Category: Stock Market

The Incannex Healthcare Ltd (ASX: IHL) share price won’t be going anywhere on Tuesday.

This comes as the company requested that its shares be placed in a trading halt.

At the time of writing, the medicinal cannabis company’s shares are frozen at 70 cents apiece.

Why is the Incannex share price halted?

At market open, the company requested trading in its shares be halted while it prepared an announcement.

According to the release, the company is planning to make an announcement regarding a potential business acquisition transaction.

At this stage, the details remain unknown as to which company is subject to a possible takeover.

Incannex has requested that the trading halt remains in place until Thursday 24 March or following the release of the announcement, whichever comes first.

What does Incannex do?

Founded in 2001, Incannex is a clinical-stage pharmaceutical company developing novel medicinal cannabinoid compounds and psychedelic therapies for unmet needs.

This includes treatment of generalised anxiety disorder (GAD), obstructive sleep apnoea (OSA), traumatic brain injury (TBI)/concussion, lung inflammation (ARDS, COPD, asthma, bronchitis), rheumatoid arthritis, and inflammatory bowel disease.

Currently, the company is pursuing United States Food and Drug Administration (FDA) approval of all its drug candidates.

Once approved, Incannex is seeking to expand its products in other regions such as Europe, Japan, Australia, and Israel.

Incannex share price summary

Over the past 12 months, the Incannex share price has surged by more than 230% following its IHL-42X positive phase 2 clinical trial results.

Although, since the start of the year, its shares have recorded wild swings of more than 40% in either direction.

The company’s shares are up 12% in 2022.

Based on valuation grounds, Incannex has a market capitalisation of roughly $847 million, with approximately 1.2 billion shares outstanding.

The post Here’s why the Incannex (ASX:IHL) share price is on ice today appeared first on The Motley Fool Australia.

More reading

• The Incannex (ASX:IHX) share price is up a whopping 50% in a week. What’s the deal?
• What’s going on with the Incannex (ASX:IHL) share price today?

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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Global oil and energy stocks are staging a comeback rally today as the price of oil crept back up above US$100 per barrel overnight. Shares in Woodside Petroleum Limited (ASX: WPL) have latched onto the momentum and are now trading 2.5% higher at $32.44 apiece today.

After retreating over the past few weeks, oil prices are again soaring amid reports the Kremlin has cast doubt on achieving peace talks with Ukraine.

The move caused investors to chase product in an already thinning market, Bloomberg reports.

What’s going on with oil and Woodside?

Brent crude futures had already surged more than 7% by Monday as news surfaced that some EU countries would back an import ban on Russian oil, according to Trading Economics.

Meanwhile, other nations, such as Germany and Italy, are more hesitant to immediately shut supply, due to already-increasing energy costs.

Brent futures are now sitting at US$118 per barrel after bouncing hard off a low of US$98 per barrel not even a week ago.

Bloomberg also reports that the Brent contract – also the global oil benchmark – had consecutive price swings of more than $5 during the day for 16 consecutive sessions, an all-time record.

Woodside shares appear to be benefitting from those prices today. The current price represents a 15% gain over the past month and a 48% gain since trading restarted back in January.

The move in oil has been a net positive for ASX hydrocarbons producers, and the gains have been realised across the board.

Woodside shares have rallied hard these past few weeks amid the volatility in oil and energy markets, and some experts are predicting these trends to inflect well on the company.

“Stronger commodity prices have resulted in vastly different sentiment towards the [energy] sector relative to last year,” JP Morgan analysts wrote in a recent note.

Natural gas prices have also skyrocketed this year, and are back in an uptrend, currently trading at US$4.93/MMBtu.

Meanwhile, 73% of analysts covering Woodside have it as a buy right now. That’s versus just 6% as a sell, and 20% holding a neutral stance, per Bloomberg data.

This number has crept up from just 56% urging clients to buy this time last year, and the consensus price target has increased from around $26 to $32.34 in that time.

A bit more on Woodside shares

In the last 12 months, Woodside shares have climbed more than 31%. They are also up almost 50% in the past six months and are in fact trading up across all major time frames.

The post Woodside (ASX:WPL) shares spike as oil rises back above $100/barrel appeared first on The Motley Fool Australia.

More reading

• 2 leading ASX 200 shares to watch as fundies rebalance portfolios
• 5 things to watch on the ASX 200 on Monday
• Oil price could hit US$200 per barrel this year: expert
• Here’s why the Woodside (ASX:WPL) share price is having a stellar end to the week
• Why ASX 200 energy shares are trouncing the index today

Motley Fool contributor Zach Bristow 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 Bruce Jackson.

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The benchmark S&P/ASX 200 Index (ASX: XJO) is gaining strength this week and is now trading up more than 1.25% in the green at 7,369 points.

After plunging to a low of 6,838 points back in late January, the ASX had staged a remarkable rally before then being rejected at the 7,200 points mark in mid-Feb.

ASX large caps then took a nosedive and tumbled in a tight range for the remaining days of the month.

However, as more clarity around the inflation and interest rate narrative has emerged, market pundits are now jumping behind ASX large caps once more.

But could this just be a fake out that is the result of a classic chart pattern better known as a ‘dead cat bounce’? Let’s take a look and see what the experts think.

What is a dead cat bounce?

A dead cat bounce is a term traders, market pundits and those on Wall Street use to describe an unfamiliar bearish chart pattern on the price of a particular stock.

The phrase stems from the old adage that even a dead cat will bounce if it falls hard and fast enough, a tribute to some of the famous stock market cases of times gone by.

It’s seen on the chart as a short-lived recovery in the price of a stock that has been declining – usually at a fairly rapid pace, Bloomberg notes.

Due to the force at which the price is hammered down, often this leads to a temporary reversal, where the price might charge up again.

However, as both market and company fundamentals begin to weigh in, the downward pressure mounted is often too much and the longer-term, downward trend soon continues.

It would be as if you traced the path of a dead-rubber ball that was dropped from a height – it would fall, bounce, and then once the downward force equalises, hit the floor again.

That’s not unlike what we see on the chart pattern of a dead cat bounce, although it’s something that is recognised in retrospect – so not really a trading or investing tool.

Is the ASX in one?

Recently, Kyle Rodda, market analyst at IG Markets, noted that the ASX could have been in a dead cat bounce in early January as the index bottomed.

He said that price action at the time had “commentators asking whether the bottom was in. [The] price action seems to suggest it could just be a dead cat bounce.”

That was in late January, and by all accounts – the market did bounce from its low, recover, and then recede further downwards.

“At the moment, either [situation] could be true because it won’t be until some clarity is given by the Fed about its policy intentions that markets may settle down,” he added.

Well, the Fed was clear on its policy move in its most recent meeting. From 2022, the US will opt to raise both the federal funds rate and the terminal rate for the first time in years, meaning interest rates are set to rise in the US. It is looking to raise a number of times in 2022, unless inflation starts to creep back down.

And the market’s reaction has been clearly positive, and some experts, like JP Morgan’s Marko Kolanovic, suggest that a rotation back into beaten-down tech stocks is warranted.

That suggests a bullish outlook for the long-term, seeing as the valuations on growth/tech shares are based on cash flow projections long into the future.

Given the fact that a dead cat bounce is typically a pattern seen in hindsight, it remains to be seen if the ASX is currently in the midst of the pattern performing.

What is true is that price action is supportive of the current gains and that overall, the index appears to back towards its 3-month highs.

The post What is a ‘dead cat bounce’ and is the ASX 200 in one right now? appeared first on The Motley Fool Australia.

More reading

• Lucky 13? The QBE Insurance share price is now up 13% in 2 weeks
• These 3 ASX 200 shares are topping the volume charts on Tuesday
• This quality ASX 200 share is trading on its ‘cheapest multiple for the past 5 years’
• ASX 200 (ASX:XJO) midday update: BHP and New Hope storm higher, Boral slumps
• This rare ASX share is growth, quality AND value: expert

Motley Fool contributor Zach Bristow 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 Bruce Jackson.

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A broker is predicting the Treasury Wine Estates Ltd (ASX: TWE) share price could make significant gains in the future.

The wine company’s shares are currently swapping hands at $11.85, a 0.42% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is 1.3% higher at the time of writing.

Let’s take a look at why experts recommend this company.

Treasury Wine share price prediction

The team at Citi believes Treasury Wine is a buy with a $13.78 price target. That’s nearly 17% more than the current share price.

Citi says Treasury Wine could outperform its expectations in the second half. Citi said industry data shows sales are also shifting from the retail channel to the on-premise channel.

As my Foolish colleague James noted, this could be a huge positive given this channel offers higher margin.

Experts have also recently named Treasury Wine as one of five ASX shares to ride out the 2022 volatility.

WAM Leaders Ltd (ASX: WLE) portfolio manager John Ayoub named the wine company’s shares as meeting the “safe haven” definition, as my Foolish colleague Tony reported.

Treasury Wine reported a 7.5% drop in net profit and 6.7% decline in EBITS in its H1 FY22 results. The company was impacted by reduced shipments to mainland China.

However, looking to the future, the company revealed it has shifted its focus from a mindset of ‘recovery and restructuring’ to one of ‘growth and innovation’.

Treasury Wine shares have fallen just over 1% in the past month. The Treasury Wine share price dropped nearly 3% on 2 March alone, ex-dividend day for the company.

Eligible shareholders will receive a fully-franked interim dividend of 15 cents per share on 1 April.

Share price snapshot

The Treasury Wine Estates share price has gained around 7% in the past year, although it is down 4.6% year to date.

For perspective, the benchmark ASX index has returned around 9% in the past year.

Treasury Wine has a market capitalisation of about $8.5 billion based on its current share price.

The post Here’s why the Treasury Wine (ASX:TWE) share price is tipped to outperform appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• 5 ASX shares to ride out the 2022 volatility: expert
• Why has the Treasury Wine (ASX:TWE) share price surged 10% in a month?
• Broker names 3 of the best ASX 200 shares to buy in March
• Here’s why the Treasury Wine (ASX:TWE) share price is sliding today

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 Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Many ASX retail investors won’t recall what it’s like to invest in an era of rising interest rates.

Indeed, since 2011, when the RBA’s official cash rate still hovered above 4%, there’s been only one direction for rates.

Down.

But at today’s rock bottom 0.10%, and with inflation ramping significantly higher for the first time in many years, that direction is about to change.

So how will rising inflation and the accompanying hikes in interest rates impact investors in ASX shares?

For some insight into that question, The Motley Fool turned to Brendan Doggett, country manager at online trading platform, Sharesies AU.

The pandemic saw household savings hit record highs

Noting that it’s now “widely accepted” that interest rates are going to go up, Doggett told us:

For homeowners, an increase in the cash rate will mean that interest rates on mortgages rise, alongside everyone experiencing a rise in the cost of everyday living, fuel and household goods – impacting household costs.

However, the good news is that the pandemic saw money habits change. Spending fell, debt was paid off and household savings reached all-time highs, meaning many Australians have a nice buffer sitting in their savings account.

Many also used this time to think about their futures and develop positive habits, including investing — something we have seen on the Sharesies platform.

What does this all mean for ASX retail investors?

“The Australian markets have already factored in an increase in rates this year, so we would not expect to see the market respond with a dramatic adjustment,” Doggett said.

However, if interest rates increase unexpectedly fast “we might see a correction in the market”.

Addressing the sectors and types of ASX companies that historically have outperformed when rates are higher, Doggett added:

While there are no truly ‘safe’ shares, in times of higher interest rates markets have historically moved away from growth companies including in the tech sector, and rallied behind value stocks such as banks and other well-established blue chips.

Other sectors that have previously been seen to respond well include energy companies, agriculture and gold.

Doggett also pointed to companies in the agriculture sector as likely to do well amid higher rates. “Food commodities will always be essential, regardless of whether inflation is rising or falling,” he said.

Looking ahead, Doggett said, “We expect to see continued volatility in the markets in the year ahead. Investors with a low-risk appetite might like to consider investing in ETFs [exchange-traded funds] which follow the index and spread risk across a number of companies.”

The post How rising inflation will impact ASX retail investors: expert appeared first on The Motley Fool Australia.

More reading

• Time is running out to secure this ASX healthcare share dividend
• Lucky 13? The QBE Insurance share price is now up 13% in 2 weeks
• Leading brokers name 3 ASX shares to sell today
• 3 reasons to buy Netflix, and 1 reason to sell
• Today is the last hurrah for API. What does this mean for Wesfarmers (ASX:WES) shares?

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 Bruce Jackson.

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The Virtus Health Ltd (ASX: VRT) share price is seesawing today. It has been down as low as $8.21 and as high as $8.27 but it is currently 0.12% in the red at $8.22.

This comes despite the fertility treatment company not releasing any price-sensitive announcements to the ASX today.

In comparison, the All Ordinaries Index (ASX: XAO) has shot up 1.17% to 7,647.6 points today.

So what’s been happening with Virtus Health?

Virtus Health shares set to go ex-dividend

Today is the last chance for investors to get their hands on the Virtus Health interim dividend.

Investors need to buy Virtus Health shares before market close today to be eligible for the interim dividend. The ex-dividend date is tomorrow, Wednesday 23 March.

It is worth noting that on the ex-dividend day, the share price traditionally falls in proportion to the dividend amount. This is because investors tend to sell off the company’s shares after securing the dividend.

What does this mean for Virtus Health shareholders?

For those who are eligible for the Virtus Health interim dividend, shareholders will receive a payment of 12 cents per share on 14 April.

The dividend is also fully franked, which means shareholders can expect to receive tax credits from this.

Virtus Health share price summary

When looking at the past 12 months, the Virtus Health share price is up almost 40%. It is also up 20% this year to date.

The company’s shares reached a 52-week high of $8.33 a little over a week ago. This came after the company announced it had signed a transaction implementation deed with an entity controlled by CapVest Partners. Under the deed, CapVest will acquire 100% of Virtus shares by a scheme of arrangement. 

Based on today’s price, Virtus Health commands a market capitalisation of roughly $703.97 million and has a trailing dividend yield of 2.92%.

The post Time is running out to secure this ASX healthcare share dividend appeared first on The Motley Fool Australia.

More reading

• Virtus Health (ASX:VRT) hits 52-week high, accepts CapVest bid
• Why CSL, Dicker Data, Elders, and Virtus Health shares are charging higher
• Why is the Virtus Health (ASX:VRT) share price frozen today?

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) has had a very pleasing two weeks. Since 7 March, the ASX 200 is now up by around 4.7%. That is quite a return for only a fortnight. But that has been put to shame by the performance of the QBE Insurance Group Ltd (ASX: QBE) share price.

Over the same period, QBE shares have gone from just over $10 a share to today’s price (at the time of writing) of $11.32. That’s a gain of almost 13%, including today’s near-3% rise.

So what’s going so right with the QBE share price?

Well, the first thing to note is that this share price recovery comes after a nasty fall in the month before 7 March. In fact, from 9 February to 7 March, QBE shares lost more than 21% of their value. The company’s shares were hammered after the devastating floods across New South Wales and Queensland. As well as by QBE’s ex-dividend date and a mixed-bag earnings report.

Even after the recovery we have seen over the past fortnight, QBE remains down by more than 11% since early February.

ASX expert investors: QBE share price is good insurance

But the steep share price falls this company has seen in 2022 so far seems to have gained the attention of some expert investors. As my Fool colleague James covered, earlier this month, broker Morgans came out with an add rating on QBE. That was complete with a 12-month share price target of $13.50. It’s also expecting big things from QBE in the dividend department over the rest of FY2022.

In addition, we also got another bullish expert opinion on QBE share last week. As my Fool colleague Bernd reported, portfolio manager at fund manager Firetrail Scott Olsson picked QBE as a leading beneficiary of looming interest rate rises. Olsson argued that the $3 billion in premiums cash that QBE holds will reap extra income for the company when interest rates rise. That could come as soon as this year.

So these multiple bullish opinions on QBE might have enticed the market to rethink QBE’s valuation. Thus, it could well be responsible for the stellar fortnight or so the insurance giant has enjoyed.

At the current QBE Insurance share price, this ASX 200 share has a market capitalisation of $16.7 billion, with a dividend yield of 2.65%.

The post Lucky 13? The QBE Insurance share price is now up 13% in 2 weeks appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Tuesday
• This quality ASX 200 share is trading on its ‘cheapest multiple for the past 5 years’
• ASX 200 (ASX:XJO) midday update: BHP and New Hope storm higher, Boral slumps
• This rare ASX share is growth, quality AND value: expert
• 5 things to watch on the ASX 200 on Tuesday

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 Bruce Jackson.

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Yesterday we looked at three ASX shares brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Commonwealth Bank of Australia (ASX: CBA)

According to a note out of Citi, its analysts have retained their sell rating and $90.75 price target on this banking giant’s shares. Citi has been looking at the banking sector and highlights that Australian banks have significantly outperformed their global peers since Russia invaded Ukraine. However, it isn’t confident this will continue given the lack of revenue growth on offer in the sector. In light of this, it holds firm with its sell rating on Australia’s largest bank. The CBA share price is trading at $106.58 on Tuesday afternoon.

Elders Ltd (ASX: ELD)

A note out of Wilsons reveals that its analysts have retained their underweight rating but lifted their price target on this agribusiness company’s shares to $10.55. While Wilsons has been pleased with Elders performance and notes that it continues to benefit from structural growth drivers, it isn’t enough for a change of rating. Due to its valuation and potential cyclical headwinds which could impact its growth, the broker retains its underweight rating. The Elders share price is fetching $13.49 this afternoon.

Spark New Zealand Ltd (ASX: SPK)

Analysts at Goldman Sachs have retained their sell rating and $4.25 price target on this telco’s shares. According to the note, Goldman acknowledges that Spark is executing well. However, this is being offset by the company debt-funding its dividend and facing uncertain competitive threats from the proposed Orcon/2Deg merger. The Spark share price is trading at $4.46 today.

The post Leading brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

More reading

• Broker names 2 quality ASX dividend shares to buy
• Why is the CBA (ASX:CBA) share price outpacing the other banks in March?
• Top brokers name 3 ASX shares to sell next week
• If you invested $10,000 in CBA shares a decade ago, here’s what it would be worth now
• These were the best performing ASX 200 share last week

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 Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There are rarely any investments without risk. Typically, even in your most admired stocks, you have one or more cautionary signals. Netflix Inc (NASDAQ: NFLX) is no different.

The last few years have been volatile for the company and its stock price. It thrived at the pandemic onset when demand for at-home entertainment surged. The reversal of that trend has become a headwind. 

There are several reasons investors should buy Netflix stock right now, and at least one reason you should sell. Let’s look at each in more depth below. 

1. Netflix is the leader

Netflix is the undisputed streaming industry leader. The company pioneered this form of delivering content more than a decade ago. Before then, consumers were relegated to subscribing to expensive cable TV. In addition to higher costs, cable TV offers lower value. You can only use a cable service at home or the office. When Netflix came along with a streaming service, folks could watch content on their phones, tablets, and laptops anywhere they get internet access. 

It’s no surprise that Netflix has soared to reach 222 million subscribers as of December 31. The trend is unlikely to reverse, and over the next several years, Netflix believes it can reach over 500 million subscribers.

Underlying that growth is the superior customer-value proposition — content all month for less than $20. The icing on the cake: The more people who join, the better the service becomes for everyone. The more revenue comes in, the more Netflix can allocate to its content budget. It spent $17.7 billion on content in 2021, up from $11.7 billion in the year before.

2. A profitable business model 

Streaming content lends itself to excellent efficiencies in scale. For instance, it does not cost Netflix that much more to show its content to an incremental 50 million viewers. Again, that’s in stark contrast to cable TV, where each new customer needs a professional installation and expensive equipment.

The advantage is demonstrated in Netflix’s growth in operating income from 2012 to 2021, when it expanded from $50 million to $6.2 billion. That’s exponential growth, and it could continue as Netflix works its way toward its target of 500 million subscribers.

3. The stock is selling at its lowest price in years 

Netflix is trading at a price-to-earnings ratio of 33. According to that metric, that’s the lowest it has been in nearly a decade. If you prefer the price-to-sales ratio at 5.7, that’s near the lows of the last five years. Netflix stock is down 46% off its highs of late 2021. The market is concerned that subscriber growth will slow in the near term, which leads nicely into the one reason to sell Netflix stock.

A reason to sell Netflix 

Subscriber growth could be slowing or potentially even reversing for Netflix. The company experienced a surge of new signups during the pandemic, and they may begin canceling as more entertainment options become available.

During the pandemic for Netflix, one of the negatives was a slew of new entries into the streaming industry. Whereas Netflix has had mostly an open runway for the last decade, it is now facing serious competition from studios with deep resources. 

To make matters worse, the new entrants are willing to absorb operating losses in their streaming services to attract subscribers. Nearly all new entrants have priced their services below Netflix. Already, management has acknowledged the slowing growth, estimating new subscriber additions of just 2.5 million for the first quarter of 2022, 5.9 million below the average gain in the first quarter in the last five years.

The final verdict 

Overall, the reasons to buy outweigh the headwind from slowing growth. Netflix’s stock has been cut almost in half, arguably more than pricing in slowing growth. Meanwhile, it’s still the undisputed leader with over 200 million subscribers and is expanding profits exponentially. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 reasons to buy Netflix, and 1 reason to sell appeared first on The Motley Fool Australia.

More reading

• Better buy: Netflix vs Nvidia
• 5 of the fastest-growing stocks on the planet
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Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Netflix. The Motley Fool Australia has recommended Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Today is the last trading day for Australian Pharmaceutical Industries Ltd (ASX: API) shares. What does this mean for Wesfarmers Ltd (ASX: WES) shares?

Wesfarmers is nearing the completion of the takeover of pharmacy business API.

Earlier today, it was confirmed that the takeover is now legally effective.

API said that it had lodged a copy of the orders made by the Federal Court of Australia with the Australian Securities and Investments Commission (ASIC). Yesterday, the Federal Court approved the takeover between API and its shareholders.

Wesfarmers is going to buy the rest of API’s shares that it doesn’t already own.

Last day of trading for API shares

With the scheme now being legally effective, API announced that it expects API shares on the ASX to be suspended from the close of trading today.

API shareholders will be paid the takeover money with the implementation of the takeover, which is expected to be on Thursday 31 March 2022.

How much was the takeover offer from Wesfarmers?

Wesfarmers’ final bid accepted by API was for $1.55 per share. That was an increase from the initial offer of $1.38 per share last year.

The takeover agreement allowed for the payment of fully franked dividends up to a maximum of $0.05 per API share, including the final dividend of 2 cents per share declared by API for FY21. The cash component of any dividends would reduce the cash consideration of $1.55.

Last week, API announced a fully franked special dividend of $0.03 per share, which had an ex-dividend date of 24 March 2022 and a payment date of 29 March 2022.

What is Wesfarmers going to do with the API business?

Wesfarmers says that it sees opportunities to invest in and strengthen the competitive position of API and its community pharmacy partners by expanding ranges, improving supply chain capabilities and enhancing the online experience for customers.

The ASX retail share said that its investments in API are expected to strengthen the competitive position of API and its community pharmacy partners.

The managing director of Wesfarmers, Rob Scott, said that the acquisition of API would provide an attractive opportunity to enter the growing health, wellbeing and beauty sector. In July 2021, Mr Scott said:

API would form the basis of a new healthcare division of Wesfarmers and a base from which to invest and develop capabilities in the health and wellbeing sector.

The combination of Wesfarmers and API is a compelling opportunity to capitalise on API’s strengths and positioning in these markets while drawing upon Wesfarmers’ capabilities in retail and distribution, our strong balance sheet and our willingness to invest in our businesses for growth over the long-term.

Wesfarmers share price snapshot

The Wesfarmers share price is up 0.6% today. However, it is down 15% since the start of 2022.

The post Today is the last hurrah for API. What does this mean for Wesfarmers (ASX:WES) shares? appeared first on The Motley Fool Australia.

More reading

• Wesfarmers (ASX:WES) now has control of API, but is the real fight just beginning?
• 5 ASX shares to ride out the 2022 volatility: expert
• Analysts name the best ASX 200 dividend shares to buy now
• Wesfarmers (ASX:WES) shares in focus as API deal looks all but sealed
• Own Wesfarmers (ASX:WES) shares? Here’s how the numbers are looking in the API takeover vote

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 no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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