The post Why the 2024 outlook for these rebounding ASX 200 lithium shares looks ‘better than market expectations’ appeared first on The Motley Fool Australia.

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More reading

• Guess which 4 shares are being dumped from the ASX 200 index
• Here’s the latest lithium price forecast through to 2027
• These are the 10 most shorted ASX shares
• 3 ASX lithium shares with huge upside to buy in March
• 6 ASX shares to buy and hold until the next leap year

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is having a subdued start to the week. In afternoon trade, the benchmark index is down slightly to 7,741.4 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising:

Calix Ltd (ASX: CXL)

The Calix share price is up 12% to $1.98. Investors have been buying the environment technology company’s shares after it found a new home for its Leilac-2 (Low Emissions Intensity Lime And Cement) project. The Leilac-2 will now be constructed at Heidelberg Materials’ cement plant in Ennigerloh, Germany. In January, Calix shares were sold off after previous construction plans were shelved.

Genex Power Ltd (ASX: GNX)

The Genex Power share price is up 30% to 24 cents. This has been driven by news that the renewable energy company has received a 27.5 cents per share non-binding takeover offer from Japan’s J-POWER. Management has granted due diligence access and advised that it would be willing to accept the offer if it became binding.

Life360 Inc (ASX: 360)

The Life360 share price is up 8% to $12.20. Investors have been buying this location technology company’s shares after brokers responded very positively to its FY 2023 results. One of those brokers was Goldman Sachs, which reiterated its buy rating with an improved price target of $14.20.

Spartan Resources Ltd (ASX: SPR)

The Spartan Resources share price is up 9% to 54.5 cents. This morning, the gold explorer announced exceptional intercepts from drilling at the Never Never gold deposit from the Dalgaranga Gold Project in Western Australia. Management believes the results highlight the growing strategic significance of the high-grade deposit.

The post Why Calix, Genex, Life360, and Spartan Resources shares are rising appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX tech stock is jumping 15% today
• Genex share price jumps 38% on $381 million takeover bid
• Why Life360 shares can keep rocketing
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up this week

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Life360. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Well, it’s another day, another new record high for the S&P/ASX 200 Index (ASX: XJO). Earlier this morning, the ASX 200 hit a new benchmark of 7,768 points. This was also accompanied by a fresh new 52-week high for the Westpac Banking Corp (ASX: WBC) share price.

Yes, Westpac shares also climbed to a new benchmark this morning – $26.54 a share.

This new 52-week high for the ASX 200 bank stock puts the Westpac share price up an impressive 14.86% year to date in 2024, as well as up an even better 19.96% over the past 12 months.

No doubt all Westpac shareholders will be feeling reasonably chuffed right now. But what about investors who have been eyeing Westpac shares to potentially add to their portfolios? Is this bank still worth buying today at new 52-week highs?

Are Westpac shares a buy at this new 52-week high?

That’s an interesting question to ponder. Sure, the past 12 months have been a fantastic time to have owned Westpac stock. But zooming out further, and the picture is very different. Today, at these new 52-week highs, Westpac shares are still not looking expensive by historical standards.

Today’s new high merely takes Westpac shares to where they were in June 2021.

Westpac was far more expensive during the final months of 2019 (reaching as high as $30 a share).

In early 2017, we saw it climb as high as $35. And in 2015, the bank was commanding a price close to $40.

Indeed, to find the first time Westpac shares hit $26.50, we’d have to go all the way back to early 2007. If you don’t believe me, check it out for yourself below:

As such, we can conclude that Westpac has historically been a fairly poor investment, and unable to compound its earnings effectively over time to increase its valuation.

Given the current banking environment, I don’t think that is set to change anytime soon. As such, I don’t think Westpac shares are a buy today for anyone who wishes to either match or beat the performance of the ASX 200 Index.

What about the Westpac dividend?

But what about Westpac’s generous dividends, you may ask? After all, despite the 52-week high share price, the bank currently trades on a fairly compelling dividend yield of 5.36%. That comes with full franking credits too.

That’s objectively a lucrative dividend yield, amongst the best you can get in the upper echelons of the ASX 200.

Whilst I don’t think Westpac shares are market-beaters at current pricing, I do think they could be a useful member of a diverse, income-focused portfolio.

I would therefore be happy to call Westpac shares a buy for retirees, income investors and anyone whose primary investing objective is to maximise franked dividend income.

But for anyone else, I think there are better options on the ASX 200 for your money today.

The post Is it too late to buy Westpac shares at a fresh 52-week high? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• 5 ASX 200 shares that boosted their dividends this earnings season
• Here’s how the ASX 200 market sectors stacked up this week
• Here are the top 10 ASX 200 shares today
• 34 ASX 200 shares with ex-dividend dates next week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small gain. At the time of writing, the benchmark index is up slightly to 7,751.5 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Cettire Ltd (ASX: CTT)

The Cettire share price is down 5% to $4.60. This follows news that the online luxury retailer’s founder and CEO has sold a large number of shares. According to the release, CEO Dean Mintz has sold 27.5 million shares in the online luxury retailer for $4.63 per share. This represents a whopping ~7.2% of the company’s issued capital and a total consideration of approximately $127 million.

Fletcher Building Ltd (ASX: FBU)

The Fletcher Building share price is down almost 2% to $3.86. This follows the release of an update on the building products company’s chair succession process. According to the release, its current chair, Bruce Hassall, has decided to step down with immediate effect. Ms Barbara Chapman has been appointed as acting chair.

Lake Resources (ASX: LKE)

The Lake Resources share price is down 6% to 12.7 cents. Investors have been selling this lithium developer’s shares after it released an update on its Kachi project in Argentina. Although Lake has identified cost reduction opportunities, it also revealed that its final investment decision on the project is likely to be delayed until late 2025.

Nick Scali Limited (ASX: NCK)

The Nick Scali share price is down 3% to $14.19. This has been driven by the furniture retailer’s shares going ex-dividend this morning. Eligible shareholders can now look forward to receiving the company’s fully franked 35 cents per share interim dividend later this month on 26 March.

The post Why Cettire, Fletcher Building, Lake Resources, and Nick Scali shares are falling today appeared first on The Motley Fool Australia.

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More reading

• Down 80% in a year why are Lake Resources shares tumbling again today?
• The CEO of this ASX stock just sold $127m worth of shares
• Here are the top 10 ASX 200 shares today
• Down 7%: What’s gone so wrong for Lake Resources shares today?
• Why Fletcher Building, GQG, Pilbara Minerals, and Tyro shares are climbing today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cettire and Nick Scali. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Lake Resources (ASX: LKE) shares have had a year to forget.

And shareholder woes are continuing today.

Shares in lithium stock closed Friday trading for 13.5 cents. In morning trade on Monday, shares are changing hands for 12.7 cents apiece, down 5.9%.

For some context, the All Ordinaries Index (ASX: XAO) is up 0.1% at this same time.

As you can see on the chart above, this puts Lake Resources shares down a painful 80% since this time last year.

The accompanying big fall in the clean lithium developer’s market cap will see the stock removed from the S&P/ASX 300 Index (ASX: XKO), as of 18 March.

That comes as part of the S&P Dow Jones Indices March quarterly review. And it could throw up some medium-term headwinds, as some fund managers restricted to investing in the larger end of the market may no longer be able to hold the stock.

Today the clean lithium developer released an update on its cost cutting program and the search for a strategic partner.

Cost reductions fail to lift Lake Resources shares

In an update that’s failing to lift Lake Resources shares on Monday, the company announced a new round of cost cutting measures.

Lake Resources said it will slash its global workforce by roughly half across its non-core operational and administrative workers. The company will also seek to streamline other general expenditures.

Management said the aim is to reduce expenses by another 30% in the quarter ending 30 June compared to the quarter ending 31 March.

CEO David Dickson remained upbeat about the longer-term prospects of the company’s Kachi project, located in Argentina.

“Despite the current backdrop of depressed short-term lithium pricing, we remain very enthusiastic about the Kachi Project, and its potential to deliver long-term value,” he said.

Dickson added:

We are committed to taking all necessary actions to preserve our financial flexibility while we execute a thorough and prudent strategic partner selection process that results in the best outcome for Lake and its shareholders.

We are focused on delivering the Kachi Project in 2028, which is forecast to align with the start of a prolonged period of structural deficit for battery-grade lithium chemicals.

Lake Resources shares could get a boost down the track if the company is successful in its hunt for a strategic partner at the Kachi Project.

With Goldman Sachs acting as its financial advisor, the company said it is now actively conducting outreach to a wide array of potential strategic partners as it progresses the initial phase of the selection process.

The post Down 80% in a year why are Lake Resources shares tumbling again today? appeared first on The Motley Fool Australia.

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More reading

• Down 7%: What’s gone so wrong for Lake Resources shares today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking to get hold of the next BHP Group Ltd (ASX: BHP) dividend, then you will need to act fast.

That’s because it won’t be long until the Big Australian’s shares trade ex-dividend.

When this happens, the rights to the payout are settled and if you’re not on its share register, you won’t be receiving a paycheck.

The BHP dividend

Last month, BHP released its half-year results and reported a 6% increase in revenue to US$27.2 billion but an 86% decline in profit after tax to US$927 million.

The latter was impacted by one-off exceptional items relating to its Western Australia Nickel operation and the Samarco dam failure. If you remove these from the equation, then BHP’s earnings would have been flat at US$6.6 billion for the half.

This allowed the BHP board to declare a fully franked interim dividend of 72 US cents per share (A$1.10 per share) for the period.

While this is down 20% year on year, it still represents a total return of US$3.6 billion and equates to a payout ratio of 56%. It was also slightly ahead of the market’s expectations.

Ex-dividend date

In order to receive this dividend when it is paid, you will need to be on BHP’s share register before the ex-dividend date of Thursday 7 March.

This effectively means that you need to own its shares at the market close on Wednesday.

If you are on the company’s share register and eligible to receive the BHP dividend, you can look forward to pay day later this month on 28 March.

In addition, if you’re planning to stick around, you can expect to receive a 73 US cents per share final dividend from BHP later this year according to Goldman Sachs. This will bring the total to US$1.45 (A$2.22) per share for FY 2024, which equates to a 5% yield.

Goldman has a buy rating and $49.40 price target on BHP’s shares.

The post Want the next BHP dividend? You don’t have long to act appeared first on The Motley Fool Australia.

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More reading

• 6 ASX shares to buy and hold until the next leap year
• 34 ASX 200 shares with ex-dividend dates next week
• Own BHP shares? Guess which star CEO just joined your board
• One ASX mining sector at risk of more pain, and one ready to soar!
• How global job cuts could boost the BHP share price

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Calix Ltd (ASX: CXL) shares are heading in the right direction on Monday.

In morning trade, the ASX tech stock is up 15% to $2.04.

Why is this ASX tech stock jumping?

Investors have been buying the environmental technology company’s shares this morning after it released an update on its Leilac-2 (Low Emissions Intensity Lime And Cement) project.

Readers may be aware that Calix shares were sold off in January after it announced that the Leilac-2 project would have to find a new home after Heidelberg Materials decided to end clinker production at its Hanover cement plant.

According to today’s update, Leilac-2 has a new home and will now be constructed at Heidelberg Materials’ cement plant in Ennigerloh, Germany.

The release notes that the Leilac-2 project aims to demonstrate a replicable module that can efficiently capture up to 100,000 tonnes per year of unavoidable process carbon dioxide emissions released during cement and lime production.

The retrofittable module is designed to be integrated into an operational cement plant with minimal downtime and operate on a range of fuels.

Looking on the bright side

While changing locations is not ideal, management believes that the successful relocation of Leilac-2 demonstrates the robust and transferrable nature of its technology and its ability to be rapidly applied at other operational cement plants.

It also highlights that the Ennigerloh site assessment found that the Leilac-2 design developed for the Hanover plant could be installed at the operational Ennigerloh plant with minimal delay and cost.

Furthermore, the required additional engineering work is expected to be limited to site-specific permitting and integration and no increase in total project capital cost is expected. Construction is anticipated to commence promptly following permitting.

Management commentary

The ASX tech stock’s CEO, Daniel Rennie, was pleased with the news. He said:

The Leilac technology represents a scalable and economical solution to address the carbon dioxide emissions that are produced unavoidably by the cement and lime industries, and the rapid demonstration of such solutions is essential to achieving our industrial decarbonisation goals.

The swift and successful selection of Ennigerloh as the new Leilac-2 host plant is the result of the proactive, positive, and committed approach by Heidelberg Materials, the European Commission, and our partners, and the dedication of an exceptional collective project team. We look forward to continuing to work with all our partners to rapidly deploy efficient decarbonisation solutions at Ennigerloh and cement and lime plants around the world.

Despite today’s gain, Calix shares are still down 60% over the last 12 months.

The post Guess which ASX tech stock is jumping 15% today appeared first on The Motley Fool Australia.

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More reading

• Why Ampol, Calix, Collins Foods, and Propel shares are tumbling today
• Why Audinate, Beach Energy, Calix, and JB Hi-Fi shares are charging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With records meant to be broken, the S&P/ASX 200 Index (ASX: XJO) is certainly doing its part lately.

On Friday, the benchmark Aussie index closed the day up 0.6% at 7,745.6 points. That marked both the highest closing price ever and the highest intraday level ever.

Today, the ASX 200 just edged past that record to set a new one.

In morning trade on Monday, the index of the top 200 listed companies hit 7,754.7 points.

Regardless of what happens in the remainder of the trading day, this marks a new intraday all-time high at time of writing. And if bullish sentiment persists, as I believe is likely, then we should see another record close for the ASX 200 today as well.

Here’s what’s driving investors to hit the buy button.

Why is the ASX 200 setting fresh records again today?

Momentum in on the bulls’ side here as fewer investors are selling and more are looking to buy to get in on the historically strong stock market performance.

Today’s new record on the ASX 200 follows the ongoing strength in US markets.

On Friday, both the S&P 500 Index (INDEXSP: .INX) and the tech-laden Nasdaq Composite Index (INDEXNASDAQ: .IXIC) closed at their own new all-time highs.

There are two significant tailwinds buoying investor spirits.

First is the prospect of normalising inflation and an accompanying easing in interest rates ahead. Both would bode well for equities.

Neither the US Federal Reserve nor the Reserve Bank of Australia has committed to any firm dates to cut interest rates yet. But inflation is easing in both countries.

And in the US, the world’s biggest economy, a dip in February’s manufacturing index bolstered the case for the Fed to begin easing sooner rather than later.

The second phenomenon helping lift US stock markets and the ASX 200 is the growing belief that fast-evolving artificial intelligence (AI) technology could put a rocket under global productivity and growth.

While some analysts are cautioning about a potential AI bubble forming, that hasn’t held the likes of NVIDIA Corporation (NASDAQ: NVDA) back.

Shares in the AI hardware and software developer closed up another 4% on Friday. That brings the 12-month gains to 249% and gives the tech giant a market cap of US$2.1 trillion (AU$3.2 trillion).

The post The ASX 200 just hit another new record high on Monday appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX tech stock is jumping 15% today
• The pros and cons of buying the Global X Fang+ ETF (FANG) right now
• Genex share price jumps 38% on $381 million takeover bid
• Where I’d invest $5,000 into ASX small-cap shares aiming for big growth
• The CEO of this ASX stock just sold $127m worth of shares

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Global X Fang+ ETF (ASX: FANG) has been one of the best-performing exchange-traded funds (ETFs) on the ASX over the past year. It’s not far off doubling in value, as we can see on the chart below.

This fund gives significant exposure to large US technology businesses, including Nvidia, Meta Platforms, Netflix, Broadcom, Amazon.com, Microsoft, Alphabet, Snowflake, Apple and Tesla.

Let’s consider the positives and negatives of buying units of the FANG ETF right now.

The positives

This ETF gives investors a concentrated exposure to some of the world’s strongest businesses. The smallest allocation is just over 7% to electric vehicle pioneer Tesla, while its largest position is AI market leader Nvidia, with a 14% weighting.

These businesses have performed very well for investors as they invent and develop new technologies and services. When companies are driving national (or global) change, I think they’re more likely to be able to generate profit growth and drive shareholder returns.

Over the three years to 29 February 2024, the FANG ETF delivered an average return per annum of 19%. Of course, past performance is not necessarily a reliable indicator of future returns.

I think it has a very reasonable management fee of 0.35%, which is cheaper than the 0.48% annual fee charged by Betashares Nasdaq 100 ETF (ASX: NDQ).

Aussies don’t have the option of many large technology businesses on the ASX, so this investment could be a good way of gaining that allocation.

And negatives

If investors are picking this investment for diversification, it doesn’t offer a lot – the FANG ETF only owns 10 names, and they’re all tech businesses or tech-related.

While its share price has lifted significantly in recent times, a sell-off could hit the valuations harder than the overall market. Tech stocks can be very volatile, like we saw in 2022.

According to its provider Global X, the FANG ETF had a price/earnings (P/E) ratio of around 46 on 31 January 2024. That seems high compared to other investments. The price-to-book ratio was 11.7x at the end of January 2024.

Foolish takeaway

There’s a danger of overpaying for the businesses in this portfolio, particularly in the short term. But, I think the long-term looks very promising. I’d call it a long-term buy, but the short-term could be volatile and uncertain.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Meta Platforms, Microsoft, Netflix, Nvidia, Snowflake, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Netflix, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Genex Power Ltd (ASX: GNX) share price is starting the week very strongly.

In morning trade, the renewable energy company’s shares are up 38% to a 52-week high of 25.5 cents.

Why is the Genex share price surging?

Investors have been scrambling to buy the company’s shares today after it received a takeover offer.

According to the release, Genex has received a non-binding, indicative, and conditional proposal from Electric Power Development (J-POWER).

The Japanese utility company has offered to acquire all of the ordinary shares on issue in Genex that it does not already own for 27.5 cents in cash per share by way of a scheme of arrangement. This represents a 48.6% premium to where the Genex share price ended last week.

This follows a previously undisclosed offer last month of 24 cents per share that was rejected by the company’s board on the belief that it “undervalued Genex in the context of a change of control transaction.”

In addition, the indicative proposal contains an alternative structure that will see J-POWER potentially make an off-market takeover bid for all Genex shares for 27 cents in cash per share.

If made, the potential takeover offer would be conditional on the potential scheme not being approved by the holders of Genex shares the scheme meeting and the fulfilment of the 50.1% minimum acceptance condition.

What now?

As things stand, the company’s board has entered into a confidentiality and exclusivity deed with J-POWER and has provided it with access to a virtual data room for the purpose of facilitating due diligence.

It also advised that it would be willing to accept this current offer if it became binding.

However, it notes that Genex shareholders do not need to take any action in relation to the proposals. It also warned that there is no certainty that the provision of the due diligence access to J-POWER will result in a binding proposal.

The company intends to keep shareholders informed in accordance with its continuous disclosure obligations.

The post Genex share price jumps 38% on $381 million takeover bid appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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