Category: Stock Market

The REA Group Limited (ASX: REA) share price is falling today despite the company’s CEO, Owen Wilson, declaring that financial year 2021 (FY21) was a “defining period” for the company.

Wilson’s comments were released with the company’s annual report this morning.

Within the report, Wilson noted the changes the company’s realestate.com.au platform made to support Australians in lockdown, which saw it sport its highest ever customer sentiment rating. Additionally, he named the company’s FY21 results “exceptional”, despite the “extraordinary disruption” caused by COVID-19.

Right now, the REA share price is $155.33, 1.27% lower than its previous close.

Let’s take a closer look at how the company’s leaders viewed its performance over the 12-months ended 30 June 2021.

REA’s “outstanding” FY21

The REA share price is in the red this morning despite the release of the company’s latest annual report.

Within the report, REA’s CEO celebrated a strong yearly performance, as did its chair, Hamish McLennan.

McLennan commented the digital advertising company specialising in property had an “outstanding” FY21 despite “ongoing disruptions and volatility” from the pandemic.

REA’s realestate.com.au saw more than 3 times more visits than its nearest competitor in FY21. REA also launched a number of new services with its Australian offerings and extended the company’s international footprint.

REA also increased its shareholding in India’s Elara to 54.3%, while Elara’s flagship site Housing.com saw 92% more site visits than it did in the previous financial year.

Additionally, REA transferred its Malaysia and Thailand operations to PropertyGuru in exchange for an 18% interest in PropertyGuru.

Back home, REA acquired Mortgage Choice, bringing it together with the company’s Smartline broker business. McLennan stated the acquisition will accelerate REA’s financial services strategy and potentially see it become Australia’s leading mortgage broking business.

However, none of the acquisition news posed by REA in FY21 resulted in its share price increasing.

Though, its business’ growth wasn’t all the company achieved last financial year.

REA officially became carbon neutral in FY21, completing the Australian Government’s Climate Active certification process.

The company’s MSCI ESG rating also increased from ‘BBB’ to ‘A’. For those not familiar with MSCI’s ESG ratings, they measure a company’s ability to weather long-term environmental, social and governance (ESG) risks. A rating of ‘A’ puts a company at the high end of average, with ‘AA’ and ‘AAA’ indicating a leading ESG company.

Further, REA ended FY21 with a gender-balanced leadership team and equal gender representation within its Australian employees.

REA share price snapshot

The REA share price has been struggling on the ASX in 2021.

It has only gained 0.7% this year so far.

However, it is 44.1% higher than it was this time last year.

The post REA Group (ASX:REA) share price slumps amid CEO naming FY21 a “defining period” 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 recommended REA Group 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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The Vulcan Energy Resources Ltd (ASX: VUL) share price is out of form on Monday.

In morning trade, the clean lithium company’s shares are down 4% to $14.52.

This is despite the company releasing an update on some key new appointments today.

Why is the Vulcan share price tumbling lower?

Today’s decline by the Vulcan share price appears to have been driven by broad weakness in the lithium sector.

This may be due to profit taking after some strong sector gains in recent weeks.

For example, the Vulcan share price isn’t the only one sinking today. The Orocobre Limited (ASX: ORE) share price is down 5% and the Pilbara Minerals Ltd (ASX: PLS) share price is down 6% at the time of writing.

What about the announcement?

Failing to give the Vulcan share price a lift today was the announcement of some key new appointments in its communications team.

In Germany, Vulcan has appointed Beate Holzwarth as its Chief Communications Officer, effective from 1 October.

The release notes that Mrs Holzwarth has over 20 years’ experience in various communication and marketing roles within Mercedes-Benz Cars and Daimler Trucks.

Whereas in Australia, Vulcan has appointed Jessica Bukowski as its Public and Investor Relations Manager. Ms. Bukowski was previously Senior Media and Corporate Affairs Specialist at Fortescue Metals Group Limited (ASX: FMG). She was also an adviser to former Prime Minister Kevin Rudd AC.

Vulcan’s Managing Director, Dr Francis Wedin, commented: “With Beate and Jess joining us, we welcome two highly qualified and capable communications experts into our executive team. Beate’s experience in the German automotive industry with Daimler-Mercedes and her in-depth knowledge of the Upper Rhine Valley region, combined with Jess’ experience with the transformation of Fortescue towards becoming an integrated resources-renewable energy company, will be invaluable to our stakeholder communication as part of the development of the Zero Carbon Lithium Project.”

The post Vulcan (ASX:VUL) share price tumbles despite key appointments appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro owns shares of Orocobre Limited. 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 Paladin Energy Ltd (ASX: PDN) share price has been booming double digits almost every other day since late August thanks to skyrocketing uranium prices.

However, its shares are unwinding on Monday, down 13.59% to 89 cents at the time of writing.

What’s driving the Paladin Energy share price?

Broader market selloff

Wall Street was red across the board last Friday, with the Dow Jones Industrial Average, Nasdaq and S&P 500 down between 0.48% and 0.91%.

The S&P/ASX 200 Index (ASX: XJO) has followed suit, down 1.2% to a 2-month low of 7,314.90.

Headlining today’s selloff is the resources sector, with heavyweights BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) opening lower.

The S&P/ASX Materials (INDEXASX: XMJ) is currently down 2.78%, which doesn’t spell good news for the Paladin Energy share price.

Uranium cools off

The uranium sector has been running hot since late August after spot prices jumped from US$30/lb to 9-year highs of around US$50/lb.

Even after today’s selloff, the Paladin Energy share price is up more than 100% since 20 August.

Coinciding with the market’s broader weakness on Friday night, the Global X Uranium ETF (NYSE: URA) tumbled 7.83%.

The uranium ETF provides a good reflection of how the sector is performing, given its broad exposure to uranium mining and nuclear components.

Are uranium prices still booming?

Uranium prices managed to close around US$50/lb on Friday.

The recent jump in uranium has largely been driven by Sprott Inc’s Physical Uranium Trust. The fund has been aggressively buying physical uranium off the spot market, tightening the market and driving prices higher.

The fund continued snapping up uranium last Friday, according to its Twitter account.

What a month for the Sprott Physical Uranium Trust!

Over 10 million pounds of physical #uranium added since August 17!

Now over 28 million lbs held #SPUT $U.UN $U.U $SRUUF #Nuclear #lowcarbon

For more information and disclosures, please visit https://t.co/PcaG53VfN5 pic.twitter.com/NeV2qQPxXE

— Sprott Asset Management (@Sprott) September 17, 2021

https://platform.twitter.com/widgets.js

Overall, it looks like uranium prices have held steady which spells good news for the broader uranium sector.

However, it looks like the crumbling ASX 200 and resources sector might have other plans for the Paladin Energy share price.

The post Why the Paladin Energy (ASX:PDN) share price is down 15% on Monday appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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 Nickel Mines Ltd (ASX: NIC) share price has started the week deep in the red.

In morning trade, the nickel producer’s shares have fallen 6% to $1.01.

Why is the Nickel Mines share price sinking?

The Nickel Mines share price has come under pressure today amid concerns that the company could be negatively impacted by tax changes in Indonesia.

An announcement notes that on Friday, the Indonesian Investment Minister was reported as suggesting that Indonesia is exploring the possibility of levying an export tax on nickel products with less than 70% nickel content.

However, it also highlights that the reported comments were made without prior consultation with other Indonesian Government Ministries. This includes the ministry which would be responsible for the introduction of such a tax, the Ministry of Energy and Natural Resources (MEMR).

Furthermore, it points out that any contemplated export tax must be submitted in draft to the Cabinet Secretary for review and eventual Presidential approval before it can be finalised and issued by the relevant Minister.

As a result, the proposal would be required to follow this process, and only after a lengthy period of discussion and industry consultation.

Though, based on the Nickel Mines share price, it seems that some investors believe the changes could happen and weigh on its margins.

Management commentary

Nickel Mines’ Managing Director Justin Werner doesn’t appear overly concerned with the speculation.

Particularly given the company’s strong domestic sales and its ability to create product with nickel content greater than 70%.

He said: “Whilst we do not currently believe the rumoured export tax to be the planned policy of the Government, it is worth noting that at present, approximately 50% of the Company’s NPI production is sold within the IMIP (in-country).”

“The Company also has an MoU for two of its RKEF lines to undergo conversion to allow the production of nickel matte which can be processed within the IMIP to a grade of greater than 75%. The Company expects to enjoy an exceptionally strong 2H2021 on the back of record NPI prices and strengthening EBITDA margins,” he added.

The post Why the Nickel Mines (ASX:NIC) share price is sinking 6% today 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 Bruce Jackson.

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The Dubber Corp Ltd (ASX: DUB) share price is off to a strong start, up 3% in early morning trade.

Below, we take a look at the cloud platform service provider’s acquisition announcement that looks to be driving this morning’s action.

What acquisition did Dubber announce?

Dubber’s share price is rising after the company reported it has acquired technology group Notiv.

Notiv, based in Brisbane, develops “cloud-native AI-based products” able to do transcripts of meetings, as well as provide summaries, signals and actions.

Dubber acquired Notiv from United States company Pinch Labs Inc for a total price of $6.6 million. The company will pay $5.15 million in cash once the deal is complete. The remaining $1.15 million will be paid via the issue of 386,277 Dubber shares at an issue price of $3.75.

According to the announcement, Notiv’s key management and employees will stay on following the transaction. This includes the company’s 2 co-founders, Chris Raethke and Iain McCowan.

Commenting on the acquisition, Dubber’s CEO Steve McGovern said:

One of our fundamental beliefs is that artificial intelligence has a part to play as a standard feature of every call and conversation… With Notiv, Dubber will now have the ability to automatically take notes and create action items on every call. We are confident that our telecommunications carrier and service provider partners will see enormous potential for revenue-generating value-added services for their customers at scale…

The integration of the Notiv business is accretive for both parties in that Dubber can expose the fantastic capability of the Notiv offering to a global customer base and the Notiv team can develop a continuous stream of revenue-generating services for Dubber’s addressable market.

Dubber share price snapshot

The Dubber share price has been a standout performer in 2021, up 150% year-to-date. That compares to a gain of 10% posted by the All Ordinaries Index (ASX: XAO).

Over the past month, Dubber shares have gained 16%.

The post Why the Dubber (ASX:DUB) share price is leaping higher today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Dubber Corporation. The Motley Fool Australia owns shares of and has recommended Dubber Corporation. 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.

At first glance, it doesn’t even seem to be a contest. Shares of e-commerce giant Amazon (NASDAQ: AMZN) have not only outperformed those of brick-and-mortar rival Walmart (NYSE: WMT) in recent years, but as of last month — according to numbers crunched by The New York Times — people now spend more at Amazon than at the more traditional retailer. The pandemic’s clearly been a boon for the online “everything store.”

However, if you think it’s just another clear sign that nothing can stand in the way of the Amazon juggernaut, you may be a bit premature in making that conclusion. Walmart has made a small dent in Amazon Prime’s reach by showing respectable growth of its own comparable subscription-based program, Walmart+.

The service may be steering some of Amazon’s current and prospective customers toward the store-centered company. And more of the same could be coming.

32 million and counting

Take the following reported number with at least a small grain of salt, as Walmart has neither confirmed nor denied it. But Deutsche Bank‘s recent estimate that there are 32 million U.S. households subscribed to Walmart+ is probably in the right ballpark. For perspective, Amazon Prime boasts more than 200 million Prime subscribers, although that’s a worldwide figure.

It’s a solid start for Walmart’s subscription service that only launched a year ago, and it doesn’t even include access to a large library of digital entertainment content as Amazon Prime does. Rather, the key selling feature of Walmart+ is unlimited free deliveries of online orders fulfilled by nearby stores — sometimes the very same day — at a Prime-like price of $12.95 per month or $98 per year. It seems to be enough for some consumers, particularly with the offer sweetened by fuel discounts.

The appeal of Walmart+ in a market where Amazon Prime is also available is obvious: speed and convenience, with greater access to perishable foods. Amazon is able to make same-day deliveries in certain markets. But it can’t offer same-day or next-day deliveries of as many high-demand goods that Walmart can thanks to Walmart’s network of more than 5,000 U.S. stores as a means of fulfilling online orders.

A study commissioned by ACI Worldwide and PYMNTS.com quantifies the idea, indicating that ease and convenience are the top concerns for 76% of online grocery shoppers right now, topping risks related to COVID-19. COVID-19 was only a concern for 59% of the 2,342 adults surveyed. Notably, 94% of respondents said they will shop in-store at least some of the time. That’s a detail that gives Walmart a serious leg up on Amazon, which is not a major retailer of groceries or other consumer goods.

Tiptoeing onto Amazon’s turf

There are a couple of additional details buried deeper in Deutsche Bank’s survey results that cast a doubt on just how well Amazon will be able to attract and retain Prime subscribers, who are known to spend at least twice as much on the site as non-Prime consumers do.

One of these nuances is, 86% of Walmart+ subscribers say they’re also Prime members.

That makes sense on the surface. Serious online shoppers likely find paying for both similar services still ultimately pays for itself. Both retailers offer a lot of items, but neither offers everything a consumer may need. If money gets tight, though, consumers may narrow such services down to one. Given the swell of cheap on-demand/streaming services now available, Prime’s content library has never been easier or more affordable to give up.

The other noteworthy nuance of the survey’s results is the type of customers Walmart+ is attracting. These consumers tend to be at the upper end of the income range. Deutsche Bank says 33% of current Walmart+ members live in households earning in excess of $100,000 per year. Only 28% of Prime’s subscribers can say the same.

Simply put, Walmart is making inroads with a crowd that to date has almost exclusively been Amazon’s. Another nicety like access to on-demand content could accelerate this penetration.

Location, location, location

Last month The Wall Street Journal reported that Amazon is mulling the development of its own full-sized store network capable of selling goods like clothing, household goods, and consumer electronics. The company itself has neither confirmed nor denied the Journal‘s suggestion, which was based on comments from unnamed “people familiar with the matter.” But given the early apparent success of Walmart+, a larger store network that looks a bit like Walmart’s might be more of a must-do for Amazon than a want-to.

As it stands now, Amazon manages a few dozen convenience-type and grocery stores, several conventional bookstores, and even more so-called “4-star” stores that feature some of the website’s best-selling items. Don’t forget that Amazon is also now parent to Whole Foods Market, which is a chain of more than 500 North American conventional grocery stores.

That’s still nowhere near Walmart’s geographic reach, however. The big brick-and-mortar retailer’s got more than 5,000 stores doubling as mini-warehouses that it’s leveraging to meet consumers’ desire for a combination of speed, convenience, and local in-store shopping.

Moral of the story: Walmart won’t destroy Amazon, but it could certainly create a brisk headwind for the company.

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

The post Here’s why Amazon needs retail stores right now appeared first on The Motley Fool Australia.

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James Brumley has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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The Ausnet Services Ltd (ASX: AST) share price has soared into the green on Monday after the electricity distributor made a key announcement earlier.

Ausnet stated that Brookfield Asset Management has made a non-binding offer to acquire all of its issued shares at $2.50 per share.

The Ausnet share price opened 20% higher at $2.38 this morning.

Let’s investigate further.

What was in Ausnet’s announcement?

Ausnet advised that it received an “unsolicited, indicative, non-binding and conditional proposal” from Brookfield to acquire all of its issued shares, by way of a scheme agreement.

Brookfield put the offer forward at $2.50 per share, which signifies a 26% premium to Ausnet’s closing price of $1.98 on Friday, and a 35% premium to its 30-day weighted average share price, as per the release.

The revised proposal was made on behalf of an infrastructure fund that Brookfield manages and follows two previous conditional proposals from Brookfield. The first was on 30 August for $2.35/share, and the subsequent offer was $2.45/share.

So it appears Brookfield is hungry for Ausnet’s $11 billion of 100% owned and operated assets – which would likely slot into its diversified infrastructure portfolio, a behemoth with $95 billion in assets under management (AUM).

The indicative proposal is subject to several conditions, including due diligence, regulatory approval and unanimous support from Ausnet’s board.

Ausnet said in the announcement:

Following careful consideration and consultation with advisers, the board of Ausnet considers that it is in the best interest’s of Ausnet’s shareholders to engage further with Brookfield on the indicative proposal.

Accordingly, Ausnet has decided to provide Brookfield with the opportunity to conduct due diligence on an exclusive basis to enable it to put forward a binding offer.

If Brookfield makes the offer binding at $2.50 per share, the current intention of Ausnet’s board is to “unanimously recommend that shareholders vote in favour of the proposal”.

The company said a “superior proposal” was not out of the question should another party become interested in Ausnet’s assets.

Considering Brookfield’s size – it has US$626 billion in AUM – and aggressive deal-making style, it could be an interesting race if that were to happen.

Investors appear to have bought on the news today, pushing the Ausnet share price higher.

Ausnet shares are now exchanging hands at $2.34 apiece, up 18% from the market open.

Ausnet share price snapshot

The Ausnet share price has had a challenging year to date, posting a return of 13% since January 1.

It has faced headwinds over the past 12 months too, having climbed just 6.5% over this time.

These returns have lagged the S&P/ASX 200 index (ASX: XJO)’s gain of around 25% over the past year.

The post Ausnet (ASX:AST) share price rockets 20% on fresh takeover bid appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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 AGL Energy Limited (ASX: AGL) share price is continuing to be hit by investors dumping their shares. The company’s shares sunk to new multi-decade lows last week. This comes after Australia’s largest electricity provider released its full-year results for the 2021 financial year.

At the time of writing, AGL shares are adding to their losses, down another 1.09% to $5.46.

What’s weighing down the AGL share price?

AGL previously noted it has been struggling with current conditions of the national electricity market along with unstable electricity prices.

A sharp decline in wholesale prices for electricity and renewable energy certificates weighed down the company’s 2021 financial performance. The company regarded last year as one of the toughest energy markets on record.

The result ended in AGL reporting a 33.5% drop in profits to $537 million on the prior corresponding period. This is a stark contrast from when it registered a bottom-line figure of $1,040 million in FY19.

That’s a mammoth fall of around 48% in underlying net profit in just 2 short years, before the emergence of COVID-19.

Furthermore, the soon-to-close Liddell coal-fired power station has put a financial strain on the company. AGL plans to transform the site with a hydro and solar energy facility after Liddell’s shutdown in 2023.

The Australian Shareholders Association (ASA) announced its intention to vote in favour of the company introducing emissions targets. Currently, AGL does not have any decarbonisation targets in line with the Paris Agreement, however, the ASA hopes to change this.

AGL has recommended shareholders vote against the resolution which is being put to its annual general meeting on Wednesday.

What’s next for the company?

AGL is planning to split into two separate energy businesses in the fourth quarter of FY22.

AGL Energy will become Accel Energy and demerge AGL as a separately listed entity via a capital reduction.

Accel Energy is set to become Australia’s largest electricity generator, focused on supplying 20% of the national electricity market. In addition, the spin-off will redevelop its sites as low-carbon industrial energy hubs.

On the other hand, AGL will be Australia’s largest multi-product retailer, providing flexible electricity generation and storage needs.

Year-to-date, the AGL share price has plummeted in value, losing more than 53%. When factoring in the past 12 months, its losses are more than 61%.

The post The AGL (AGL) share price hit multi-decade lows last week. What’s next? appeared first on The Motley Fool Australia.

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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 Lake Resources N.L. (ASX: LKE) share price won’t be going anywhere on Monday after the company requested a trading halt.

What’s the trading halt for?

The trading halt was requested in relation to the negotiation of a material agreement with the company’s technology partner, Lilac Solutions Inc.

The company advised that its shares will remain halted until Wednesday, 22 September or upon the release of the announcement.

The Lake Resources share price was flat last Friday, closing the session at 51.5 cents.

About Lilac Solutions

Lake Resources believes the company is positioned to deliver the “world’s cleanest lithium”, with higher purity, cleaner technology and a pathway to large, scalable production.

Lake Resources has partnered up with California-based Lilac Solutions to fast-track its lithium production process.

The company explains that the conventional lithium extraction for brine involves pumping salt-rich waters to the surface into large ponds, where solar evaporation reduces the liquid content. This process can take up to anywhere between nine months to two years, with lithium recoveries below 50%.

Lilac has proven a high-purity extraction method that produce lithium brines “in under three hours” and with “minimal environmental impact”.

Without the need for traditional evaporation ponds, Lake Resources believes this “addresses the increasing interest from EV makers and battery makers to demonstrate they have access to a sustainable scalable supply chain for raw materials”.

The company believes Lilac’s proprietary extraction process could put “Lake ahead of rival projects in terms of consistent, battery quality production …”.

Lake Resources share price snapshot

The Lake Resources share price has surged 543% year-to-date thanks to the recent boom in lithium prices.

The company is busy on multiple fronts, from drilling at its flagship Kachi Project to discussions with potential offtake partners.

A number of near-term milestones are on the horizon according to the company’s July investor presentation. This includes the anticipated completion of its definitive feasibility study in Q2 2022 and final investment decision on construction finance in mid-2022.

The post Why the Lake Resources (ASX:LKE) share price is frozen appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Kerry Sun 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 Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has accelerated by over 40% since the company received its initial takeover offer.

The company’s shares were hovering around the $5.80 mark following a turbulent 12 months for Sydney Airport. However, its shares roared to a 52-week high of $8.41 last Monday before ending the week at $8.30 apiece.

Recap on the takeover offer

In early July, Sydney Airport advised that a consortium of infrastructure investors proposed a $22.6 billion all-cash transaction to buy Australia’s largest airport.

The deal offered $8.25 per share, which represented a 42% premium on the company’s shares at the time.

However, the Sydney Airport board knocked back the proposal just two weeks after. It stated that the offer undervalues the company and is not in the best interest of shareholders.

A revised conditional and non-binding proposal soon followed a month later (16 August), sweetening the deal. The consortium of infrastructure investors tabled an improved $8.45 per share offer. Yet again, the board declined, noting that the current COVID-19 environment does not reflect Sydney Airport’s long-term value.

Another offer arrived last Monday, upping the ante to $8.75 per share to acquire 100% of Sydney Airport shares. As such, the board appeared satisfied and said that it intends to grant the consortium due diligence on a non-exclusive basis.

This allows the buyer to put forward a binding proposal. The due diligence will take around 4 weeks to complete.

What does this mean for shareholders?

The process will proceed to the next step once the binding proposal is received and due diligence is complete.

The Sydney Airport board would make a unanimous recommendation to shareholders voting on the transaction. If this is approved, Sydney Airport and the consortium will enter into a mutually acceptable scheme implementation deed. Although, this would be subject to several conditions, including court and regulatory approvals.

For now, Sydney Airport shareholders will need to wait until due diligence is complete around mid-October.

Based on the current Sydney Airport share price, the latest offer represents an upswing of 5.4%.

Sydney Airport share price snapshot

Over the past 12 months, Sydney Airport shares were mostly tracking sideways until the takeover proposal announcement. Since then, the company’s shares have skyrocketed to near pre-COVID highs.

Sydney Airport presides a market capitalisation of roughly $22.4 billion and has approximately 2.7 billion shares on its books.

The post Sydney Airport (ASX:SYD) board recommends revised takeover proposal. What could this mean for shareholders? appeared first on The Motley Fool Australia.

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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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