The Santos Ltd (ASX: STO) share price is falling today amid reports experts expect its merger bid for Oil Search Ltd (ASX: OSH) to get messy.

Santos made an under-the-table proposal that would have seen it merge with Oil Search in late June. Santos’ proposal went public on Tuesday when Oil Search rejected the bid.

Right now, the Santos share price $6.64, 1.48% lower than its previous close.

It has also fallen 2.7% this week, despite announcing positive quarterly results yesterday.

The market seemingly expects Santos to increase its bid but some analysts say Oil Search’s board is preparing for battle. Let’s take a closer look.

Is a bidding war brewing?

With oil prices back in focus and its bid for Oil Search rejected, the Santos share price is having a tough week.

Santos’ bid for Oil Search and its following rejection was announced on Tuesday.

The all-scrip offer put forward was 0.589 new Santos shares for every Oil Search share.

Santos’ offer implied a value of $4.25 per share – a 12.3% premium on the Oil Search share price as of 24 June. Oil Search said Santos’ offer undervalued its shares.

The proposal offered Oil Search’s shareholders a 37% holding in the resulting company.

Word on the street today is Santos is preparing to put forward an increased offer, and Oil Search’s board is ready to toss it out.

According to reporting by The Australian, Wood Mackenzie senior analyst Daniel Toleman believes Oil Search’s shares have surpassed the offer’s premium. Toleman was quoted as saying:

The Oil Search board will likely believe that a merger with Santos would not provide full value to Oil Search shareholders. As a result, we expect the board to fight off the merger attempt.

MST Marquee analyst Mark Samter said Oil Search, and its share price, isn’t in a good position to fight off Santos’ proposal:

I do think for Oil Search we need to remember the alternate scenario, where no deal happens, and we are back to a world with no CEO, likely a few less board members and clearly greater challenges on progressing Alaska…

Clearly, as I have discussed before, I think there are far greater opportunities to extract value than the market may realise in this deal, both through asset optimisation in [Papua New Guinea]… and in being willing to sell operator-ship in Alaska.

Santos share price snapshot

Despite this week’s poor performance, the Santos share price is doing well.

It has gained 3.5% year to date. It’s also 19% higher than it was this time last year.

The post Santos (ASX:STO) share price down amid concerns over bidding war appeared first on The Motley Fool Australia.

More reading

• Oil Search (ASX:OSH) share price on watch — board tipped to fight merger
• 5 things to watch on the ASX 200 on Friday
• Santos (ASX:STO) share price jumps on record quarterly sales
• What’s happening with ASX 200 oil shares this week?
• 5 things to watch on the ASX 200 on Thursday

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 Star Entertainment Group Ltd (ASX: SGR) share price is on the move today after providing an update on its merger proposal with rival Crown Resorts Ltd (ASX: CWN).

At the time of writing, the Star share price is up 1% to $3.58 and the Crown share price is down 3% to $9.94.

What did Star announce?

Investors have been selling down the Crown share price after Star revealed that it has withdrawn its conditional, non-binding, indicative merger proposal.

That proposal outlined significant strategic and value accretion benefits for the shareholders of both companies, including estimated cost synergies of between $150 million to $200 million per annum. It also highlighted the potential to create significant value from a sale and leaseback of the enlarged property portfolio.

However, it appears as though recent developments, including concerns that Crown could lose its Melbourne casino licence, have spooked Star’s management team. It notes that these developments have the potential to materially impact the value of Crown.

What now?

Star advised that it remains interested in merging with Crown, but not while there is so much uncertainty.

It explained: “We continue to believe substantial benefits could be unlocked by a merger, however the uncertainty surrounding Crown is such that The Star is unable to continue at the present time with its Proposal in the form as announced on 10 May 2021.”

“The Star remains open to exploring potential value enhancing opportunities with Crown. The Star will continue to closely monitor the Victorian Royal Commission and Perth Casino Royal Commission, with final findings expected later this year,” it added.

In the meantime, Star remains focused on its growth initiatives. This includes the development of its world-class multi-billion dollar Queen’s Wharf Brisbane integrated resort due to open in late 2022 and its Gold Coast masterplan.

Crown responded, saying that it remains willing to engage with Star in the future in relation to a potential merger.

The post Crown (ASX:CWN) shares fall after Star (ASX:SGR) ends merger talks appeared first on The Motley Fool Australia.

More reading

• Crown (ASX:CWN) share price dips, analysts doubt licence will be revoked
• Crown (ASX:CWN) share price falls as Victorian licence danger looms
• Crown (ASX:CWN) share price falls amid reports heads are on the block
• Crown (ASX:CWN) share price lower following earnings guidance update
• Star (ASX:SGR) share price struggles following lockdown news

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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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.

For years, Netflix (NASDAQ: NFLX) was one of the most reliable growth stocks on the market. The video streamer would regularly deliver brisk subscriber and revenue growth every quarter as it disrupted the massive video entertainment industry.

That’s starting to change now. In its second-quarter earnings report, Netflix reported its slowest quarterly subscriber growth in the streaming era with just 1.5 million new member additions. In North America, it actually lost 430,000 members, showing it may be reaching a saturation point in its biggest, oldest, and most valuable market. Management blamed the COVID hangover as Netflix had record sign-ups in the first half of 2020 due to the pull-forward effect of the pandemic, and COVID-related production delays have slowed down new content in the first half of this year.

Revenue growth came in at just 19.4% to $7.34 billion, the first time top-line growth was below 20% in nearly a decade. Moreover, the company’s third-quarter guidance indicates that revenue growth will continue to decelerate, with management forecasting just 16.2% top-line growth for the current quarter.

Are Netflix’s growth days over?

With more than 200 million subscribers on its platform and five years since it completed its global launch, Netflix is unlikely to put up the kind of percentage growth it did through much of the last decade as it became a global entertainment powerhouse.

Netflix is still capable of adding 30 million new subscribers a year as it has essentially done for the last three years, but with its subscriber base now over 200 million, that alone wouldn’t even grow its total membership by 15%.

Despite that slowdown, there are still reasons to be optimistic about the company’s future.

1. Room for growth in Asia

Asia, or APAC (Asia Pacific), is the youngest of the company’s four geographic segments. It launched in most of the continent in 2016, including in India, the biggest market it competes in. More than half of the world’s population lives in Asia, though that includes China, where Netflix is blocked; yet it’s Netflix’s smallest region as it finished the second quarter with 27.9 million paid subscribers in APAC.

The good news is that APAC recorded the highest subscriber increase last quarter with 1 million subscriber additions. Over the last four quarters, it added 5.4 million new members, making it the company’s second-fastest-growing region behind Europe. Netflix had previously added a low-cost, mobile-only plan in India and a handful of other countries, and it said it would expand the concept to 78 countries in Southeast Asia and sub-Saharan Africa, parts of the world where potential subscribers might have a smartphone but not a TV. That move should help drive growth in those regions.

Additionally, as Netflix invests further in its local content strategy, it should gain traction in Asian markets, especially in populous countries like India, Japan, South Korea, Indonesia, and the Philippines.

2. Profits are soaring

To an extent, Netflix’s slowing revenue growth doesn’t really matter. The company is no longer the cash-burning enterprise it was a few years ago when it earned jeers from critics who said it would never be profitable. Management says it’s on track to post break-even free cash flow (FCF) this year after $1.9 billion in FCF in 2020. Better yet, on a generally accepted accounting principles (GAAP) basis, Netflix is delivering profits hand over fist. Through the first half of the year, the company has posted nearly $4 billion in operating profit, and it’s targeting an operating margin of 20% for 2021. In the years ahead, it expects the operating margin to increase by 3 percentage points each year, meaning it should reach 29% by 2024.

Profit growth is inherently tied to revenue growth, but Netflix’s subscription model means that margins should naturally expand as it adds more members, as the incremental cost for those subscribers is almost nothing.

As Netflix has become more profitable, the stock is also starting to look much more affordable. Currently, it trades at a price-to-earnings (P/E) ratio of 55, which is only slightly higher than the S&P 500‘s P/E at 46. When you factor in the company’s profitability and valuation, the slowdown in revenue growth seems less concerning.

3. Video games offer a new frontier

For the first time in its history, Netflix is moving beyond traditional video entertainment in TV and films. The company said that it was in the “early stages” of expanding into gaming, initially focusing on mobile devices. Games will be included at no additional cost for subscribers, showing that, for now, the company sees games as a way to increase retention and grow its subscriber base, not as a separate revenue stream.

Last week, Bloomberg reported that Netflix hired video game veteran Mike Verdu, a former executive with Electronic Arts and Facebook, as vice president of gaming development to head up the new gaming operation.

While Netflix is arriving late to the video game fray, the company does have more than 200 million subscribers around the world, many of whom already have its app installed on their smartphones and tablets. If it can put out some appealing games, they should get solid traffic.

The move into gaming isn’t that surprising, as video games are one of the closest substitutes for video entertainment. As Netflix said in its letter to shareholders, “Our goal is to be everyone’s first choice for entertainment because of the variety and quality of our titles.” There’s no reason video games shouldn’t be part of that equation.

As the company matures, Netflix’s biggest growth days may be behind it, but with profit margins ramping up and opportunities in Asia, video games, and optionality with things like advertising, slowing revenue growth is no reason to give up on the stock.

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

The post Are Netflix’s growth days over? appeared first on The Motley Fool Australia.

More reading

• Why Netflix stock fell nearly 5% on Wednesday
• 5 US shares investors will be watching on earnings this week
• 3 great reasons to buy Netflix
• Worried about another crash? Buy Netflix
• FANG+ ETF (ASX:FANG) tumbles 10% on ex-dividend day

Jeremy Bowman owns shares of Facebook and Netflix. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, 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 Facebook and Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts. The Motley Fool Australia has recommended Facebook and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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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.

What happened

With COVID-19 variants grabbing headlines worldwide, coronavirus stocks are again landing on the radar screens of investors. That, combined with a new supply agreement announced this morning, pushed Moderna‘s (NASDAQ: MRNA) stock up by 0.7% on Thursday, beating the gain of the S&P 500 index on the day.

So what

Moderna is greatly expanding its arrangement with Taiwan. The biotech company has signed on to provide 20 million doses of its mRNA-1273 coronavirus vaccine and its updated variant booster vaccine (if authorized for use) in 2022. This will quadruple the 5 million it is obligated to supply the island nation this year. As part of the new agreement, it will also provide an additional 15 million doses in 2023.

Moderna did not disclose the financial terms of the expanded deal.

It’s the second expansion in Asia announced this week by the company. On Tuesday, it divulged that Japan’s Ministry of Health, Labor and Welfare and Takeda Pharmaceutical will take delivery of 50 million additional doses of the vaccine and, provisionally, the booster, in 2022. That doubles the 50 million already agreed for this year.

Now what

While Moderna frequently makes the headlines as the maker of one of only three coronavirus vaccines authorized for use in the US, mRNA-1273 has the green light in many other jurisdictions around the world, too. The resurgence of COVID-19 isn’t only a US problem, it’s a global issue; therefore, the company will remain on the front lines of the fight as long as it rages.

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

The post Why Moderna Topped the Market on Thursday appeared first on The Motley Fool Australia.

More reading

• Here’s why Moderna stock soared 125% during the first 6 months of 2021
• Does This Shocking CDC Statement Mean Trouble for Pfizer and Moderna?
• With COVID-19 variant threats rising, why are vaccine stocks falling?
• Why Moderna shares surged 27% in June

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna Inc. 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.

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

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The Insurance Australia Group Ltd (ASX: IAG) share price is dropping on Friday morning.

At the time of writing, the insurance giant’s shares are down 1.5% to $4.79.

Why is the IAG share price falling?

The IAG share price is under pressure today after it revealed a preliminary result that was a touch below expectations.

According to the release, the company reported Gross Written Premium (GWP) growth of 3.8% and a 1.5% increase in net earned premium to $7,473 million in FY 2021.

IAG also revealed that its underlying insurance margin came in at 14.7% for the year. This was down from 16% a year earlier and dragged lower by a second half result of 13.5%.

This ultimately led to the insurance giant revealing full year cash earnings of $747 million for the year. This is up 168% on FY 2020’s cash earnings of $279 million.

However, things weren’t quite as positive on a reported basis, with IAG revealing a reported net loss of $427 million. This follows total pre-tax net corporate expenses of $1.51 billion in FY 2021, including a $1.15 billion business interruption provision.

How does this compare to expectations?

As you might have guessed from the weakness in the IAG share price, this fell short of expectations.

For example, Goldman Sachs was forecasting GWP growth of 4% and an underlying insurance margin of 15.4%.

It also pencilled in a cash profit of $764 million in FY 2021, which means IAG also missed on this key metric.

FY 2022 guidance

Management advised that it is able to provide guidance for FY 2022 due to its sound underlying financial performance in FY 2021, the new operating model now embedded with new executive responsibilities, and less uncertainty in the economic outlook.

The release explains that it is expecting GWP growth in the low single digits. This incorporates modest growth in customer numbers in Direct Insurance Australia (DIA), ongoing rate increases across personal and commercial lines, and further portfolio remediation.

As for IAG’s reported insurance margin guidance, that guidance range is quite broad. It is forecasting a reported insurance margin of 13.5% to 15.5%.

And finally, it management is guiding to an increase in the natural perils allowance to $765 million (post-quota share) reflecting underlying exposure growth. This has increased from $658 million in FY 2021, which benefitted from additional reinsurance cover provided by the calendar year 2020 aggregate catastrophe cover.

IAG’s CEO, Nick Hawkins, commented: “While our adjusted underlying FY21 performance delivered an insurance margin of around 14%, I’m confident that, with the steps we have in place, we will deliver business and customer growth. Our direct insurance businesses in Australia and New Zealand are growing and we expect this growth to continue as we build out our premium brands across Australia.”

“We recognise that our Intermediated business has underperformed which is why I have set specific goals for this business to simplify its structure, upgrade its risk and underwriting disciplines, further strengthen relationships with broker partners, and improve its financial returns,” he concluded.

The post IAG (ASX:IAG) share price drops on FY 2021 update and guidance appeared first on The Motley Fool Australia.

More reading

• IAG (ASX:IAG) share price climbs on new leadership appointment
• Here’s why the IAG (ASX:IAG) share price is down 7% this last month
• IAG (ASX:IAG) share price on watch following asset sale update
• Brokers using the lockdown to upgrade earnings forecasts on these ASX 200 shares
• What’s weighing down the IAG (ASX:IAG) share price lately?

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 owns shares of and has recommended Insurance Australia 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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If you’re looking for exposure to the gold sector, then you may be looking at the shares listed below.

Following their recent quarterly updates, a leading broker has been running the rule over them to see if there’s an investment opportunity.

Here’s what it thinks about these ASX 200 gold miners:

Evolution Mining Ltd (ASX: EVN)

According to a note out of Goldman Sachs, its analysts have downgraded this gold miner’s shares to a sell rating with a $3.90 price target. This compares to the latest Evolution share price of $4.07.

Goldman wasn’t impressed with its quarterly update, noting that it fell short of expectations with production and its costs were higher.

The broker said: “We downgrade EVN to Sell, with the stock trading at a premium to other gold names across our coverage (1.1xNAV, 7.0xEBITDA) despite the underwhelming near-term outlook and a growth profile largely concentrated in two key projects.”

Newcrest Mining Ltd (ASX: NCM)

Goldman Sachs is much more positive on Newcrest and has put a buy rating and $35.00 price target on its shares. This compares to the current Newcrest share price of $26.18. This follows a quarterly update that was in line with the broker’s expectations.

Goldman said: “We continue to expect that updates on key projects over the remainder of 2021 will de-risk the company’s value-accretive project pipeline, and retain our Buy rating with NCM trading at 0.74xNAV.”

Northern Star Resources Ltd (ASX: NST)

The broker notes that Northern Star outperformed its expectations with both its production and costs in the June quarter. This led to the gold miner comfortably achieving its full year guidance. In light of this, its growth options, and attractive valuation, the broker thinks its shares are in the buy zone. Goldman has a buy rating and $13.10 price target on its shares. This compares to the latest Northern Star share price of $10.76.

It explained: “Growth capex was ~A$500mn higher in total over the next three years vs. our prior estimates, but is expected to deliver a production profile broadly in line with our prior forecasts, after accounting for the divestment of Kundana included in guidance. We retain our Buy rating, with NST trading at 0.82xNAV despite offering high-returning organic growth.”

The post Are these ASX 200 gold miner shares buys? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Newcrest (ASX:NCM) share price slides on quarterly update
• Why the Northern Star (ASX:NST) share price is on watch today
• Why the Evolution (ASX:EVN) share price is in a trading halt
• 5 things to watch on the ASX 200 on Thursday

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 S&P/ASX 200 Index (ASX: XJO) closed 1.06% higher at 7,386.40 points on Thursday – just 0.27% shy of an all-time high. The index’s strong gains are supported by many big-name ASX 200 shares that are also sitting at or just below all-time highs of their own.

So, how can these Aussie valuations be so high even as more than half the country remains in lockdown thanks to the Delta strain of COVID-19?

These ASX 200 shares are nudging new highs

Let’s look at some of the ASX 200 shares that are currently at or near all-time highs. Among the big names are Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES) and BHP Group Ltd (ASX: BHP). Those are some heavy hitters of the Aussie share market.

Strong gains across multiple sectors have helped propel the benchmark index higher in recent days. However, the real answer may not be at home but further abroad.

It’s long been known that the Aussie share market tends to ‘follow the leader’ a little bit. That leader at the moment tends to be the US share market. Whenever the US markets, such as the Dow Jones Industrial Average Index (DJX: .DJI) or S&P 500 Index (SP: .INX) climb overnight, the Aussie market tends to follow.

A couple of strong days of trade on Wall Street have helped propel ASX 200 shares higher as investors follow the sentiment seen by investors overseas. There are, of course, exceptions. Shares like BHP are also benefitting from higher commodity prices that are expected to flow through to higher earnings.

There is also the ever-present factor of government stimulus at the moment. Governments around the world, including in Australia, pumped billions into the economy in the face of the COVID-19 crisis. That means that there is a lot of additional money in the economy that could either be spent (perhaps on ASX 200 companies’ products) or invested in ASX 200 shares themselves.

Foolish takeaway

It may seem odd that ASX 200 shares are performing so well in the face of continued COVID-19 disruption. These are somewhat unusual times, and a combination of government stimulus and the forward-looking nature of markets appears to be propelling markets higher right now.

The post ASX 200 shares near all-time high despite COVID-19 fears appeared first on The Motley Fool Australia.

More reading

• 2 high-yielding ASX 200 dividend shares
• 5 things to watch on the ASX 200 on Friday
• Openn Negotiation (ASX:OPN) share price up 13% in second day of trade
• Why the 4DS (ASX:4DS) share price is rallying today
• Which ASX 200 shares are winning from latest retail trade figures?

Motley Fool contributor Ken Hall 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 Telstra Corporation Limited and 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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Webjet Limited (ASX: WEB) is the most shorted company on the ASX. At the time of writing, the Webjet share price is residing at $4.90.

A re-emergence of COVID-19 induced lockdowns has weighed on the online travel agent since mid-March. As a result, the short interest in Webjet has climbed atop the leader board.  

Blood in the water

Firstly, it is important to note that the short interest data is from 16 July 2021. This data is sourced by the Australian Securities & Investments Commission (ASIC) from individual short sellers, so there’s a delay between collection and reporting.

Based on ASIC’s latest data Webjet holds the highest amount of short interest, at 12.1% of shares on issue shorted. Interestingly, this isn’t Webjet’s first dance with short-sellers. Even at the beginning of the year, the online travel agent was the second most shorted ASX company with 12% short interest.

It seems the Webjet share price has become a popular bet for declining further. This is likely the result of how reliant the company is on a reopening of borders.

Additionally, because of the substantial decrease in revenue, Webjet has become a loss-making company. In its full-year results for FY21, Webjet revealed a net loss of $156.6 million. Therefore, the company is in a precarious position whereby it is burning through its cash to sustain operations.

Webjet share price presents ‘golden opportunity’

Despite the high level of short interest, fund manager Roger Montgomery recently made a point of the opportunity in the Webjet share price.

According to Montgomery, the $346 million of capital raised in early 2020 fortified the business. The fund manager believes Webjet is well-positioned to capitalise once travel resumes. The only question is, when will that occur?

At the current Webjet share price, the company holds a market capitalisation of $1.86 billion.

The post Webjet shares (ASX:WEB) are among the most shorted on the ASX appeared first on The Motley Fool Australia.

More reading

• Why the Webjet (ASX:WEB) share price has fallen 10% in a month
• What happened on the US stock market overnight and how could it impact ASX shares?
• These are the 10 most shorted ASX shares
• Fund manager sees Webjet (ASX:WEB) share price as ‘golden’ opportunity
• Broker says Webjet (ASX:WEB) share price weakness is a buying opportunity

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 owns shares of and has recommended Webjet 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 Oil Search Ltd (ASX: OSH) share price is in focus following reports a bidding war could erupt between the company and Santos Ltd (ASX: STO).

Santos lobbed a $23 billion confidential merger offer at Oil Search late last month.

The offer, and its rejection, was announced on Tuesday. Oil Search’s board said the $4.25 scrip consideration – a 12.3% premium on the Oil Search share price as of 24 June – didn’t appropriately value Oil Search’s shares.

Santos is now expected to up its offer. But whether it will increase its consideration, or by how much, is yet to be seen. Additionally, some analysts are tipping the Oil Search board will battle against the merger.

Right now, the Oil Search share price is $4.08. That’s 10.87% higher than it was at Monday’s close after the company battled the fallout of its CEO’s surprise departure.

Let’s take a look at what’s now expected of Santos’ offer for the Papua New Guinea-based oil and gas producer.

Oil Search to enter a bidding war?

The Oil Search share price is on watch as the market waits to see if Santos will continue campaigning for control of the company.

Santos’ offer would have seen the ASX 200 oil producers merged into one company, with Oil Search shareholders owning 37% of the resulting entity.

Woodmac senior analyst Daniel Toleman told The Australian the firm expects Oil Search won’t submit to Santos’ merger plans easily. He said:

At the current share price, the Oil Search board will likely believe that a merger with Santos would not provide full value to Oil Search shareholders. As a result, we expect the board to fight off the merger attempt.

However, Bernstein analyst Neil Beveridge, who was also quoted by The Australian, said a bidding war would likely harm the Oil Search share price.

For shareholders, attention is now focused on Oil Search and whether Santos will up their offer. We expect it will be competitive. However, a bidding war is the last thing investors will want.

MST Marquee analyst Mark Samter also spoke to the publication.

He said Oil Search should be wary of rejecting an increased offer. Samter said doing so could leave it down a CEO, numerous board members, and struggling to progress in Alaska. Such a situation would likely have dire consequences for the Oil Search share price.

Samter also spoke of Santos’ CEO Kevin Gallagher, saying:

Having watched Kevin operate this past 5 or so years, I think it would be foolish of us to think he might not have a few nice little tricks up his sleeve.

Oil Search share price snapshot

Oil Search’s shares have been performing well lately.

They are currently 8.22% higher than at the start of 2021. They have also gained 25.54% since this time last year.

The ASX 200 oil producer has a market capitalisation of around $8.4 billion, with approximately 2 billion shares outstanding.

The post Oil Search (ASX:OSH) share price on watch — board tipped to fight merger appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Santos (ASX:STO) share price jumps on record quarterly sales
• What’s happening with ASX 200 oil shares this week?
• 5 things to watch on the ASX 200 on Thursday
• Here are 3 top trading ASX 200 shares this Wednesday

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 Boral Limited (ASX: BLD) share price has been on the tear in 2021. Shares in the Aussie manufacturing and building supplies company have climbed an impressive 48.9% higher to hit an all-time high on Thursday.

So, what’s helping the company’s shares outperform the S&P/ASX 200 Index (ASX: XJO) by more than 38% this year?

Why the Boral share price has gained 45% in 6 months

Arguably the biggest news of the year has been a takeover bid by Seven Group Holdings Ltd (ASX: SVW). The Kerry Stokes-led conglomerate lobbed an initial takeover bid for $6.50 per share back in May. Seven already owned a sizeable chunk of the company’s shares and was able to use the “creeping takeover” clause in Aussie takeover regulations to slowly build up its stake.

The Boral share price shot higher back in May on news of the bid. The board maintained that the offer was opportunistic and undervalued the company. Despite urging that shareholders should not sell, it looks like those words seem to have fallen on deaf ears.

From a starting stake of 23%, Seven Group and its subsidiaries have now acquired nearly 60% of Boral’s shares. A change in substantial holding notice yesterday showed Seven entities now control 59.23% of voting power in the company. That includes the purchase of 11,588,010 ordinary shares at $7.40 per share by Seven Group entities.

All of this means Seven is inching closer to a full acquisition of the building group. All of that buying, combined with an increased takeover price of $7.40, has helped push the Boral share price higher in recent months.

The takeover efforts have moved swiftly, however, Mr Stokes’ interest in the company is well-known. Seven’s initial stake was purchased at a time when Boral was struggling, and Seven Group CEO Ryan Stokes currently sits on the Boral board of directors.

Foolish takeaway

The Boral share price has been rocketing higher in the last 6 months. That has largely been as a result of steadfast efforts from Seven Group to keep its share purchase offer open and quietly accumulate control of the Aussie building group.

The post Why the Boral (ASX:BLD) share price has gained 45% in 6 months appeared first on The Motley Fool Australia.

More reading

• Here are 3 top trading ASX 200 shares this Wednesday
• A jump in the ARB (ASX:ARB) share price, but no joy for the Woodside (ASX: WPL) share price. Scott Phillips on Nine’s Late News
• Boral (ASX:BLD) share price edges up as Seven Group wins control
• Boral (ASX:BLD) share price gains as Seven’s hold surpasses 50%
• Boral (ASX:BLD) share price falls as Seven’s hold nears 50%

Motley Fool contributor Ken Hall 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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