Category: Stock Market

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline. At the time of writing, the benchmark index is down 0.6% to 6,952.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Adairs Ltd (ASX: ADH)

The Adairs share price is down almost 7% to $2.07. The catalyst for this has been the furniture and homewares retailer’s shares going ex-dividend for its upcoming interim dividend this morning. Eligible shareholders can now look forward to receiving Adairs’ 8 cents per share fully franked dividend on 6 April.

Liontown Resources Ltd (ASX: LTR)

The Liontown share price is down 7% to $1.53. This may have been driven by continued weakness in lithium prices. In a note this morning, Goldman Sachs points out that spot lithium prices have continued to weaken. The 6% spodumene spot price is currently fetching US$5,040 a tonne, down from 1.3% from US$5,110 a tonne a week earlier.

Qantas Airways Limited (ASX: QAN)

The Qantas share price is down 3% to $6.27. This appears to have been caused by news that the ACCC has delayed a decision on its proposed takeover of Alliance Aviation Services Ltd (ASX: AQZ). The corporate regulator has delayed making a decision for another month and will give its verdict on 20 April. Investors appear to be interpreting this as a bad sign.

Synlait Milk Ltd (ASX: SM1)

The Synlait Milk share price is down over 5% to $2.52. Investors have been selling this dairy processor’s shares after it provided very disappointing guidance and pushed back its recovery date by a year. Macquarie was disappointed and downgraded its shares to an underperform rating with a slashed price target of ~$2.44.

The post Why Adairs, Liontown, Qantas, and Synlait shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Qantas share price takes a dive amid more takeover delays
• Here are the 10 most shorted ASX shares this week
• Top brokers name 3 ASX shares to buy next week
• Is it a trap? 3 ASX shares with ultra-high dividend yields
• Why Carsales, Evolution, Kelsian, and Synlait shares are dropping

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 Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Alliance Aviation Services. 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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Some ASX dividend shares are trading at a cheaper price than they used to be. This could be an opportunity to buy them at a lower price and get a higher dividend yield.

If a business with a 5% dividend yield falls 10% and the dividend payment stays the same then the dividend yield becomes 5.5%. If it dropped 20% the yield would become 6%.

Dividends and distributions are not guaranteed, but businesses that say they are committed to payouts could be more likely to continue paying shareholders.

With that in mind, here are two ASX dividend shares where I think the yield and share price look good.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a portfolio of farms that are diversified by geography, climactic conditions and farm type.

The types of farms it owns include almonds, macadamias, vineyards, cropping (sugar and cotton) and cattle.

The Rural Funds share price has fallen by around 30% over the past year and 20% in the last six months.

It’s understandable why that has happened. Higher interest rates can hurt a REIT’s property values, and hurt the rental profit due to higher interest costs.

However, I think the lower Rural Funds share price makes up for this new environment, plus the rental income that’s linked to inflation is getting a helpful boost.

The ASX dividend share aims to increase its distribution by 4% per year for investors. If the total FY24 distribution is increased by 4%, this would represent a distribution yield of approximately 6.2%.

I think farms will continue to be useful assets beyond the foreseeable future. There’s no shift to e-commerce farming or work-from-home farming to affect this segment of the REIT industry.

Medibank Private Limited (ASX: MPL)

Medibank is one of the largest private health insurers in Australia. Last year it suffered from a cyber attack and this sent the Medibank share price down as investors worried about policyholder losses.

Medibank shares have recovered but are still down by 7% over the last six months. That’s interesting considering Medibank’s underlying health insurance profit has been increasing and it can now earn stronger returns on its bond investment portfolio.

In the first six months of FY23, the health insurance operating profit increased by 8.7% to $305.2 million, while the group operating profit improved by 7.4% to $307.8 million. Its net investment income increased by 80.9% to $55.9 million.

It revealed that its net resident policyholders grew by 0.1%, or 1,700, while the net non-resident policy unit growth was 17%, or 33,400. It still achieved growth despite the cyber issues.

The ASX dividend share decided to increase its interim dividend by 3.3% to 6.3 cents per share.

With the latest two dividends, Medibank has a grossed-up yield of 5.9%.

The post 2 beaten-up ASX dividend shares I’d buy for long-term income appeared first on The Motley Fool Australia.

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More reading

• Medibank share price edges lower amid $31 million joint venture news
• 2 leading ASX 200 shares to buy that could keep outperforming in 2023: fund manager
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Buy these ASX dividend shares right now for income: analysts
• I reckon these are 2 of the best ASX income stocks to buy in March

Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. 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 positions in and has recommended Rural Funds Group. 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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One of the more pleasing aspects of the rapid rises in interest rates that we’ve all had to deal with over the past year or so is the return on interest-bearing cash investments. Until the start of 2022, interest rates were at a historic low of 0.1%. This meant that it was difficult to find a savings account or term deposit yielding anything over 1%. 

Getting a 1% return on your money isn’t exactly an exciting prospect. As a result, we saw large amounts of capital flowing into the share market chasing yield between 2020 and 2022. 

But today, the picture is remarkably different. Earlier this month, the Reserve Bank of Australia (RBA) raised rates for the tenth consecutive month in a row. The cash rate now sits at 3.6%, well above the 0.1% it was at just over a year ago.

This means that cash investments are back to paying decent interest rates. In fact, today, you can nab yourself a term deposit that will pay you close to 5% per annum. That’s more than the dividend yields of Woolworths Group Ltd (ASX: WOW), Telstra Group Ltd (ASX: TLS) and even Commonwealth Bank of Australia (ASX: CBA) right now.

But I’m still avoiding investing in cash today, beyond an emergency savings account, of course. Why? Because Warren Buffett told me so.

Buffett: Cash is trash

Well, not directly. But here is a quote on the merits of cash investments (or lack thereof) from an article Buffett once wrote:

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: ‘I skate to where the puck is going to be, not to where it has been.’

Buffett wrote that in 2008, in the midst of the global financial crisis. Since then, the flagship US S&P 500 Index has risen more than 330%. It was good advice then, and it remains good advice today.

Shares are volatile, no one can deny it. The past month alone has seen the S&P/ASX 200 Index (ASX: XJO) lose more than 5% of its value – a year’s worth of term deposit returns. But this volatility is the price we pay for the outsized returns that ASX shares have given investors over a long period of time.

Let’s take an exchange-traded fund (ETF) that tracks the ASX 200 Index, the iShares Core S&P/ASX 200 ETF (ASX: IOZ).

Over the ten years to 28 February, this ETF has returned an average of 7.72% per annum, including dividend returns. Compare that with cash, and we don’t even have a contest. Even the highest interest rates in more than a decade don’t touch the returns of shares.

So when you’re tempted to give up the volatility of the share market for the ‘safety’ of cash, remember what Warren Buffett said.

 

The post Why I’m avoiding term deposits right now and listening to Warren Buffett instead appeared first on The Motley Fool Australia.

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More reading

• AMP share price dips despite $337m sale win
• Why I’d be happy to invest in these ASX 200 bank shares today
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• $400 in monthly passive income, buy 8,728 shares of this ASX 200 stock

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway and Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Berkshire Hathaway. 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 Bitcoin (CRYPTO: BTC) price is up 3% in the past 24 hours and a whopping 28% since this time last week.

At the time of writing, Bitcoin is trading for US$28,036 (AU$40,465).

That puts the world’s top crypto up some 69% so far in 2023.

And it’s not just the Bitcoin price that’s shooting the lights out this past week.

Ethereum (CRYPTO: ETH), the world’s number two crypto by market valuation, is up 12% since last Monday.

One Ether is currently trading for US$1,783.

What’s driving the Bitcoin price higher?

The Bitcoin price looks to be getting some solid tailwinds on two fronts.

First, there’s the past week’s succession of banking failures that commenced in the United States with Silicon Valley Bank’s collapse and spread to Europe to Credit Suisse and others.

As you may be aware, Bitcoin was born in the wake of the global financial crisis. Satoshi Nakamoto (the name used by the crypto’s founder or founders) wrote the white paper that launched the token when trust in the global financial system was at a low point.

Now that trust is again being tested.

“An environment where higher interest rates after a period of hyper-low interest rates are creating bank runs is about as perfect a Bitcoin use-case as one can think,” CEO of FRNT Financial Stephane Ouellette said (courtesy of Bloomberg).

The Bitcoin price also looks to be benefiting from investor expectations that the global banking woes will force the US Federal Reserve and other central banks to ease off their aggressive rate-tightening paths.

“Given the uncertainty, we are not yet seeing mass retail or institutional inflows into the market,” crypto analyst Noelle Acheson said.

“What is moving the market is the shifting liquidity environment,” she added, noting “expectations are consolidating around a much lower rate-hike ceiling than expected even a week ago. That environment is good for risk assets, and especially Bitcoin which has no earnings or credit vulnerability.”

Proceed with care

While some crypto investors have made tidy profits, many have been stung by leaping in when FOMO strikes.

While the Bitcoin price could continue to march higher from here, it could also head in the other direction.

Remember, even after this year’s remarkable rally, Bitcoin is still down more than 59% from its all-time high of US$68,790 reached on 10 November 2021.

Invest with care.

The post Bitcoin price rockets 28% in a week amid ‘perfect use case’ appeared first on The Motley Fool Australia.

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More reading

• Something strange is happening with the Bitcoin price in 2023

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 Bitcoin and Ethereum. The Motley Fool Australia has has recommended Bitcoin and Ethereum. 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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While ASX gold shares are starting the week very strongly, one is standing out with a particularly strong gain.

At the time of writing, the Breaker Resources NL (ASX: BRB) share price is up a whopping 36% to a 52-week high of 39.5 cents.

Why is this ASX gold share rocketing higher?

Investors have been scrambling to buy this ASX gold share after it accepted a takeover offer from Ramelius Resources Ltd (ASX: RMS).

According to the release, the two parties have entered into a bid implementation agreement (BIA), pursuant to which Ramelius will offer to acquire Breaker by way of an all-scrip off-market takeover.

Under the terms of the offer, Breaker shareholders will receive 1 Ramelius share for every 2.82 Breaker shares they own.

This equates to an offer of 40 cents per share, which is a 39% premium to its last close price and values Breaker’s undiluted equity at $130.7 million.

What’s next?

Breaker’s directors have unanimously recommended that its shareholders accept the offer. This is in the absence of a superior offer.

Furthermore, they intend to accept the offer for all the shares they own or control. This currently represents approximately 4% of its issued shares. But they are not alone. Breaker’s two largest shareholders, Electrum Strategic Opportunities Fund and Paulson & Co, with a combined shareholding of approximately 19.92% will do the same.

Why acquire Breaker?

Ramelius revealed that acquiring this ASX gold share is in line with its long term strategy. It explained:

Ramelius’ long-term strategy has been to create shareholder value through organic and inorganic growth opportunities. The acquisition of Breaker is in line with Ramelius’ objective to execute synergistic corporate opportunities to enhance the development of a new production hub following the complementary acquisition of Apollo Consolidated Limited and its flagship Rebecca project which completed in early 2022.

The post Why is this ASX gold share rocketing 36% higher today? appeared first on The Motley Fool Australia.

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More reading

• Why is everyone suddenly talking about ASX 200 gold stocks again?
• Why are ASX 200 gold stocks like Northern Star having such a stellar run today?
• These ASX shares are being dumped from the ASX 200 index this month
• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares 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 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 investment team at Wilson Asset Management (WAM) has picked out some ASX shares that could be undervalued and prime buying opportunities.

WAM runs a number of different listed investment companies (LICs) including WAM Research Limited (ASX: WAX) and WAM Active Limited (ASX: WAA) which looks to find undervalued opportunities on the ASX share market.

In the latest monthly update, WAM revealed two of its leading ideas which could produce outperformance.

Tourism Holdings Ltd (ASX: THL)

WAM described this ASX share as a global tourism operator and the largest commercial recreational vehicle rental operator in the world.

The fund manager pointed out that the company announced “strong” FY23 half-year results and “record guidance”, which revealed that it now expects an improved underlying net profit after tax (NPAT) to be “above NZ$75 million”.

WAM said that the guidance was “reflective of the strong trading in the first half of FY23 and a positive outlook for the remainder of FY23”. The fund manager explained its positive outlook for the business:

We continue to remain positive on Tourism Holdings’ outlook as the tourism industry continues to recover and the business benefits from synergies following the merger with Apollo Tourism & Leisure.

Temple & Webster Group Ltd (ASX: TPW)

The fund manager described the ASX share as a pure play online retailer of furniture and homewares.

Last month, Temple & Webster released its FY23 half-year result, with revenue of $207 million, which was down year over year from $235.4 million in FY22. WAM also pointed out that the company noted that sales in the first five weeks of the 2023 calendar year were also down by 7%.

The fund manager pointed out that the negative result and overall market sentiment led to a decline of the Temple & Webster share price, which fell around 27% on the day of the report announcement.

WAM said:

Despite the slowing growth in home goods retail, we believe Temple & Webster Group remains in a great position to leverage the long-term opportunity to expand into the e-commerce space in the Australian furniture and homewares sector.

Temple & Webster also recently launched a share buyback of up to $30 million.

The post 2 undervalued ASX shares to buy this month: expert appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• 3 ASX growth stocks down 40%-65% to buy now and hold
• Why Atlantic Lithium, Pushpay, St Barbara, and Temple & Webster shares are rising
• Temple & Webster share price higher on $30 million share buyback
• Analysts say these exciting ASX growth shares are buys this month

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 Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. 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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S&P/ASX 200 Index (ASX: XJO) gold shares are rocketing out of the blocks on Monday.

At the time of writing, Northern Star Resources Ltd (ASX: NST) shares are up 8.7%.

Newcrest Mining Ltd (ASX: NCM) shares are up 6.8%.

And Evolution Mining Ltd (ASX: EVN) shares are up 10.3%.

Boom!

The blue-chip Aussie gold miners’ surge is helping send the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains smaller miners outside of the ASX 200 gold shares – up a whopping 8% in early trade.

This comes as the benchmark index is down 0.45% following weakness in US and European markets on Friday.

What’s driving ASX 200 gold shares higher today?

Investors are bidding up the ASX 200 gold shares following a big leg up in the gold price.

On Friday, the miners came under pressure as the yellow metal’s rally faltered and the price slipped to US$1,923 per troy ounce.

Over the weekend, the rally regained steam to see gold trading for US$1,989 per ounce. It’s slipped a tad since, currently trading for  US$1,977 per ounce, up 2.8% from Friday’s levels.

Gold – and ASX 200 gold shares – have benefited from the global uncertainty stemming from the banking crisis unfolding in the United States and Europe.

Investors have again upped their exposure to the yellow metal, a classic haven asset, with economists increasingly forecasting that the financial instability will see the US Federal Reserve, and other central banks, ease off on the past year’s rapid interest rate hikes.

Less aggressive rate hikes amid still high inflation would offer further tailwinds for gold, which doesn’t offer any yield itself.

Commenting on the outlook for gold — and, by extension, ASX 200 gold shares — TD Securities global head of commodity strategy Bart Melek said (courtesy of Kitco News) said, “Markets are concluding that we’ll see the Fed go for another 25bps increase and then probably sit on it for a while and see what happens.”

Melek added:

The view from the gold perspective is that given disruptions in the banking system and the US Treasury Department’s willingness to help, we might get accommodation that allows inflation to hang around longer at a higher level. This is a good thing for gold.

The post ASX 200 gold shares are starting the week with a bang. Here’s why appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Why Carsales, Evolution, Kelsian, and Synlait shares are dropping
• ASX 200 gold shares reverse the charge higher to tumble today. Here’s why
• 5 things to watch on the ASX 200 on Friday
• Despite today’s ASX sell-off, All Ords gold shares are surging significantly higher

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 Qantas Airways Limited (ASX: QAN) share price is descending on Monday morning.

At the time of writing, the airline operator’s shares are down 3% to $6.27.

Why is the Qantas share price falling?

Today’s weakness in the Qantas share price appears to have been driven by concerns over its proposed acquisition of Alliance Aviation Services Ltd (ASX: AQZ).

Alliance is Australasia’s leading provider of contract, charter, and allied aviation and maintenance services. It provides essential services to mining, energy, and government sectors as well as wet lease services for other airlines.

In May last year, Qantas announced an agreement with Alliance to acquire the remaining 80% stake that it does not already own in an all-scrip deal. At the time, the Qantas share price was trading at $4.75 per share, which valued the 80% stake at $614 million.

Qantas CEO, Alan Joyce, believed that “acquiring the remaining shares in Alliance would mean QantasLink can better compete in the highly competitive charter segment, particularly given the shared fleet type of Fokker aircraft.”

What’s the latest?

This morning, Alliance revealed that the Australian Competition & Consumer Commission (ACCC) has informed it that it will further delay its review of the proposed scheme of arrangement until 20 April 2023.

The market appears to believe that this could be a sign that the ACCC has concerns with the potential acquisition, casting doubts over the deal.

Given that Qantas expects it to be earnings per share accretive, it would be a blow if it didn’t go through. But certainly not the end of the world for the airline operator.

Investors will have to sit tight and wait to see what the ACCC announces this time next month.

The post Qantas share price takes a dive amid more takeover delays appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• What’s with the Qantas share price on Thursday?
• 7 ASX shares flying under the radar to buy now: Goldman Sachs
• 5 things to watch on the ASX 200 on Wednesday
• Qantas shares have dumped 7% in 3 days. Should I buy?

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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The Australian Clinical Labs Ltd (ASX: ACL) share price is having a solid start to the week.

In morning trade, the ASX All Ords healthcare share is up 3% to $3.73.

Why is the ASX All Ords healthcare share rising?

The catalyst for this has been news that the company has launched a bold takeover approach for larger rival Healius Ltd (ASX: HLS).

According to the release, Australian Clinical Labs has made a nil-premium all-scrip off-market takeover offer of 0.74 shares for every Healius share.

While this may seem like an odd takeover proposal from the ASX All Ords healthcare share, there is method to its madness.

Australian Clinical Labs believes the real value of the proposal will come when the two companies merge.

It believes the merged entity would deliver pro forma earnings before interest and tax (EBIT) of $361 million in FY 2023. This includes cost synergies and operational improvement benefits.

Based on its forecast earnings and belief that it could trade at the current blended forward EV/EBIT multiple of 17.5x, it estimates that it could deliver a value uplift of approximately $2.1 billion. It notes that this equates to a 90% increase in the value per Healius share implied by the offer consideration.

Another positive is that Australian Clinical Labs believes the merged group would be a candidate for ASX 100 inclusion in time.

What’s next?

As things stand, Healius has told its shareholders that it is looking at the offer. In the meantime, it has informed shareholders to take no action.

Management commented:

The Board of Healius advises shareholders to take no action in respect of ACL’s takeover offer. The Board will evaluate the offer and ACL’s bidder’s statement and provide shareholders with a recommendation in due course. Until then, there is no need for shareholders to take any action. Healius will keep its shareholders fully informed of any further developments.

The post Why this ASX All Ords healthcare share is defying the market weakness and zooming higher 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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The AMP Ltd (ASX: AMP) share price is slipping this morning despite the S&P/ASX 200 Index (ASX: XJO) financial giant announcing it will finally begin to offload its real estate and domestic infrastructure business.

The first stage of its long-awaited sale to Dexus Property Group (ASX: DXS) will bring in around $337 million. However, final completion – and another $50 million – still hinges on Chinese regulatory approvals.

The AMP share price is currently trading 0.3% lower at 98.2 cents.

But that’s a better performance than the broader market. The ASX 200 is tumbling 0.78% at the time of writing. Meanwhile, the Dexus share price is down 1.15%, trading at $7.75.

Let’s take a closer look at the latest news of AMP’s massive divestment.

AMP share price slumps amid simplification milestone

 AMP’s sale of Collimate Capital’s real estate and domestic infrastructure equity business was once worth up to $1 billion, but those days have passed.

After lengthy delays, the base purchase price was dropped to $225 million and any potential funds under management-based earn outs forfeited earlier this year. But today has brought brighter news.

The pair have officially finalised a previously-flagged alternative transaction structure. The first stage of the new plan for the sale is set to complete on Friday.

That will see Dexus taking on the business without AMP’s interest in China Life AMP Asset Management (CLAMP) being transferred out. The transfer is yet to be approved by regulators in China.

At first completion, Dexus will pay $175 million of the $225 million base purchase price, as well as $105 million for sponsor investments and $57 million for cash on the business’ balance sheet – a total of around $337 million.

The remaining $50 million of the base purchase price will be paid on final completion. That is, as long as CLAMP’s transfer occurs by 30 September 2024.

Looking forward

AMP CEO Alexis George said the sale would be “a key pillar of our strategy to simplify AMP”. He added:

The sale allows AMP to have a clear focus on our go forward businesses of retail banking and wealth management in Australia and New Zealand.

We will continue to build on the hard work of the past 12 months to position AMP to win in those markets, deliver for customers and drive value for shareholders.

AMP will now begin a review of its balance sheet and cost base. It will do so with the view to reduce debt and return excess liquidity to shareholders.

An update on the reviews will be published sometime before it drops its first-half earnings in August.

The post AMP share price dips despite $337m sale win appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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