Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

City Chic Collective Ltd (ASX: CCX)

According to a note out of Citi, its analysts have retained their buy rating and lifted the price target on this fashion retailer’s shares to $4.00. This follows the announcement of the acquisition of UK-based plus-sized women’s fashion retailer Evans this week. The broker is expecting the acquisition to be meaningfully accretive to earnings from next year and suspects it could help drive margin expansion. The City Chic share price is changing hands for $3.79 this afternoon.

QBE Insurance Group Ltd (ASX: QBE)

Another note out of Citi reveals that its analysts have retained their buy rating but cut the price target on this insurance giant’s shares to $10.60. According to the note, the broker was disappointed to see QBE announce yet another profit warning. However, given its undemanding valuation and a very favourable premium rate backdrop, the broker is holding firm with its buy rating. It expects premium increases to underpin margin expansion and growth in the coming years. The QBE share price is fetching $8.85 on Wednesday.

Volpara Health Technologies Ltd (ASX: VHT)

Analysts at Morgans have retained their add rating and $1.71 price target on this healthcare technology company’s shares. This follows the announcement of a five-year software-as-a-service (SaaS) contract with BreastScreen Queensland. BreastScreen Queensland is the third largest public breast screening program in Australia. Morgans suspects that this could be the first of other state-based screening programs. In addition, Morgans has reminded investors about an upcoming ruling by the FDA that could see the regulator mandate that a women’s breast density must be reported. This would be a big positive for the company. The Volpara share price is trading at $1.38 this afternoon.

More reading

• 2 small cap ASX healthcare shares to watch
• ASX 200 drops over 1%
• Leading brokers name 3 ASX shares to sell today
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher
• Volpara (ASX:VHT) share price jumps 5% in morning trading. Here’s why

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

from The Motley Fool Australia https://ift.tt/3hdcotG

At lunch on Wednesday the S&P/ASX 200 Index (ASX: XJO) is on course to bounce back from yesterday’s decline. The benchmark index is currently up 0.5% to 6,632.8 points.

Here’s what has been happening on the market today:

Transurban reveals distribution plans.

The Transurban Group (ASX: TCL) share price is trading broadly flat on Wednesday following the release of an update on its distribution plans. The toll road giant revealed that it plans to pay an interim distribution of 15 cents per share. This is half the distribution it paid in the prior corresponding period. Looking ahead, it continues to anticipate that the full year distribution will be in line with free cash, excluding capital releases.

Smartgroup FY 2020 guidance.

The Smartgroup Corporation Ltd (ASX: SIQ) share price is surging higher today after the salary packaging and novated leasing company released its guidance for FY 2020. Smartgroup is expecting an adjusted net profit after tax before amortisation of $65 million. While this is down almost 20% from a year earlier, it is a lot better than many investors had feared.

Big four banks rise.

The big four banks are all performing positively on Wednesday and helping to drive the ASX 200 higher. The best performer in the group has been the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price. The banking giant’s shares are up a decent 0.6% at the time of writing after investor sentiment improved.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Wednesday has been the Smartgroup share price with an 8% gain following its guidance update. The worst performer has been the Ramelius Resources Limited (ASX: RMS) share price with a 4.5% decline. A number of gold miners have come under pressure on Wednesday after a pullback in the spot gold price.

More reading

• Here’s what the Transurban (ASX:TCL) dividend will look like in 2021
• Why the Smartgroup (ASX:SIQ) share price has popped 7% higher
• Here’s how ASX 200 energy shares have performed in 2020 so far
• ASX miners put on alert as the iron ore price crashes overnight
• Why the Challenger (ASX:CGF) share price is one to watch today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended SMARTGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 up 0.5%: Big four banks rise, Smartgroup guidance, Transurban distribution update appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37EquRM

The iron ore price is on a lot of lips right now, including ours. Yesterday, we were talking about how iron ore was trading at a nine-year high. Today, we’re telling you about the overnight price crash which puts the share prices of miners such as BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) under a cloud.

Year-over-year, the price has risen around 70%. So why does it seem like everyone’s talking about the iron ore price?

China likes making steel

At the start of 2020, the World Steel Association (worldsteel) reported that as of 2019, China was producing more than half of the world’s crude steel. A few days ago, worldsteel announced that China’s crude steel production has increased 8%, comparing November 2019 to November 2020.

Producing steel doesn’t exclusively involve iron ore either, right? It also involves coal, for example.

According to the World Coal Association, “Global steel production is dependent on coal. 70% of the steel produced uses coal.”

Australia likes selling China iron ore, as well as coal

A couple of days ago, Treasury was cheering about the iron ore price as the mid-year economic and fiscal outlook approached. That’s because while COVID-19 continues to ravage other industries, mining has managed to carry the flag.

Discussing Australia’s trade relationship with China back in September, the Australian Bureau of Statistics (ABS) noted, “The overall value and growth in goods exported to China in recent years has been driven by exports of resource commodities, in particular metalliferous ores (mostly iron ore), and coal.”

Exporting iron ore and coal are good for the Australian economy, point blank. So when the price of either starts going crazy, people are going to talk about it.

What lies ahead for the iron ore price?

Considering the monstrous gains that the iron ore price has experienced during 2020, a correction could be approaching. Although, unless Brazil can come back from the landslide suffered this week, pressure might remain on prices as we gear up for the new year.

The Financial Review recently pointed out that in addition to consuming more than half of the global iron ore supply, China “was the buyer of 68 tonnes in every 100 tonnes of Australian production” last financial year.

As long as the iron ore price holds such a heavy impact on the Australian economy, you can bet that people will keep talking about it. 

More reading

• ASX miners put on alert as the iron ore price crashes overnight
• These ASX shares have more than doubled in 2020
• How to get the best out of the 2021 mining boom
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Iron ore hits 9-year high: What this means for BHP, Fortescue, & Rio Tinto

Motley Fool contributor Gretchen Kennedy 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.

The post Why is everyone talking about the iron ore price? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/34CgRkq

It has been a very positive day for the S&P/ASX 200 Index (ASX: XJO) on Wednesday. In late morning trade the benchmark index is up 0.8% to 6,654.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price is down 3% to $1.08. Investors have responded unenthusiastically to the company’s acquisition announcement this morning. Bigtincan has entered into a binding agreement to acquire unified sales enablement platform provider, ClearSlide, for US$16.25 million (A$22.6 million) in cash. ClearSlide is expected to report annualised recurring revenue (ARR) of ~US$5.2 million in 2021.

Over the Wire Holdings Ltd (ASX: OTW)

The Over the Wire share price is down a further 6% to $3.98. Investors have been selling the telecommunications, cloud and IT solutions provider’s shares since the release of a trading update yesterday. That update revealed that the company expects to report a 22% to 28% increase in EBITDA in the first half. However, this has been boosted by acquisitions. Its existing businesses will deliver lower EBITDA than a year ago.

Resolute Mining Limited (ASX: RSG)

The Resolute share price has come under pressure and is down 2.5% to 77.5 cents. Investors have been selling Resolute and other gold miners on Wednesday after the spot gold price pulled back overnight. This has led to the S&P/ASX All Ordinaries Gold index trading 0.9% lower at the time of writing.

Uniti Group Ltd (ASX: UWL)

The Uniti share price is down 1% to $1.70. This morning the telco announced the details of the share purchase plan from its equity raising to fund the acquisition of the Telstra Velocity assets from Telstra Corporation Ltd (ASX: TLS). Uniti is aiming to raise $10 million at the lower of $1.50 per new share or the volume weighted average price of its shares during the five trading days up to and including 20 January plus a 2% discount.

More reading

• Here’s why the Bigtincan (ASX:BTH) share price is dropping lower
• Here’s what is dragging the Over the Wire (ASX:OTW) share price lower
• 2 blue chip ASX shares to buy for 2021
• Cimic (ASX:CIM) share price falls despite positive update
• ASX 200 Weekly Wrap: ASX hits new post-March high

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended BIGTINCAN FPO and Over The Wire Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3puhwwH

The Ingenia Communities Group (ASX: INA) share price is up 1.24% in early morning trade.

This follows on the company’s announcement of a major new acquisition as well as a trading update.

What did Ingenia report to send its shares higher?

In this morning’s ASX release, Ingenia reported it had acquired Merry Beach Caravan Park on the New South Wales South Coast for $20.5 million. The deal is scheduled to settle in March.

The new acquisition adds more than 540 cabins, sites, permanents and annuals to the company’s portfolio. Annuals provide approximatey two-thirds of revenue. This increases the size of its holiday offerings by more than 10%.

Around 3.5 hours south of Sydney, Merry Beach Caravan Park has walking tracks, a swimming pool, a playground and direct beach access.

Commenting on the acquisition, Ingenia Communities Group CEO Simon Owen said:

Merry Beach offers a unique opportunity to acquire a beachfront park with significant upside potential. We have identified a number of ways to enhance performance, including upgrades to facilities and improving the accommodation offer and mix. Like Ingenia Holidays Lake Conjola the Park benefits from a stable revenue base from more than 350 annuals.

The prime location provides easy access to the beach and beauty of the Murramarang National Park. We know the South Coast market well and are excited to add Merry Beach to our established cluster.

Noting that Ingenia is closing monitoring the evolving situation with New South Wales new COVID outbreak, Owen added:

Combined with the acquisition of BIG4 Inverloch Holiday Park and the mixed-use Middle Rock Holiday Parka and Village, we have announced close to $74 million of acquisition this month and are continuing to work through the due diligence for a number of potential acquisitions, including a large lifestyle community.

Ingenia Communities Group share price and company snapshot

Ingenia owns, operates and develops a portfolio of lifestyle and holiday communities (Ingenia Lifestyle and Holidays) and rental communities (Ingenia Gardens). The company’s assets are located throughout Australia, primarily in Queensland, New South Wales and Victoria. Ingenia pays a 2.0% dividend yield, unfranked.

Like most every ASX 200 share involved in the tourism business, Ingenia’s share price was hit hard during the COVID market panic. Shares fell 46% from 5 March through to 23 March.

Since that low the Ingenia share price has soared 75%. Year-to-date shares are down 1.4%. That compares to a 0.5% loss on the S&P/ASX 200 Index (ASX: XJO) at time of writing.

More reading

• These are the 5 best ASX real estate shares of 2020

Motley Fool contributor Bernd Struben 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.

The post Why the Ingenia (ASX:INA) share price is moving higher this morning appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2WKP9O5

Qantas Airways Limited (ASX: QAN) will face off against employees in the High Court of Australia on Wednesday.

Four unions are appealing against a Full Federal Court decision last month that the airline did not have to provide sick, compassionate or carer’s leave for staff that had been stood down.

Qantas stood down about 20,000 employees at the start of the COVID-19 pandemic when it became apparent its planes would be grounded.

The Australian Council of Trade Unions (ACTU) claims Qantas’ denial forced some seriously ill workers to take a redundancy for financial reasons.

“Qantas’ behaviour toward the most unwell people in its workforce has been callous and illegal,” said ACTU assistant secretary Scott Connolly.

“Stand downs are meant to be strictly limited to particular circumstances, but even in those circumstances workers should not be prevented from taking leave or being paid their basic entitlements.”

Connolly added the High Court result could have ramifications for all Australian businesses and workers.

“This appeal is not just important for Qantas employees who’ve been unfairly denied access to their own sick, compassionate, personal or carer’s leave, it’s critical to all workers in Australia who may be stood down in the future.”

The airline did provide annual and long service leave during the coronavirus stand down.

The Motley Fool has contacted Qantas for comment.

Running battle with its own staff

Law firm Maurice Blackburn is handling the appeal on behalf of the Transport Workers Union (TWU), the Electrical Trades Union (ETU), the Australian Workers Union (AWU) and Australian Manufacturing Workers Union (AMWU).

“Denying sick workers the leave they have built up and pushing them in some cases out of their jobs in order to access redundancy payments to pay bills is utterly despicable,” said TWU national secretary Michael Kaine.

“Qantas has received over $800 million in taxpayers’ support to help it during the pandemic but instead of acting like a responsible employer in return it is trashing lives and trashing jobs.”

There was one dissenting judge, Justice Mordy Bromberg, in the Full Federal Court hearing. The unions are pursuing his line of argument in the High Court.

“The corollary of this contention is that there is no entitlement to any kind of paid leave whatsoever, whenever an employee cannot be usefully employed,” he said in the judgment.

“That notion is startling in its reach and effect.”

Just last week Qantas had a separate court victory against the unions. The Full Federal Court reversed an earlier judgment that the airline had illegally pocketed JobKeeper payments that should have been passed along to employees.

More reading

• Air New Zealand (ASX:AIZ) share price rises despite falling air traffic
• Why this fund manager prefers Transurban over Sydney Airport, Flight Centre and Qantas
• 3 best and worst performing ASX transport shares of 2020
• ASX 200 ends slightly down
• ASX 200 down 0.4%: NIB jumps, a2 Milk rebounds, WiseTech sinks lower

Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. 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.

The post Qantas taken to High Court over COVID-19 sick leave appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/34z6BJJ

The Woodside Petroleum Limited (ASX: WPL) share price is edging higher today after the company announced it has completed the Sangomar acquisition.

At the time of writing, the energy giant’s shares are up 0.85% at $22.51.

Quick take on the Sangomar project

Woodside’s recently acquired Sangomar project contains both oil and gas, and is located 100km south of Dakar, Senegal. The project covers a combined area of 7,490sq km within the Senegalese portion of the Mauritania-Senegal-Guinea Bissau Basin. It is said to be one of the world’s largest oilfields discovered in the last decade.

While work has already started earlier this year, first oil production is being targeted by 2023. Phase one is expected to be around 100,000 barrels of oil per day. In total, it is estimated that the Sangomar offshore oil project is worth around $6 billion.

What did Woodside announce?

In today’s release, Woodside advised that it has completed the acquisition of the entire participating interest of Capricorn Senegal Limited (Cairn) in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.

Woodside spent US$300 million plus a working capital adjustment of US$225 million to complete the transaction. In addition, the company is expecting up to US$100 million of further payments depending on the price and timing of first oil production.

With the deal all wrapped up, Woodside’s equity interest lifted to 68.33% in the Sangomar exploitation area and to 75% for the remaining RSSD evaluation area. However, the company’s stake could further increase should the FAR Ltd (ASX: FAR) acquisition also be finalised. This would bring Woodside control of 82% for the Sangomar region and 90% of the RSSD area.

What did management say

Commenting on the acquisition, Woodside CEO Peter Coleman said:

The development of Sangomar is being executed according to schedule. The Senegal team recently achieved another milestone, with the award of the contract for the operations and maintenance of the floating production storage and offloading vessel which is targeted for delivery and first oil production in 2023.

The completion of the transaction with Cairn has simplified the structure of the joint venture ahead of our planned equity sell-down in 2021. The Sangomar development is an attractive, de-risked asset that offers near-term production to potential buyers.

Woodside share price performance

The Woodside share price is down 35% from the past 12 months, which could be seen as an attractive discount for shareholders. While energy companies have been battered from COVID-19, the industry is slowly on the mend. From March lows, the Woodside share price has gained more than 50%.

Woodside has a market capitalisation of $21.4 billion.

More reading

• Here’s how ASX 200 energy shares have performed in 2020 so far
• Why AGL, Mesoblast, WiseTech, & Woodside are dropping lower
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Aaron Teboneras owns shares of Woodside Petroleum Ltd. 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.

The post Why the Woodside (ASX:WPL) share price is edging higher today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mI0byg

The Stockland Corporation Ltd (ASX: SGP) share price is climbing higher this morning after the Aussie real estate investment trust (REIT) announced a new joint venture partnership.

Why is the Stockland share price climbing?

Stockland announced a “strategic capital partnership” with J.P. Morgan Asset Management to help enhance risk-adjusted returns. The new joint venture will focus on growing the group’s logistics investment with a long-term, institutional capital partner.

Stockland Chief Investment Officer Darren Rehn said the initial portfolio will comprise assets valued at $400 million.

Two properties that Stockland has recently exchanged contracts to acquire — 151 Leakes Road, Truganina and 140S Paramount Boulevard, Cranbourne West — will seed the new vehicle. The combined total of the assets is approximately $110 million. 

Stockland requires Foreign Investment Review Board (FIRB) approval for these transactions, with completion expected by mid to late 2021.

Stockland is forecasting $200 million in assets once third-party purchases are included, with a further $200 million of existing assets to be acquired from Stockland’s logistics portfolio.

The joint venture will primarily target the acquisition of established assets with solid, reliable income streams. Assets will be purchased on market and be primarily located along the “high-performing” eastern seaboard.

Stockland managing director and CEO Mark Steinert said:

We have a clear goal to introduce third party capital with trusted, quality partners to help fast track the delivery of our development pipeline and expand our acquisition capability, and we’re delighted to have partnered with such a highly regarded, international group.

Forming relationships with capital partners like this enables us to scale our management and development capabilities, grow assets under management more quickly, and enhance growth to achieve returns in line with or above our investment hurdles.

Foolish takeaway

Investors have reacted positively to the news, with the Stockland share price climbing 2.9% higher to $4.28 per share. The Stockland share price has slumped 10.5% this year but is up 131.1% since the bottom of the March bear market.

The Aussie REIT has a market capitalisation of more than $10 billion, with a 5.3% dividend yield.

More reading

• 3 ASX REITs with notable ESG scores
• Which ASX 200 sectors performed the best in November? 
• Why Harvey Norman, Northern Star, Stockland, & TechnologyOne shares are charging higher
• Stockland (ASX:SGP) share price up 3% after new chief announced

Motley Fool contributor Ken Hall 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.

The post Why the Stockland (ASX:SGP) share price is on the move today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2Kt5CEh

In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to bounce back from yesterday’s drop. At the time of writing the benchmark index is up 0.9% to 6,658.2 points.

Four shares that are climbing more than most today are listed below. Here’s why they are storming higher:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price is up a further 3.5% to $11.15. Investors have been buying the infant formula company’s shares this week after a horror showing a week earlier. It appears as though some investors believe the sell off on Friday has dragged its shares down to an attractive level. The a2 Milk share price was sold off after it downgraded its guidance for FY 2021.

Air New Zealand Limited (ASX: AIZ)

The Air New Zealand share price is up 3.5% to $1.64. This follows the release of an update on its operations this morning. Air New Zealand revealed that it carried a total of 690,000 passengers in November. While this is roughly half what it carried a year earlier, it is an improvement from earlier in the financial year.

Mesoblast limited (ASX: MSB)

The Mesoblast share price is up 6% to $2.30 despite there being no news out of the biotech company. However, with its shares halving in value over the last few trading days, some investors may believe they have been oversold. Alternatively, as Mesoblast is one of the most shorted shares on the ASX, the buying could be from short sellers closing positions.

Recce Pharmaceuticals Ltd (ASX: RCE)

The Recce share price has pushed 4% higher to $1.12. The catalyst for this was the release of results from its international SARS-CoV-2 (COVID-19) in-vivo studies. The results demonstrate positive activity of RECCE 327 (R327) and RECCE 529 (R529) against COVID-19 in Syrian golden hamsters. Management believes this hamster study is the first indication of the potential for nasal administration of its anti-infective compounds, specifically when used against viruses.

More reading

• Air New Zealand (ASX:AIZ) share price rises despite falling air traffic
• Recce (ASX:RCE) share price charges higher on COVID-19 update
• Why a2 Milk and these ASX shares have been smashed in 2020
• 7 top ASX biomedical shares in 2020
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why a2 Milk, Air New Zealand, Mesoblast, & Recce shares are storming higher appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/37FqHEm

The Primero Group Ltd (ASX: PGX) share price has slipped today on news the company directors have accepted a takeover bid.

The company announced this morning that its directors, who own 30.42% of the company’s shares, have accepted NRW Holdings Limited (ASX: NWH)’s conditional off-market takeover bid.

The Primero share price has fallen almost 2% to 55 cents on the news , while the NRW share price dipped by 0.35% to $2.86 at the time of writing.

What else did today’s announcement say

Primaero advised that, as a result of today’s acceptances, NRW now has built up a stake of just over 48% of Primero shares.

The Primero directors continue to unanimously recommend that its shareholders accept NRW’s offer, which will expire on 22 January 2022.

In the announcement, NRW told Primero shareholders that by accepting the offer, they would be investing a financially stronger company with an attractive dividend policy. It also warned shareholders that the Primero share price may fall if the takeover was unsuccessful.

Details of the takeover offer

The takeover by NRW values Primero at an equivalent of 55 cents per share, or a total equity value of approximately $100 million.

Primero’s directors collectively own approximately 30.42% of Primero shares. Each of those directors had already confirmed in November of their intention to accept the offer in respect of all Primero shares they own. Primero also said that its management team would remain with the business under NRW ownership.

NRW meanwhile said that it will fund the acquisition through a combination of cash on its balance sheet, and a $50 million bank loan facility. 

Both companies believe there are synergies to be achieved through this merger, which will allow the combined entity to expand to other pipelines businesses and opportunities. 

A quick take on Primero and NRW

Primero provides engineering design, construction and operational services to the minerals, energy and infrastructure sectors. The Primero share price has risen by more than 60% in 2020, and it commands a market capitalisation of around $96 million.

NRW is a much bigger company than Primero, and provides contract services to the resources and infrastructure sectors across most states of Australia. The NRW share price has fallen 10% in 2020, and it commands a market cap of $1.2 billion.

More reading

• Primero (ASX:PGX) share price surges 10% on takeover news

Motley Fool contributor Eddy Sunarto 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.

The post Why the Primero (ASX:PGX) share price has slipped 2% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2JcLhT0