Wesfarmers Ltd (ASX: WES) is expected to grow its dividend in FY22 on top of the growth in FY21.

One of the key objectives of Wesfarmers is to deliver satisfactory shareholder returns over the long-term.

Wesfarmers regularly takes the opportunity to pay shareholders a healthy level of its profit out as a dividend. It achieves this thanks to its profit, cashflow, “strong” balance sheet and portfolio of market-leading businesses which position it for achieving good dividends.

In FY21, Wesfarmers paid a full year dividend of $1.78 per share – that was an increase of 17.1% compared to FY20. This represented a payout ratio of 83% of continuing operations underlying earnings per share (EPS).

How much could the Wesfarmers dividend grow in FY22?

One of the brokers that has made a projection about the Wesfarmers dividend in FY22 is UBS.

The broker has projected that Wesfarmers is going to grow its annual dividend by 2.8% in FY22 to $1.83 per share. That would represent a dividend payout ratio of 90.6% of the estimated profit for the 2022 financial year, if the broker is right on both projections.

In FY23, Wesfarmers is expected by UBS to grow its dividend again to $2.08 per share. That would be a grossed-up dividend yield of 5% if the broker is right.

Is the Wesfarmers share price an opportunity?

There are not many brokers that are bullish on the business at the moment, with most analyst ratings being neutral/a hold on the company.

UBS is one of those that is neutral on the business, with a price target of $62 – a little higher than where it is right now.

But there are some brokers that are even less optimistic.

Citi actually rates Wesfarmers as a sell, with a price target of $50. That’s approximately 15% lower than where it is today. Citi thinks that Wesfarmers shares are looking a bit expensive, and thinks that there are plenty of disruptions going such as the supply chain and increasing freight costs.

Investing for growth

Wesfarmers is doing a number of initiatives to try to grow the business. It’s investing in data and digital capabilities, including an ecosystem that will allow a more seamless and personalised customer experience across the retail businesses.

But it’s also investing for growth through acquisitions. It recently entered into a scheme implementation deed with Australian Pharmaceutical Industries Ltd (ASX: API). Wesfarmers plans to buy each API share for a price of $1.55. API’s board has unanimously recommended the deal to shareholders.

Wesfarmers managing director Rob Scott says that the acquisition of API will provide an opportunity to enter the growing health, wellbeing and beauty sector. Mr Scott also said:

Wesfarmers continues to see 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.

Valuation

Looking at some of the projections by brokers can give a sense of how expensively the business is trading.

Citi’s numbers put the Wesfarmers share price at 28x FY22’s estimated earnings.

Looking at FY23, UBS has a more optimistic estimate, with the Wesfarmers share price valued at 26x FY23’s estimated earnings.

The post How much is the Wesfarmers (ASX:WES) dividend expected to grow in FY22? appeared first on The Motley Fool Australia.

More reading

• Only a few ASX 200 companies have received this honour and Scentre (ASX:SCG) just joined them
• Why has the Wesfarmers (ASX:WES) share price leapt 8% over the past month?
• Is the Wesfarmers (ASX:WES) share price great value or overvalued?
• Why the Wesfarmers (ASX:WES) share price has underperformed the ASX 200 in the last 3 months
• Top brokers name 3 ASX shares to sell next week

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 shares of 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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The Genworth Mortgage Insurance Australia Ltd (ASX: GMA) share price is pushing higher in late afternoon trade. The mortgage insurance company released an announcement regarding an on-market share buyback.

At the time of writing, Genworth shares are swapping hands for $2.32, up 6.42%.

Genworth set to commence share buy back

In today’s statement, Genworth advised it intends to begin an on-market share buyback from 8 December. The maximum value the company is willing to spend on taking a portion of shares off the market is $100 million.

Based on Genworth’s closing share price of $2.18 yesterday, this buyback would represent 11.1% of the total issued capital. This equates to roughly 45.9 million shares.

The company noted that, depending on business and market conditions, the number of shares to be purchased may change. However, the buyback will not exceed more than 10% of Genworth ordinary shares without shareholder approval.

The reason for the buyback is that the board is trying to bring Genworth’s solvency ratio within a target capital range of 1.32 to 1.44 times the Prescribed Capital Amount (PCA) on a Level 2 basis.

Genworth CEO and managing director Pauline Blight‐Johnston said:

The on‐market share buyback is consistent with Genworth ensuring we have an efficient capital structure and helps us to deliver improved returns to our shareholders.

Genworth share price snapshot

It’s been a disappointing 12 months for Genworth shares, falling 2% in that time. Year-to-date, its shares are hovering 3% below for the last 11 months.

Based on today’s price, Genworth commands a market capitalisation of about $952.91 million and has approximately 412.51 million shares outstanding.

The post Genworth (ASX:GMA) share price leaps 6% on share buyback news appeared first on The Motley Fool Australia.

More reading

• The DigitalX share price has tumbled 30% in 8 days. What’s happening?
• Here’s why this fund manager sold its Star Entertainment (ASX:SGR) shares
• Here’s why the Magnis (ASX:MNS) share price is rocketing 21% today
• European Lithium (ASX:EUR) share price sinks after listing in US
• Here’s why the Atomos (ASX:AMS) share price is sinking 8% 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 DigitalX Ltd (ASX: DCC) share price is not having a fun day of trading on the ASX boards this Tuesday. At the time of writing, DigitalX shares are down a nasty 8.33% to 11 cents apiece.

Unfortunately, it gets worse for investors. This latest drop means the DigitalX share price is now down by roughly 30% from the 52-week high of 16 cents a share that we saw less than two weeks ago. I don’t need to tell you that’s a pretty devastating drop in such a short space of time.

So what happened to this now-former ASX high flyer? After all, DigitalX was a company that had delighted investors with a 150% surge just between 1 October and 15 November.

Well, it’s not entirely clear. There have been no price-sensitive (or any, for that matter) announcements out of this company since 10 November.

As we covered at the time, that was the week when DigitalX announced its most recent cryptocurrency-related fund performances.

The company announced a new record high for funds under management (FUM) at the time, with $38.99 million in FUM as of 31 October, a 36.8% increase on the previous month. DigitalX’s Bitcoin Fund and Digital Asset Fund both rose by an impressive 37.46% and 27.82% respectively over October as well.

But that was then, and this is now. So what could have gone wrong with this company?

DigitalX share price under-mined by Bitcoin?

The first and best place to look is the cryptocurrency markets themselves, since this is the space in which DigitalX operates and invests.

Looking at the price of Bitcoin (CRYPTO: BTC), we can see the flagship cryptocurrency has fallen 15.8% since making a new all-time high of close to US$67,000 a coin back on 8 November.

Today, one Bitcoin is asking just US$56,900 at the time of writing. We have seen similar trends play out for other cryptos like Ethereum (CRYPTO: ETH).

Such a steep fall in Bitcoin conceivably would have a large impact on a crypto fund manager like DigitalX. At least, that’s what the market could be assuming.

Therefore, this is a very possible explanation as to why the DigitalX share price is getting hammered today and has been hammered since this dip in Bitcoin began earlier this month.

At the current DigitalX share price of 11 cents, this company has a market capitalisation of roughly $89 million.

The post The DigitalX share price has tumbled 30% in 8 days. What’s happening? appeared first on The Motley Fool Australia.

More reading

• Did the Bitcoin and Ethereum bubble burst just signal a crypto market top?
• Why ASIC chair warns ‘great caution’ needed when investing in crypto
• Planning to gift Bitcoin (CRYPTO:BTC) or another crypto for Christmas? You’re not alone
• Could carbon credits become the new crypto? This fundie thinks so
• How has Bitcoin (CRYPTO:BTC) performed since this weekend’s Taproot upgrade?

Motley Fool contributor Sebastian Bowen owns shares of Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. 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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Shares in Star Entertainment Group Ltd (ASX: SGR) have been caught in a violent whirlwind of allegations and speculation over the last month and a half. During this time, the Star Entertainment share price has fallen more than 19%.

The dismantling of the company’s value largely followed allegations stemming from a joint investigation by the Sydney Morning Herald (SMH), The Age, and 60 Minutes. It was alleged the casino allowed money laundering, organised crime, fraud, and foreign interference.

Following the reports, the Australian boutique fund manager Perennial Partners decided to sell its Star Entertainment shares.

Perennial jumps ship from Star Entertainment shares

Despite one of the most famous investing quotes advising “buy when there’s blood in the streets”, the team at Perennial Partners wasn’t interested in applying it to the casino operator in October. Instead, the Perennial Value Australian Shares Trust did the opposite.

While Star Entertainment shares have recovered 15% since 12 October, the share price remains a long way off its recent 52-week high. Lingering in the minds of investors is likely the potential for a public hearing. However, as previously covered, this would depend on a recommendation by the current investigator, Adam Bell.

As it stands, Perennial’s fund shouldn’t be impacted by any further outcomes since exiting its position. The fund described its reasoning for the sale in its monthly report:

There was strong reason to believe that Star would be a beneficiary of this [improved compliance] process, including potentially merging with Crown. However, claims of similar issues at Star as had occurred at Crown, mean that the business will be effectively hamstrung for a period of time as these matters are investigated.

This was very disappointing, as Star was widely considered to have been much better managed than Crown. As a result, we decided to exit the stock.

Buying instead

The fund went on to use the proceeds from the Star Entertainment share sale to increase its holding in Incitec Pivot Ltd (ASX: IPL). Unlike the casino operator, Incitec has been enjoying the sustained appreciation of its share price in recent months.

On 15 November, the agricultural chemicals company reported a 91% lift in net profit after tax for the full year. Following the release, shares surged to a 52-week high. The team at Perennial Partners holds a positive outlook for the company on strong fertiliser prices.

Finally, Star Entertainment shares are down approximately 2% since the beginning of the year. Whereas, the S&P/ASX 200 Index (ASX: XJO) is up around 12%.

The post Here’s why this fund manager sold its Star Entertainment (ASX:SGR) shares appeared first on The Motley Fool Australia.

More reading

• Why these top brokers say the Incitec Pivot (ASX:IPL) share price is a buy
• These 3 ASX 200 shares are topping the volume charts this Monday
• Why Cardno, Incitec Pivot, Mesoblast, and WiseTech are storming higher
• These ASX 200 shares could be set to face fresh pressure over climate action
• ASX 200 (ASX:XJO) midday update: Incitec Pivot and Mesoblast jump, NAB drops

Motley Fool contributor Mitchell Lawler 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 Magnis Energy Technologies Ltd (ASX: MNS) share price is surging higher today amid the company’s US listing and its chair’s re-election.

The company’s stock will be floating on the OTCQX Best Market tonight (Australian time).

Additionally, Magnis chair Frank Poullas kept his seat on the company’s board yesterday. That’s despite reports claiming he is the subject of an Australian Securities and Investments Commission (ASIC) probe.

At the time of writing, the Magnis share price is 61 cents, 20.79% higher than its previous close.

For context, the broader market is also in the green today. The S&P/ASX 200 Index (ASX: XJO) is up 0.7% while the All Ordinaries Index (ASX: XAO) has gained 0.74%.

Magnis share price soars on Tuesday

Tuesday is proving to be a good day for Magnis shareholders. The company’s share price is taking off despite no price-sensitive news having been released.

However, the company’s stock is getting ready to become more liquid tonight.

In a bid to simplify the process US-based investors must go through to get a hold in Magnis, the company is listing on the US OTC market at 1.30am AEDT. It will trade there under the ticker OTCQX: MNSEF.

The secondary listing could also inspire confidence in Magnis as the OTC upholds notoriously strict standards for companies listing on the exchange. Secondary listings also tend to increase the liquidity of a company’s stock.

On the new listing, Poullas commented:

We are seeing significant interest from investors in the US given our unique position as the largest shareholder in one of the largest lithium-ion battery plants in North America. We are privileged to be ringing the OTC Markets Opening Bell tonight.

Speaking of Poullas, more than 99.5% of Magnis’ shareholders voted for his re-election at the company’s annual general meeting yesterday.

The support came despite the Magnis share price being halted last week following reports Poullas is being investigated by ASIC.

The same report also claimed the watchdog hadn’t ruled out investigating Magnis as well, a claim Magnis denied.

However, the company didn’t go so far as to deny ASIC is looking into Poullas.

The post Here’s why the Magnis (ASX:MNS) share price is rocketing 21% today appeared first on The Motley Fool Australia.

More reading

• Why Magnis, Nanosonics, WiseTech, and Zip shares are dropping
• Magnis (ASX:MNS) share price falls 40% this week amid ASIC and board woes
• Magnis Energy (ASX:MNS) share price frozen amid ASIC probe
• Liftoff: Why is the Magnis Energy (ASX:MNS) share price up 50% in a week?

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 Bruce Jackson.

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The European Lithium Ltd (ASX: EUR) share price is in reverse on Tuesday afternoon. This comes after the lithium miner announced its shares have now begun trading on the OTCQB market in the United States.

At the time of writing, European Lithium shares are swapping hands for 14 cents, down 3.45%.

European Lithium expands access to US investors

A possible catalyst for the fall in the European Lithium share price is that investors are fearing a share dilution.

According to the release, European Lithium’s ordinary shares are now quoted on the OTCQB market. Trading under the symbol EURIF, the listing provides direct access to US institutions and retail investors to invest in.

A diversified shareholder base bolsters the company’s strategic efforts to scale up its lithium projects in Europe. The company is focused on developing the Wolfsberg Lithium Project in Austria to production and securing critical local lithium supply.

European Lithium’s primary listing is on the ASX, with the secondary quotation on the OTCQB market and the Frankfurt Stock Exchange, under the symbol PF8.

European Lithium executive chair Tony Sage commented:

We’re actively engaging with US investors and institutions who have expressed strong interest in the company and its projects. We believe that providing a convenient and transparent trading platform for US investors to directly access our shares will improve liquidity and broaden awareness of the company among mature and sophisticated investors with strong interest in lithium.

More on the OTCQB market

The OTCQB market, also called the “Venture Market”, is a trading platform that is operated by OTC Markets Group Inc in New York. The middle-tier market provides a home for shares that are not listed on the two big United States exchanges, NYSE and NASDAQ.

European Lithium share price summary

Over the last 12 months, the European Lithium share price has accelerated to post a 230% gain. Year-to-date, its share price performance is almost as impressive, up 210%.

Since hitting a 52-week high of 19 cents in early November, European Lithium shares have retreated for the time being.

Based on today’s price, European Lithium presides a market capitalisation of roughly $155.9 million, with approximately 1.08 billion shares outstanding.

The post European Lithium (ASX:EUR) share price sinks after listing in US appeared first on The Motley Fool Australia.

More reading

• Here’s why the Atomos (ASX:AMS) share price is sinking 8% today
• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• BHP (ASX:BHP) share price jumps 4% on ‘global energy company’ deal
• Why is the Australian Ethical Investment (ASX:AEF) share price surging 7% today?
• The AGL (ASX:AGL) share price has lost 8% so far this month. What’s next?

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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Shares in Atomos Ltd (ASX: AMS) haven’t found solid ground today and are sliding 8% in the red at the time of writing.

At last check, Atomos shares were changing hands at $1.18 apiece, after trading as low as $1.04 just before the afternoon session.

Atomos started the day behind as investors responded poorly to a set of market updates.

The tech company that specialises in products for the content creation market first provided an update on a US$2 million investment in a cloud development agreement. Shortly afterwards, it confirmed its FY22 guidance.

Let’s take a closer look.

What did Atomos announce?

Atomos advised it has entered into a cloud development agreement with Cinemacraft Inc to fund the completion of its Videogram platform.

The release notes that Cinemacraft’s CEO and founder Sandeep Casi developed Videogram as a “cloud-based platform with a vision to automate video workflows to deliver unique opportunities for video creatives”.

Atomos will invest up to US$2 million to complete the development of the Videogram platform, including US$800,000 for patents and oversight.

Cinemacraft has a string of flashy investors on its books ranging from venture capital firm 500Startups to a Japanese actor. According to Atomos, the investment builds on its depth in video and multi-camera capture to expand into cloud-based services.

The agreement also has an embedded option that allows Atomos to acquire all shares in Cinemacraft. Atomos may exercise its option based on the financial performance of Videogram over two 12-month periods ending September 30, 2023.

Regarding the agreement, Atomos Chief Executive Officer Estelle McGechie said:

We are delighted to partner with Cinemacraft; they have developed unique cloud solutions that will underpin an exciting new chapter for Atomos. When you combine Sandeep’s experience developing technology at Fuji Film and ILM for Lucas Films, with his passion for using machine learning to simplify a creator’s journey, you can see Videogram is poised to reinvent the way online video is discovered, consumed, shared and monetised. I look forward to working closely with Sandeep and his team to help realise the potential of Videogram.

What about Atomos’ FY22 guidance?

Further to the cloud agreement, Atomos also advised on its FY22 full-year guidance today. The company expects revenue to be in excess of $95 million, an increase of at least 21% over FY21 revenue.

First half revenue is anticipated to be in excess of $40 million, up 22% year on year despite being “impacted by supply chain challenges”.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margins are expected to be upward of 12%, up from 10.4% in FY21. Also factored into this EBITDA margin guidance is some upward pressure on variable costs, most notably freight, according to the release.

The forecast EBITDA margin relates to the underlying Atomos business and excludes approximately $1m of operational costs resulting from the investment in Videogram.

Commenting on Atomos’ guidance, McGechie said:

In effectively managing our supply chain to ensure sufficient stock to meet our sales targets, we have in inventory during the first half and as a result will experience a cash outflow.

The Atomos share price has gained almost 24% in the past 12 months, after rallying 22% this year to date.

However, in the past month, it is down by more than 20% and has fallen 9% in the past week.

The post Here’s why the Atomos (ASX:AMS) share price is sinking 8% today appeared first on The Motley Fool Australia.

More reading

• European Lithium (ASX:EUR) share price sinks after listing in US
• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• BHP (ASX:BHP) share price jumps 4% on ‘global energy company’ deal
• Why is the Australian Ethical Investment (ASX:AEF) share price surging 7% today?
• The AGL (ASX:AGL) share price has lost 8% so far this month. What’s next?

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Atomos Ltd. The Motley Fool Australia has recommended Atomos Ltd. 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 shaken off yesterday’s woes and is currently in the green thus far this Tuesday. At the time of writing, the ASX 200 is up by 0.8% at 7,412 points.

So let’s dive a little deeper and check out the ASX 200 shares that are currently topping the ASX trading volume charts so far today, according to investing.com.

3 most active ASX 200 shares by volume on Tuesday

Telstra Corporation Ltd (ASX: TLS)

The first ASX 200 share experiencing elevated trading volume today is the blue-chip telco Telstra. A hefty 10.95 million TLS shares have swapped hands so far this Tuesday. There isn’t much in the way of news or announcements out of Telstra today.

However, the Telstra share price has enjoyed a very pleasing day of trading so far. It’s up 0.49% and is sitting at $4.08 a share after hitting a new 52-week high of $4.09 earlier this morning. It’s these new highs that are probably responsible for this trading volume, perhaps in conjunction with Telstra’s ongoing share buybacks.

Fortescue Metals Group Limited (ASX: FMG)

Here we have another ASX 200 blue chip in the giant iron ore miner Fortescue. A sizeable 14.77 million Fortescue shares have found new owners so far today. Again, there is no major news out of the company to speak of.

However, as my Fool colleague Bernd covered this afternoon, Fortescue shares are exploding higher today, likely on the back of rising iron ore prices. Fortescue is currently up a pleasing 9.75% so far to $17.34 a share. This huge surge is almost certainly behind this elevated trading volume.

Pilbara Minerals Ltd (ASX: PLS)

Our final and most traded ASX 200 share thus far today is none other than lithium producer Pilbara Minerals. There have been a tremendous 22.01 million Pilbara shares bought and sold. This can likely be placed at the feet of the announcement Pilbara made this morning.

This covered an agreement Pilbara has inked with its lenders to secure an increase in its debt facilities. Perhaps in response, the Pilbara share price is up 4.84% so far today at $2.60 a share, a new all-time high for this ASX 200 lithium share. It’s this combination that is probably behind so many Pilbara shares flying around the markets today.

The post Here are the 3 heaviest traded ASX 200 shares this Tuesday so far appeared first on The Motley Fool Australia.

More reading

• What’s causing the Fortescue (ASX:FMG) share price to leap 9% today?
• 2 high-yielding ASX 200 dividend shares
• Leading brokers name 3 ASX shares to sell today
• Here’s why the Pilbara Minerals (ASX:PLS) share price hit a record high today
• ASX 200 (ASX:XJO) midday update: BHP, Woodside rise, TechnologyOne falls

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation 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 owns shares of and has recommended Telstra Corporation 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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Shares in resources giant BHP Group Ltd (ASX: BHP) are climbing in afternoon trade and are now swapping hands 4.41% higher at $38.195.

The BHP share price has been lifting today following a company announcement after the close on Monday.

As covered by The Motley Fool earlier today, both BHP and Woodside Petroleum Limited (ASX: WPL) provided an update on their plans to create a global energy company.

BHP also followed up with another announcement on the Scarborough upstream project in Western Australia.

Why are BHP shares crawling higher?

Investors are responding positively to a set of updates provided by BHP on Monday. The first advised that BHP and Woodside will merge their respective oil and gas portfolios.

Further to this announcement, BHP came out with a separate note, advising it had approved US$1.5 billion in capital for phase 1 of the development of the Scarborough project. Final investment decisions have also been made by Woodside and the Scarborough joint venture.

The approved capital expenditure represents BHP’s 26.5% participating interest in Phase 1 of the upstream development. Woodside holds the remaining 73.5% interest and is the operator of the project.

According to BHP, Phase 1 of the project was approved after “a thorough evaluation of its risk and return metrics, including the economics and technical assessment of the integrated project”.

Speaking on the announcement, BHP’s CEO Mike Henry said:

Scarborough will be amongst the lowest carbon incremental sources of LNG to world markets. Scarborough will provide a reliable source of LNG for global customers and secure gas supply for the domestic market, as well as ongoing employment in Western Australia. Scarborough will provide important cash flows and value for shareholders of the enlarged Woodside.

In addition to this development, BHP also holds an option to sell its interests in Scarborough, plus the Thebe and Jupiter projects, to Woodside if the Scarborough merger does not complete.

What else did BHP announce?

Aside from this, as covered by The Motley Fool today, BHP and Woodside confirmed each had signed a binding share sale agreement for the merger of BHP’s oil and gas portfolio with Woodside.

Woodside will acquire the entire share capital of BHP Petroleum International Pty Ltd in exchange for new Woodside shares.

BHP Petroleum will transfer to Woodside on a cash and debt-free basis, based on the balance sheet at the time, including BHP’s legacy assets and liabilities.

When finalised, the merger will result in a global top 10 independent energy company by production and the largest energy company listed on the ASX, according to the announcement.

The combined company will have a high margin oil portfolio, long-life LNG assets, and the financial resilience to help supply and meet energy demand. BHP reckons the deal will deliver substantial value creation for both sets of shareholders from across a range of areas.

Some of these areas include greater scale and diversity of geographies, products, and end markets. The company also foresees estimated synergies of more than US$400 million (100 per cent basis, pre-tax) per annum.

Curiously, the board considered an alternative option to the merger. It considered spinning off its BHP Petroleum asset via distributing shares in a newly-listed entity.

However, while a demerger would result in a financially viable entity, “the board determined that the merger was the best alternative for shareholders given that it would capture the additional value”.

On completion of the merger, Woodside will issue new shares expected to comprise approximately 48% of all its shares, according to the announcement.

BHP says completion is targeted for the second quarter of the 2022 calendar year. Prior to completion, both parties will carry on their respective businesses and try to ensure a smooth transition at the time.

The BHP share price has had a choppy year, up just 3% in the past 12 months. Year to date, it has posted a loss of almost 10% since January 1.

The post BHP (ASX:BHP) share price jumps 4% on ‘global energy company’ deal appeared first on The Motley Fool Australia.

More reading

• Looking to invest in the electrification and battery theme? Here are 5 ASX shares to consider
• Woodside (ASX:WPL) share price climbing as megadeals signed off
• ASX 200 (ASX:XJO) midday update: BHP, Woodside rise, TechnologyOne falls
• Analysts name 2 ASX 200 blue chip shares to buy now
• BHP (ASX:BHP) and Woodside (ASX:WPL) shares on watch amid petroleum merger update

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 S&P/ASX 200 Index (ASX: XJO) is enjoying a reasonably breezy day on the ASX boards so far this Tuesday. At the time of writing, the ASX 200 is up a healthy 0.73% at 7,406 points. But one ASX 200 share is putting those numbers to shame. That would be the Australian Ethical Investment Limited (ASX: AEF) share price.

Australian Ethical shares are currently up 6.87% at $14.62 a share after closing at $13.65 yesterday afternoon and opening at a flat $14 this morning. The price went as high as $14.80 this morning, up nearly 8%.

So with this explosive move higher, you must be wondering what’s going on with Australian Ethical today. Is there a new announcement or update from this managed fund and super provider? A fresh dividend announcement? Perhaps a director has picked up a truckload of shares?

What’s happening with the Australian Ethical share price?

Well, unfortunately for anyone who wants a solid answer, there isn’t one to give. It’s unclear why this company is jumping so decisively higher today.

Yes, there has been no news or announcements out of Australian Ethical this Tuesday. In fact, the last update the company gave was last Thursday. And that was just some routine ASX paperwork. There have been no public director or major shareholder transactions this week either. Or any announcements related to this company’s dividend.

One of the last major updates this company gave was its quarterly funds under management (FUM) update last month. As we covered at the time, the company announced a record quarterly inflow of $160 million, resulting in a record $6.54 billion in total FUM. But that was a while ago now, and investors have had plenty of time to digest those numbers.

And ASX fund managers or even financials shares are certainly not enjoying a sector-wide banquet today. As an example, Australian Ethical’s fellow fund managers such as Magellan Financial Group Ltd (ASX: MFG) and Platinum Asset Management Ltd (ASX: PTM) are both in the red so far today. The major ASX financials shares (ie, the ASX banks) are having a decent day today. But all four are up between 1 and 2% so far, nothing compared to Australian Ethical.

It’s what we think we know that just ain’t so…

So what conclusions can we draw? Well, only that we don’t know for sure why Australian Ethical is enjoying such a strong day today,

It’s possible a large and/or institutional investor noticed Australian Ethical shares fell close to 7% over last week and decided to load the boat. Perhaps an exchange-traded fund (ETF) needed to rebalance its holdings and picked up a large tranche of shares to do so.

Whatever the reason, there will be more than a few shareholders pleased with what today has given them. Not that this is anything out of the ordinary for this company. Remember, Australian Ethical is now up an eye-watering 199% in 2021 alone.

At the current Australian Ethical share price, this company has a market capitalisation of $1.65 billion, with a price-to-earnings (P/E) ratio of 148 and a dividend yield of 0.48%.

The post Why is the Australian Ethical Investment (ASX:AEF) share price surging 7% today? appeared first on The Motley Fool Australia.

More reading

• 2 great ASX shares to think about
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• The Australian Ethical (ASX:AEF) share price just hit a new all-time high

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. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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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