ASX shares have been under pressure this year amid soaring inflation and fast-rising interest rates.

While we’re not technically there yet, many newer investors are looking at what may be their first bear market unfolding.

Is bigger safer?

With that in mind, many investors on the hunt for relatively safer ASX shares in a time of broadly falling prices will be running their slide rules over both the smaller and larger end of the market looking for some safety.

Turning to the charts, so far in 2022 the S&P/ASX 20 Index (ASX: XTL) – which contains the 20 largest-cap ASX shares – is down 7.4%

By comparison, the S&P/ASX Small Ordinaries Index (ASX: XSO) – which contains all the companies included in the S&P/ASX 300 aside from those in the S&P/ASX 100 – is down 21.1% year-to-date.

Over the longer term, however, the picture changes.

The ASX 20 is up 17.2% over the past five years compared to a gain of 19.6% posted by the Small Ordinaries.

So, what does that tell us about the relative safety of ASX blue chips in a falling market?

What the experts are saying about ASX shares in a bear market

For some expert insight, we defer to Hugh Dive, chief investment officer at Atlas Funds Management, and Hugh Giddy, senior portfolio manager at IML.

Asked by Livewire whether sticking to the biggest 20 ASX shares was a safer option with a looming bear market, Giddy said, “If you buy a big stock, of course, it’s safer in terms of they’re probably not going to go bust.”

As for whether that’s a better option for investors over buying a mid or small-cap stock, Giddy added:

Safety really comes from the franchise of the business, the balance sheet and so on… If you look at Zip Co (ASX: ZIP) and Sezzle (ASX: SZL) and so forth, they would no longer be anywhere near the top 20 because the franchise is not that strong. It’s a competitive market. They didn’t have the best balance sheet. They certainly didn’t have much in the way of earnings. So top 20 doesn’t mean safe.

Dive pointed out that historically many ASX shares don’t manage to remain in the top 20 list for long:

If you look at the top 20 from 20 years ago, most of them underperformed. AMP (ASX: AMP) is down 90%, NAB (ASX: NAB) is off 10-15%, Lendlease (ASX: LLC) is similar.

I think only three or four companies in that top 20 from 20 years ago have actually outperformed the ASX. A lot of these companies are still around, but they are shadows of their former selves. So simply buying an ASX top 20 stock doesn’t mean safety.

Dive added that in times of market dislocation, the biggest ASX shares do “tend to work a bit better in that they have sympathetic bankers and equity holders that can raise money. Smaller companies… are fighting for their corporate lives at the moment.”

The post Is it safer to buy large-cap ASX shares during a bear market? appeared first on The Motley Fool Australia.

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More reading

• Why has the Nickel Industries share price surged 13% in a week
• Broker says Allkem share price can rise 60% from here
• Zip share price soars 24% to break $1 mark for first time in 2 months
• Why is the Imugene share price sinking 13% this week?
• It’s better to be overprepared for a recession than underprepared

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 ZIPCOLTD FPO. 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 Nickel Industries Ltd (ASX: NIC) share price is up and away again during early Tuesday afternoon trading.

This comes after the company announced this week that its 80%-owned Angel Nickel power plant has started commissioning.

At the time of writing, the nickel producer’s shares are up 2.91% to $1.06 each. This means the company’s shares have gained 6% since Friday’s market close and 13% in the last week.

What’s charging Nickel Industries shares forward?

In yesterday’s announcement, Nickel Industries advised its 380-megawatt power plant within the Indonesia Weda Bay Industrial Park is now online.

The news seemed to appease investors which led the Nickel Industries share price to climb 3% for the day.

In comparison, the S&P/ASX 200 Index (ASX: XJO) fell slightly by 0.02%.

Nickel Industries stated that the commissioning of the power plant is currently ahead of schedule. This follows the early commissioning of the project’s 4 RKEF lines between January to May this year. This was originally projected for October 2022.

Angel Nickel has been operating at around 80% of nameplate capacity because of power restrictions within the IWIP electricity grid. However, with its own power source now available to tap into, production levels are expected to increase to approximately 130% of nameplate capacity.

Furthermore, Angel Nickel’s four RKEF lines are estimated to save around 20% on electricity charges. These lines account for roughly 25% of total operating cash costs.

Nickel is a key component in lithium-ion batteries, which are used in generating power for electric vehicles. The silvery-white metal is able to produce a lot more energy into batteries than cobalt. On top of that, cobalt is considered a more expensive metal and has fewer purposes across industries.

Nickel Industries’ managing director Justin Werner commented:

The early commissioning of the Angel RKEF lines more than 6 months ahead of schedule allowed us to significantly bring forward nickel production. With Angel’s power plant now commissioned this should allow us to ramp up to approximately 130% of name plate capacity, which will greatly increase nickel metal production and assist to materially decrease Angel operating costs.

Nickel Industries share price snapshot

After zipping to an all-time high of US$43,000 per tonne in mid-March, the price of nickel has spectacularly erased its historic gains.

Subsequently, this impacted the Nickel Industries share price which fell to a 52-week low of 88.5 cents on 15 July.

Year to date, the company’s shares are down 25%.

Nickel Industries has a price-to-earnings (P/E) ratio of 12.56 and commands a market capitalisation of roughly $2.89 billion.

The post Why has the Nickel Industries share price surged 13% in a week appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why is the Nickel Industries share price 5% worse for wear today?
• These ASX 200 mining shares are getting buried. What’s happening?
• Could the Nickel Industries share price more than double from here?
• ASX 200 mining shares glide lower as expert reduces commodity targets

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 Scott Phillips.

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The Nickel Industries Ltd (ASX: NIC) share price is up and away again during early Tuesday afternoon trading.

This comes after the company announced this week that its 80%-owned Angel Nickel power plant has started commissioning.

At the time of writing, the nickel producer’s shares are up 2.91% to $1.06 each. This means the company’s shares have gained 6% since Friday’s market close and 13% in the last week.

What’s charging Nickel Industries shares forward?

In yesterday’s announcement, Nickel Industries advised its 380-megawatt power plant within the Indonesia Weda Bay Industrial Park is now online.

The news seemed to appease investors which led the Nickel Industries share price to climb 3% for the day.

In comparison, the S&P/ASX 200 Index (ASX: XJO) fell slightly by 0.02%.

Nickel Industries stated that the commissioning of the power plant is currently ahead of schedule. This follows the early commissioning of the project’s 4 RKEF lines between January to May this year. This was originally projected for October 2022.

Angel Nickel has been operating at around 80% of nameplate capacity because of power restrictions within the IWIP electricity grid. However, with its own power source now available to tap into, production levels are expected to increase to approximately 130% of nameplate capacity.

Furthermore, Angel Nickel’s four RKEF lines are estimated to save around 20% on electricity charges. These lines account for roughly 25% of total operating cash costs.

Nickel is a key component in lithium-ion batteries, which are used in generating power for electric vehicles. The silvery-white metal is able to produce a lot more energy into batteries than cobalt. On top of that, cobalt is considered a more expensive metal and has fewer purposes across industries.

Nickel Industries’ managing director Justin Werner commented:

The early commissioning of the Angel RKEF lines more than 6 months ahead of schedule allowed us to significantly bring forward nickel production. With Angel’s power plant now commissioned this should allow us to ramp up to approximately 130% of name plate capacity, which will greatly increase nickel metal production and assist to materially decrease Angel operating costs.

Nickel Industries share price snapshot

After zipping to an all-time high of US$43,000 per tonne in mid-March, the price of nickel has spectacularly erased its historic gains.

Subsequently, this impacted the Nickel Industries share price which fell to a 52-week low of 88.5 cents on 15 July.

Year to date, the company’s shares are down 25%.

Nickel Industries has a price-to-earnings (P/E) ratio of 12.56 and commands a market capitalisation of roughly $2.89 billion.

The post Why has the Nickel Industries share price surged 13% in a week appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why is the Nickel Industries share price 5% worse for wear today?
• These ASX 200 mining shares are getting buried. What’s happening?
• Could the Nickel Industries share price more than double from here?
• ASX 200 mining shares glide lower as expert reduces commodity targets

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 Scott Phillips.

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The Allkem Ltd (ASX: AKE) share price is having a strong day on Tuesday.

In afternoon trade, the lithium miner’s shares are up 3.5% to $10.57.

This means the Allkem share price is now up 35% since this time last year.

Can the Allkem share price keep rising?

The good news for investors is that one leading broker still sees plenty of upside in the Allkem share price.

According to a recent note out of Morgans, its analysts have retained their add rating and lifted their price target on the lithium miner’s shares to $16.72.

Based on the current Allkem share price, this implies potential upside of 58% for investors over the next 12 months.

What did the broker say?

Morgans was pleased with Allkem’s fourth quarter update, which revealed record free cash flow generation thanks to increased production and strong lithium prices.

The broker believes that this bodes well for FY 2023, particularly given the expectation for increased production as Naraha and Stage 2 Olaroz come online.

It commented:

AKE holds long lived brine assets that are well leveraged to the lithium carbonate price and Mt Cattlin looks to be highly profitable for its remaining life with high exposure to the spot market. Additionally the Naraha plant will give the company exposure to lithium hydroxide prices in addition to spodumene and carbonate.

We believe that the strong cash flows we’re anticipating in FY23 will make the value proposition more compelling than the uncertainties of the lithium market. We maintain our ADD rating with potential 12-month upside of 69% [now 58] but we note that the lithium market is still developing and comes with higher risks.

The post Broker says Allkem share price can rise 60% from here appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Allkem 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 Scott Phillips.

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It’s been a bit of a stop-start kind of day for the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has gained an almost-indistinguishable 0.01% after stints in both positive and negative territory, closing back on 6,800 points. But that’s nothing compared to the Zip Co Ltd (ASX: ZIP) share price.

Zip shares are having a cracker today. Presently, the buy now, pay later (BNPL) share has gained an impressive 15.2% and is trading at 98 cents a share after opening at 85 cents this morning. But not only that, earlier we saw Zip rise as high as $1.07 a share.

Not only was that a gain of more than 24% at the time, but it also represents the first time in two months that Zip shares have ventured above the $1 a share mark. Since hitting a new 52-week low of 44 cents a share on 30 June, Zip is now up an extraordinary 125%. What a start to the new financial year.

So what’s going on with Zip shares today that might have elicited such a decisive push upwards in valuation?

Why are Zip shares on a 24% rocket today?

Well, it’s not entirely clear. There hasn’t been any new news out of Zip today. Or indeed this week so far.

But we did get some big news from the BNPL share last week, which could still be pushing on the Zip share price today.

Last week, Zip released its quarterly update, covering the three months to 30 June 2022. This update revealed Zip’s quarterly revenue rose a healthy 27% to $160.1 million. Transaction volumes were also up by 20% year on year, while customer numbers rose 5.3% on a quarter-on-quarter basis.

Investors clearly liked what they saw in this report, judging by the fact that since its release, Zip shares have jumped almost 27%. Investors have also responded positively to the news earlier this month that Zip’s proposed merger with its fellow BNPL share Sezzle Inc (ASX: SZL) has been scrapped.

So it seems it is a combination of these events that is still driving the Zip share price higher today. But remember, Zip is still down a painful 77% or so over 2022 so far.

At the current Zip share price, this ASX 200 BNPL share has a market capitalisation of $684.5 million.

The post Zip share price soars 24% to break $1 mark for first time in 2 months appeared first on The Motley Fool Australia.

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More reading

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• Swings and roundabouts: What’s with the Zip share price today?
• Here are the top 10 ASX 200 shares today

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 positions in and has recommended ZIPCOLTD FPO. 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 Imugene Limited (ASX: IMU) share price is down 13% since the closing bell this past Friday.

As covered by my Fool colleague James, the biotech company released a quarterly update yesterday.

The update revealed an operating cash outflow of $10.15 million. Research and development accounted for $8.5 million, and staff costs accounted for the bulk of the remaining expenditure.

However, the company remains in a strong financial position with a cash balance of $99.9 million.

In its statement, Imugene said: “The Company continues to monitor its expenditure carefully across all facets of the business, though this is expected to increase as clinical programs ramp up.”

Why is the Imugene share price struggling?

The performance of Imugene shares so far this week may be partly related to the update yesterday, and perhaps partly just a pullback after a very strong month.

As my Fool colleague Brooke reported last week, the Imugene share price has actually skyrocketed in recent times. At the time of reporting on 20 July, Imugene shares were up 77% over four weeks.

It’s not uncommon to see an ASX share pull back a little after a surge in value.

Some investors might choose to cash in some of their short-term profits, which we don’t generally recommend here at the Fool. We advocate the buy-and-hold strategy in most situations for ordinary ASX investors.

Imugene is an immuno-oncology company developing treatments to activate the immune systems of cancer patients.

So, like most biotech companies in development mode, the Imugene share price pretty much lives or dies from day to day based on the results of trials announced to the ASX, and other news relating to the company’s ongoing pursuit of medical advances.

What’s the latest news from Imugene?

Earlier this month, Imugene announced the appointment of executive director and clinical scientist Dr Sharon Yavrom.

Yavrom has almost 20 years of industry experience and has taken the lead role in multiple clinical trials for cancer treatments in the past.

The Imugene share price rose by 11% on the day of the news.

On 27 June, the company also reported the results of a phase 2 trial for the use of HER-Vaxx to treat advanced gastric cancer.

The trial showed a median overall survival of 13.9 months for patients treated with HER-Vaxx and chemotherapy. This compared to a survival rate of 8.3 months for patients who only received chemotherapy treatment.

ASX investors pushed the Imugene share price 41% higher on the day of this announcement.

The post Why is the Imugene share price sinking 13% this week? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, EML, Imugene, and Nanosonics shares are sinking
• ASX 200 midday update: ANZ’s capital raising, Link jumps, Zip’s Q4 update
• The Imugene share price has rocketed 77% in a month. What’s going on?
• What’s the outlook for ASX biotech shares in FY23?
• Up 33% in a week, what’s helping the Imugene share price higher?

Motley Fool contributor Bronwyn Allen 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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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.

To put it lightly, the first half of 2022 has been a challenging year in the stock market. Between the major indexes being down double-digit percentages year to date, blue-chip companies seeing their stocks plunge, and portfolios losing value seemingly by the hour, it’s been rough. Add in rising inflation at a level that we haven’t seen in decades, and it has many people wondering if a recession is on the way.

I can’t say with 100% certainty whether we’re headed for a recession, but I can say that it’s always better to be overprepared than underprepared for one. If you stay ready, you won’t have to get ready.

Prioritize an emergency fund

Before investing, your first priority should be establishing an emergency fund. You never know when your car may need repairs so you can get to work, something important in your house breaks, or you’re suddenly jobless. It’s nice to have investments, but you don’t want to find yourself in a situation where an emergency pops up, and you have to sell some of your stocks to cover the cost.

Having to sell stocks unexpectedly can hurt you both in the present and future. It can spark a tax bill now that could add to whatever costs you’re trying to cover. If you sell stocks for a profit, you must pay capital gains taxes. And any shares sold now are also shares that don’t have the chance to continue growing in the future.

To determine how much you need for an emergency fund, first add up all your monthly expenses. If you’re single and the only person’s livelihood you have to look after is yours, you can likely manage with three months of expenses. If you have a family and are responsible for other people, you should aim to have at least six months’ worth of expenses saved.

Pay down your expensive debt

Unfortunately, nothing in stock investing is guaranteed. You know what is guaranteed? The debt you owe, along with the interest that comes with it. If you have debt (particularly with high interest), prioritize cutting it down over investing — especially with a potential recession looming. Making money off stocks can be counterproductive if you pay more in debt interest than you’re earning. It’s even worse if you lose money investing while your debt is simultaneously piling up.

And not all debt is created equal; some kinds are way more costly than others. Your credit card debt, for example, is likely to have a higher interest than your student loans. While some people like eliminating debts with the lowest balance first, you will save yourself money in the long run by eliminating your highest interest debt first.

Focus on larger-cap companies

Large-cap companies have a market capitalization of $10 billion or more. These stocks may not have the hypergrowth potential of small-cap stocks, but because of their size and financial resources, they tend to be more stable investments than smaller companies that are more sensitive to economic conditions. While nothing is guaranteed, large-cap companies are generally in a better position to weather bad economic storms.

To spread out risk, it would help to invest in a large-cap index fund. The S&P 500 — which is often used to gauge the state of the overall market — has produced solid returns after every correction, bear market, and recession that’s happened since its inception in 1957, and there’s no reason to think it won’t continue to do so going forward. During times of uncertainty, large-cap companies can provide a bit of stability.

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

The post It’s better to be overprepared for a recession than underprepared appeared first on The Motley Fool Australia.

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• Why is the Hawsons Iron share price hiking 6% higher today?
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• ASX 200 midday update: Iress sinks on CEO exit, Flight Centre shares descend
• Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

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The Myer Holdings Ltd (ASX: MYR) share price is racing higher following the release of the company’s FY22 trading update.

In early afternoon trade, the Australian department store group’s shares are surging 22.5% to an intraday high of 49 cents.

Let’s take a closer look at how the company performed for the 2022 financial year.

Myer continues to build on sales growth momentum

Investors are bidding up the Myer share price after digesting the company’s latest scorecard.

In its announcement, Myer provided a trading update and results guidance for the 52 weeks ending 30 July 2022 (FY22). Here are some of the key highlights:

• Total sales for the second half of FY22 are up between 16.5% and 17.3% compared to H2 FY21;
• FY22 total sales are up between 12.3% and 12.7% ($2,985 million and $2,995 million) compared to $2,658.3 million for FY21;
• FY22 group online sales are up between 32.5% and 34.4% ($715 million and $725 million).

Subsequently, the above numbers are expected to flow into a stronger financial performance for the company. As such, the group is forecasting the following:

• H2 FY22 net profit after tax (NPAT) for the 26 weeks to 30 July 2022 of between $23 million and $28 million. This reflects an increase between 160% and 217% compared to H2 FY21 NPAT of $8.8 million for the 27 weeks to 31 July 2021;
• FY22 NPAT of between $55 million and $60 million, an improvement of between 86% and 103% if JobKeeper is excluded from the prior year.

The company noted it’s projecting to finish FY22 in a positive net cash position of more than $155 million, up from $112 million in FY21.

Department store stock on hand is currently 9.6% higher than this time last year due to management’s response to global supply chain delays.

Furthermore, clearance inventory is being well managed at 6.2% of current department store stock on hand.

Myer anticipates its FY22 final results will be released sometime in September, following board approval and completion of audit.

Management commentary

Myer CEO John King touched on the company’s results, saying:

Execution of the Customer First Plan continues to deliver positive outcomes for the business with all categories achieving sales growth over FY21, despite more trading days lost due to COVID this year.

The momentum in the second half in terms of sales growth both in-store and online, profitability and strengthening of our balance sheet places us well as we go into the new financial year.

Myer share price snapshot

Adding to its impressive gains, the Myer share price has risen 49% in the past month which will offer some relief to shareholders.

This comes after its shares hit a 52-week low of 29.5 cents on 17 June on the back of weakened investor sentiment on the ASX.

Based on the current share price, Myer commands a market capitalisation of around $404 million.

The post Myer share price rockets 23% as 2022 profit expected to double appeared first on The Motley Fool Australia.

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More reading

• It’s better to be overprepared for a recession than underprepared
• Why is the Hawsons Iron share price hiking 6% higher today?
• Maca share price leaps 23% on Thiess takeover news
• ASX 200 midday update: Iress sinks on CEO exit, Flight Centre shares descend
• Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22

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 Scott Phillips.

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The Hawsons Iron Ltd (ASX: HIO) share price is rising today on the back of a mineral resource upgrade.

The iron ore producer’s shares are rising 6% at the time of writing, trading at 43.5 cents. For perspective, the S&P/ASX 200 Materials Index is jumping 1% today.

Let’s take a look at what Hawsons Iron reported to the market.

Resource upgrade

Hawsons advised that its mineral resource estimate has jumped by 21% from 400 to 484 million tonnes. This is at the Hawsons Iron Project near Broken Hill in New South Wales.

The measured and indicated resources leapt 87% from 132 to 247 million tonnes. This includes a measured resource of 54 million tonnes and an indicated resource of 193 million tonnes.

Given the strength of this resource, Hawsons predicts it can meet its target of producing 20 million tonnes of concentrate per year.

Commenting on the news, managing director Bryan Granzien said:

This upgrade is significant because having these Mineral Resources in the higher confidence
measured and indicated categories is necessary for the BFS and finalising our project financing package.

We are absolutely delighted with the outcome which now sets the scene for getting on with the next
stage of the BFS, including completion of our detailed mine design and engineering.

Granzien highlighted the new mineral resources estimate will assist in discussions with potential project financiers.

The iron ore price is up 0.97% and trading at US$104 per tonne, trading economics data shows.

Hawsons Iron share price snapshot

The Hawsons Iron share price has surged 156% in a year and 190% in the year to date.

For perspective, the Materials Index has shed nearly 16% in a year.

Hawsons has a market capitalisation of about $322 million based on the current share price.

The post Why is the Hawsons Iron share price hiking 6% higher today? appeared first on The Motley Fool Australia.

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More reading

• What’s with the Hawsons Iron share price on Monday?

Motley Fool contributor Monica O’Shea 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 Maca Ltd (ASX: MLD) share price is rocketing higher following a $350 million takeover proposal.

Thiess has put forward an all-cash off-market offer of $1.025 per share in Maca.

At the time of writing, the Maca share price is 98.7 cents, 23.38% higher than its previous close.

Let’s take a closer look at the bid posed to the mining and civil construction company.

Thiess puts forward bid for Maca

Global mining services company Thiess has put forward a bid for Maca, offering shareholders a 28% premium on the ASX share’s previous closing price.

The Maca board has unanimously recommended investors accept the offer. Though, its recommendation is contingent on an independent expert concluding the bid is reasonable and no better offer coming along in the meantime.  

The offer is also conditional on Thiess receiving a 90% holding in Maca at the end of the offer period and regulatory approval. The regulators involved in the transaction will include the Foreign Investment Review Board and the Australian Competition & Consumer Commission.

Maca co-founder and chair Geoff Baker commented on the takeover bid driving the company’s share price today, saying:

The board of Maca believes that Thiess is the right partner for the Maca business … Thiess will continue investing in our respected brand and will seek to provide additional development opportunities for our people as part of its national and international operations.

Thiess executive chair and CEO Michael Wright said the offer brings shareholders “certainty of cash, a strong premium, and an ability to achieve liquidity”. Wright continued:

The proposed acquisition of Maca is an important part of Thiess’ strategy to diversify its operations across commodities, services, and geographies.

We recognise and intend to maintain and grow Maca’s strong brand and presence in the Western Australian market. Thiess also looks forward to supporting Maca to meet the evolving needs of its client base through promoting further investment in low emission and technology-led solutions.

Maca share price snapshot

The mining and constructing small cap has been outperforming many of its S&P/ASX 200 Index (ASX: XJO) peers lately.

Today’s gain sees the Maca share price 23% higher than it started 2022. It has also gained 7% since this time last year.

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) has slipped 11% year to date. It has fallen 16% over the last 12 months.

The post Maca share price leaps 23% on Thiess takeover news appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Iress sinks on CEO exit, Flight Centre shares descend
• Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22
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• Iress share price drops 9% on news of CEO departure

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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