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The Aussie Broadband Ltd (ASX: ABB) share price is taking off on Friday after the company confirmed it’s in exclusive talks with a potential new acquisition.

Aussie Broadband is looking to buy $297 million information technology and telecommunications company, Over the Wire Holdings Ltd (ASX: OTW). Over the Wire offers data networks, voice services, internet connectivity, and technological support.

At the time of writing, the Aussie Broadband share price is $4.93, 5.34% higher than its previous close.

Let’s take a closer look at the still-unfolding news out of Aussie Broadband.

Aussie Broadband share price soars on takeover talks

The Aussie Broadband share price is surging after the telecommunications company confirmed rumours it’s in talks to absorb Over the Wire.

Aussie Broadband stated, “the discussions are preliminary and incomplete, and no agreement has been reached in relation to any transaction”.

Over the Wire shares entered a trading halt before the ASX opened this morning. As of its last close, the Over the Wire share price is $5. The smaller telco stated the freeze was due to it needing more time to respond to the acquisition rumours.

However, Aussie Broadband beat it to the cake. The company’s tentative announcement follows a $134 million capital raise – made up of a $114 million placement and a $20 million share purchase plan – in September.

At the time, Aussie Broadband said the funds were to go towards “growth by [mergers and acquisitions]”, as well as new products, technology development, and, potentially, further fibre and network build.

As The Motley Fool Australia reported earlier, media speculation Aussie Broadband’s talking with Over the Wire emerged last night.

Aussie Broadband has vowed to “keep the market informed in the event of any material developments”.

It likely goes without saying, the Aussie Broadband share price will be closely watched until the market hears more.

The post Aussie Broadband (ASX:ABB) share price surges 5% as acquisition talks confirmed appeared first on The Motley Fool Australia.

More reading

• Over the Wire (ASX:OTW) share price halted amid possible takeover
• Aussie Broadband (ASX:ABB) share price on watch amid acquisition rumours
• Aussie Broadband (ASX:ABB) share price drops out on trading update and NBN gripe
• How Aussie Broadband (ASX:ABB) is just smashing it right now
• Wilson Asset Management believes these 2 leading small cap ASX shares are a buy

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. owns shares of and has recommended Aussie Broadband Limited and Over The Wire Holdings Ltd. The Motley Fool Australia has recommended Aussie Broadband Limited 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.

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The Over the Wire Holdings Ltd (ASX: OTW) share price is frozen on Friday. The pause button has been hit on the telecommunications company following rumours of a possible takeover deal from Aussie Broadband Ltd (ASX: ABB). The speculation has since been confirmed by both companies.

The $300 million Brisbane-based company’s shares are currently frozen at $5.00 apiece. Meanwhile, Aussie Broadband shares are lifting 5.6% on the potential acquisition in the making.

Let’s peel back the layers on what this could mean for the ASX-listed Over the Wire.

An unusual candidate

By the price action on Aussie Broadband shares today, it appears investors are enthusiastic about the potential takeover of Over the Wire. However, reports from The Australian indicate that some analysts don’t see the deal as a ‘no-brainer’.

Although, an argument could be made for the deal from a valuation perspective. Currently, Aussie Broadband trades at approximately 30 times its earnings before interest, tax, depreciation, and amortisation (EBITDA). Meanwhile, based on the Over the Wire share price, the potential takeover target trades at around 10 times EBITDA.

This difference in valuations is likely a byproduct of the companies contrasting growth profiles. While Over the Wire grew its revenue at a respectable 29% in the last 12 months, Aussie Broadband delivered a huge period of growth, increasing 84% year-over-year.

Yet, one analyst believes Over the Wire is not so fitting for Aussie considering the smaller company has a customer-centric focus on IT solutions. Whereas, Aussie deals in the realm of communications reselling — namely, the National Broadband Network.

Instead, the analyst suggests that Spirit Technology Solutions Ltd (ASX: ST1) would be a better fit for the fast-growing network provider. The $184 million company provides internet, cyber-security, and networking solutions to businesses, hospitals, schools, and aged-care providers. It seems investors are taking note, with the Spirit Technology share price up 12% today.

At this stage, the discussions between Aussie Broadband and Over the Wire are preliminary and incomplete. This means no agreement has been entered and no deal may eventuate.

However, the Over the Wire share price has requested to remain halted until a further announcement, or the commencement of trading on 26 October 2021.

Over the Wire share price recap

While the Over the Wire share price has bounced back from its COVID-19 rout, its performance since has been average. Over the past year, the IT company has gained 10.9%, which would typically be considered reasonable. However, the S&P/ASX 200 Index (ASX: XJO) has gained 20% over the same time period.

Likewise, Aussie Broadband has delivered far greater returns during the past 12 months. The new telco competitor has delivered a return of 147% in the past year. This is more than 10 times greater than the performance of the Over the Wire share price.

The post Over the Wire (ASX:OTW) share price halted amid possible takeover appeared first on The Motley Fool Australia.

More reading

• Aussie Broadband (ASX:ABB) share price on watch amid acquisition rumours
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• How Aussie Broadband (ASX:ABB) is just smashing it right now
• Wilson Asset Management believes these 2 leading small cap ASX shares are a buy
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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. owns shares of and has recommended Aussie Broadband Limited, Over The Wire Holdings Ltd, and SPIRIT TC FPO. The Motley Fool Australia has recommended Aussie Broadband Limited, Over The Wire Holdings Ltd, and SPIRIT TC FPO. 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 leader of a $64 billion super fund says the fund is pushing 11 S&P/ASX 300 Index (ASX: XKO) companies to clean up their act on carbon emissions.

Speaking to the Smart Energy Council’s Global Race to Zero Summit last night, HESTA chief executive Debby Blakey said the fund is worried Australia and Australian companies are lagging behind the rest of the world in the transition to decarbonisation.

She said: “The cost of lagging decarbonisation, and then a sudden, disorderly transition, really does endanger the financial future, and the quality of life, of all Australians…”

And to avoid such a transition, HESTA asserts reaching net-zero by 2050 is necessary to protect Australia’s economic position.

Blakey said: “To achieve carbon reduction in our portfolio means we must actively engage with the companies we own. Just 11 of the ASX 300 companies make up 76% of emissions, and these companies are the focus of our engagement.”

Let’s take a look at which ASX 300 companies HESTA wants to see reach net-zero.

The most carbon-polluting ASX 300 companies

Here are the 11 companies responsible for 76% of the ASX 300’s carbon emissions, according to HESTA’s Climate Change Report.

It likely comes as no surprise that Australia’s biggest carbon polluter topped the list.

AGL Energy Limited (ASX: AGL) took out the top spot. Fellow energy producers Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL), and Origin Energy Ltd (ASX: ORG) also made the list.

Also overrepresented were Iron ore producers. Rio Tinto Limited (ASX: RIO), South32 Ltd (ASX: S32), and BHP Group Ltd (ASX: BHP) are among the top emitters.

Additionally, Australia’s largest airline, Qantas Airways Limited (ASX: QAN), also made the list.

However, 3 companies among the ASX 300’s top polluters don’t have concrete plans to achieve net-zero emissions by 2050. They are Incitec Pivot Ltd (ASX: IPL), BlueScope Steel Limited (ASX: BSL), and Alumina Limited (ASX: AWC).

In its latest sustainability report, Incitec stated it’s looking to examine pathways towards zero operational emissions by 2050.

BlueScope also wants to achieve net-zero emissions by 2050. Although, it believes new technology needs to be created before it can do so.

Interested readers can find Alumina’s climate change position statement here.

HESTA’s stance on Australia’s climate targets

Blakey also stated Australian policies are restricting the capital HESTA is willing to invest into the nation. She said:

HESTA would have more appetite to invest more in renewable infrastructure in Australia if we can overcome existing barriers to investment…

Current barriers to domestic investment in renewables mean that for every $1 that we’ve been able to commit to Australian assets in this area, we’ve actually been able to invest $3 overseas.

Blakey also pointed to findings by the Investor Group on Climate Change (IGCC). As the Motley Fool Australia reported, IGCC recently found Australia’s lacking emissions-reduction targets could be causing it to miss out on billions of dollars.

The post HESTA boss calls out ASX 300 companies without net-zero targets appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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 hydrocarbon and LNG giant Santos Ltd (ASX: STO) have posted a swift recovery this past month, reversing a 3-month long downtrend in pricing.

At the time of writing, the Santos share price is changing hands at $7.11 each, a 1.3% drop into the red.

Santos shares have been lifting alongside a corresponding lift in oil prices, recently reaching their 3-year high.

What tailwinds are behind the Santos share price lately?

Undoubtedly, the biggest factors that tend to influence Santos’ share price – outside of its earnings or any market sensitive news – is oil and gas pricing in the commodity markets.

Santos is considered a price taker on the commodity markets it sells into, as it is an ASX resource share that produces hydrocarbons like oil and natural gas.

As such its share price can and does fluctuate with volatility in the broader commodity markets, whether it be to the upside or the downside.

Examining oil pricing action over the last month or so, we see it also broke out from late September, around the exact same time Santos shares popped again.

Brent Crude is considered a sort of global benchmark for crude oil, with around 80% of the world’s oil being priced of movements in the Brent benchmark.

Spot pricing of Brent Crude oil alongside Brent Crude futures have both ticked higher since 20 September, extending an upward rally that commenced in August, all while gaining 32% in that time.

Meanwhile, the price of natural gas took off for a second rally from 21 September as well, spiking 20% in just two weeks and easily surpassing its 5-year high.

With all of this underlying momentum weighing in, one top broker has chimed in with its opinion, and afforded investors its take on the outlook for the Santos share price.

What are analyst’s saying about Santos shares?

Analysts at leading broker Morgan Stanley were pleased with the company’s performance this quarter, however, feel more may be needed to drive additional share price returns in the name.

It noted record quarterly sales revenue from Santos, coming in at US$1.14 billion and a 6% jump from the last quarter.

But the broker reckons that Santos might need to either sell or spin-off some of its assets in order for its share price to keep charging higher.

Should the planned merger with Oil Search Ltd (ASX: OSH) get the green light, Morgan Stanley believes this may be a catalyst to fuel some of these divestments.

Despite robust fundamentals and technicals underlying the growth in the commodity markets, the broker is looking “for news on potential divestments at Dorado (targeting a 20%–30% sell down)”, alongside another potential divestment in Barossa, “which Santos and JERA continue to progress the sales and purchase agreement with JERA to acquire a 12.5% interest”.

Yet, Morgan Stanley reiterates its overweight recommendation on Santos shares, citing strengths in oil and gas markets in its reasoning.

It has a price target of $8.60 on the Santos share price, implying an upside potential of 21% from its current market trading.

Santos share price snapshot

The Santos share price has struggled this year to date, having posted a return of just 13% since January 1, after rallying 15% this month.

However, in the past year, Santos shares have climbed 40% into the green, around double that of the S&P/ASX 200 index (ASX: XJO)’s return in that time.

The post What this top broker thinks of the Santos (ASX:STO) share price appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) has fought back from a poor start and is edging higher. The benchmark index is currently up 0.1% to 7,421.2 points.

Here’s what is happening on the ASX 200 today:

Mining giants drag on ASX 200

One area of the market which is acting as a drag on the ASX 200 is the resources sector. The likes of BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) are all trading lower. This appears to have been driven by weakness in the iron ore price overnight. According to Metal Bulletin, the spot 62% fines iron ore price dropped 5.8% to US$116.93 a tonne.

Qantas ramps up international travel plans

The Qantas Airways Limited (ASX: QAN) share price is rising after ramping up its international travel plans. Both Qantas and Jetstar will bring forward the restart of more international flights to popular destinations from Sydney. Qantas made the decision in response to the Federal and New South Wales governments confirming that international borders would reopen from 1 November. All Qantas and Jetstar workers based in Australia and New Zealand who are currently stood down are expected to return to work by early December.

Aurizon shares fall on acquisition plans

The Aurizon Holdings Ltd (ASX: AZJ) share price is sinking after announcing a major acquisition. According to the release, the rail freight operator has signed an agreement with Macquarie Group Ltd (ASX: MQG) subsidiary Macquarie Asset Management to acquire One Rail Australia for $2.35 billion. Management believes the One Rail acquisition is highly strategic and transformative for Aurizon. It appears as though the market isn’t convinced with the deal.

Best and worst ASX 200 performers

The best performer on the ASX 200 has been the Nuix Ltd (ASX: NXL) share price with a 5% gain after announcing the appointment of its new CEO. The worst performer has been the Lynas Rare Earths Ltd (ASX: LYC) share price with an 8% decline. This follows the release of a disappointing quarterly update this morning.

The post ASX 200 (ASX:XJO) midday update: BHP and Rio Tinto fall, Qantas higher appeared first on The Motley Fool Australia.

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• Why the Fortescue (ASX:FMG) share price is falling again on Friday
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• Aurizon (ASX:AZJ) share price rises amid transformative $2.35bn acquisition
• Nuix (ASX:NXL) share price charges higher on CEO appointment
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Aurizon Holdings 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 Kalium Lakes Ltd (ASX: KLL) share price is edging higher in Friday morning trade. This comes after the mineral exploration company provided investors with an update on its capital raising efforts.

At the time of writing, Kalium Lakes shares are up 2.78% to 18.5 cents. In comparison, the All Ordinaries Index (ASX: XAO) is hovering 0.19% higher at 7,743.4 points.

What did Kalium Lakes announce?

In a statement to the ASX, Kalium Lakes advised it has opened up its share purchase plan (SPP) following a successful placement.

On 14 October, the company revealed that it had received overwhelming support to raise $50 million via a two-tranche placement. The firm took commitments came from its largest shareholder, Greenstone Resources, along with other institutional investors.

About 278 million shares will be issued at 18 cents per share. This represents a 22.2% discount on the last traded price of 22 cents before the announcement on 13 October.

Kalium Lakes decided to allow its remaining shareholders to participate in a $10 million SPP based on the same terms.

The company said eligible investors would be able to apply for up to a maximum amount of $30,000 worth of new shares.

The closing date for the SPP will fall on 11 November, and the results will be announced on 17 November.

Kalium Lakes will use the capital raised to fund the expansion of its Beyondie sulphate of potash (SOP) project.

Located in Western Australia, the project is on schedule to achieve its first output in September 2021. The company is targeting to deliver steady state production of up to 120 kilo-tonnes per annum.

In addition, the remaining monies will provide working capital during the ramp-up.

About the Kalium Lakes share price

Over the past 12 months, the Kalium Lakes share price has pushed around 5% higher. However, the company’s shares have fallen more than 6% since the start of 2021.

On valuation grounds, Kalium Lakes presides a market capitalisation of roughly $184.9 million, with approximately 1 billion shares outstanding.

The post Why is the Kalium Lakes (ASX:KLL) share price climbing today? appeared first on The Motley Fool Australia.

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• Own ANZ (ASX:ANZ) shares? Here’s what the bank’s CEO is warning on ‘greenwashing’
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are slipping in morning trade, down 0.39%.

The share price has been bouncing around the $28.15 level this week. Over the past 5 days ANZ shares have slipped 0.11%.

That’s the recent price action.

Now here’s ANZ’s CEO Shayne Elliot on the flood of investor money seeking ‘green’ investments.

When green may not be green

Ever more investors are looking to invest their money into companies with strong environmental records. Companies that have plans in place to reduce their carbon footprints. And, increasingly, companies that can show how they intend to get to the environmental Holy Grail – net zero – by 2050.

Most investors seeking ‘green’ investments are still looking for healthy returns. But they also like the idea that their money is supporting companies committed to doing their part in limiting climate change.

The question then becomes, how do you know if a company’s environmental credentials are all they appear?

According to Shayne Elliot, that’s not always easy.

Elliot said (quoted by the Australian Financial Review):

Clearly, one of the risks at the moment is there is too much money out there, the risk of greenwashing, of trying to cobble together things to give it some sense of ‘greenness’ to satisfy that massive level of demand.

The onus is on a lot of us to make sure we keep our standards high, making sure we have an agreement across the economy and the sector around taxonomy and definitions.

Elliot suggested that a big step forward would be increased cooperation between the banking and insurance sectors:

The insurance industry has a much better, nuanced understanding given what they do, and banks are really good at financing transitions and change. When you bring the two together, that is a very powerful combination for the financial sector because we can learn a lot from insurance industry, thinking about long-term impacts.

One of the potential pitfalls of having so many investors chasing ‘green’ investments is a potential lack of funding for crucial transitional projects. Along with the higher mid-term risks that can comes with investing in renewable energy projects.

“We need new forms of capital taking different types of risk to bridge some of this. There is too much money running around looking for ‘green’ investments” Elliot said.

As the AFR reported, he pointed to the work the Clean Energy Finance Corporation (CEFC) does in “de-risking renewable energy project financing for banks”:

What we want is money taking a slightly different risk approach – exactly what CEFC is doing – funding bottlenecks and glitches in the system that make it hard for private money to be allocated and how do we de-risk that … Private money will follow very quickly when those things are sorted through.

What is ANZ’s sustainability policy?

ANZ, according to their website, stands behind the goal of achieving net zero emissions within 30 years:

We are focussing our efforts on energy, water and waste due to their relevance to the customers we bank and the markets in which we operate. We are supporting household, business and financial practices that improve environmental sustainability…. We support the Paris Agreement’s goal of transitioning to net zero emissions by 2050 and are committed to playing our part.

How have ANZ shares been performing?

Over the past 12 months, ANZ shares are up 44%. That’s more than twice the 20% gains posted by the S&P/ASX 200 Index (ASX: XJO) over that same time.

The ANZ share price has gained 4% over the last month.

The post Own ANZ (ASX:ANZ) shares? Here’s what the bank’s CEO is warning on ‘greenwashing’ appeared first on The Motley Fool Australia.

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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 Orocobre Limited (ASX: ORE) share price is trading higher on Friday after the company released its September quarterly results.

This marks the company’s first results announcement as a combined entity following its merger with Galaxy Resources Ltd.

At the time of writing, the Orocobre share price is up 1.11% to $9.12. However, it has been as high as $9.16 and as low as $8.88 during a topsy-turvy day so far.

Mt Cattlin upgrades production forecast

The Mt Cattlin project in Western Australia achieved record production rates of 67,931 dry metric tonnes (dmt) of spodumene concentrate. That is in line with customer requirements at a unit cash cost of US$351/t.

Encouragingly, the company upgraded its forecast production for CY 2021 to 210,000-220,000 dmt of spodumene concentrate, up from its previous guidance of 195,000-210,000 dmt.

Forecast cash costs were also revised down to US$390-420/tonne. That’s an improvement against its previous guidance of US$420-450/tonne.

It looks like the upgrades have been enough to push the Orocobre share price into positive territory this morning.

During the quarter, 89,640 dmt of spodumene concentrate was shipped at an average grade of 5.7% and an average sales price of US$779/dmt inclusive of cost, freight, and insurance (CIF).

Looking ahead, the average pricing shipments in the December quarter and early January 2022 is approximately US$1,650/tonne CIF for grades of 6%. That is more than double that of September quarter prices.

Olaroz lithium facility lifts production, expansion on track

Orocobre’s Olaroz facility in Argentina produced 2,802 tonnes of lithium carbonate. A total of 58% of production achieved battery-grade status, exceeding the budgeted target of 50%.

Sales volume was up 3% quarter-on-quarter, but down 23% against the prior corresponding period (pcp). This reflects a decision in 2020 to reduce excess inventory during a time of weak lithium spot prices and COVID-19-related uncertainty.

Total sales revenue was up 13% quarter-on-quarter and up 133% on the pcp, reflecting surging lithium demand and tight supply.

The company achieved average sales prices of US$9,341/tonne during the quarter. This compared to US$8,476 in the June quarter and US$3,102 a year ago.

December quarter pricing is anticipated to be approximately US$12,000/tonne free on board at similar sales volumes as the September quarter.

Cash costs jumped 20% on the pcp to US$4,754/tonne. This was due to lower production volume, higher labour costs, and also the devaluation of the Argentine Peso.

Olaroz’s Stage 2 expansion has reached 60% completion. The company expects this project to be completed during the first half of CY 2022 with production to begin in the following half.

Orocobre share price boosted by rising lithium prices

The Orocobre share price has ballooned this year thanks to the bullish momentum behind lithium spot prices.

“Demand for lithium chemicals and spodumene concentrate increased materially during the quarter in all key geographies responding to sustained high production of lithium-ion battery materials and batteries,” the report said.

Another factor driving lithium demand was the electric vehicle industry. Production between January and August 2021 jumped 150% compared to a year ago.

From a supply perspective, Orocobre flagged that “supply from lithium brine and spodumene producers is estimated to be at least 3% less than the projected demand volumes in 2021”. The supply deficit is forecast to increase to more than 20% over the next five-year period.

Orocobre share price trading sideways

The Orocobre share price has been trading sideways since mid-October, perhaps taking a breather after doubling year-to-date.

Orocobre shares have since struggled to break above the $10 mark, but are bouncing strongly when approaching the low $8s.

The post Orocobre (ASX:ORE) share price rising after bumper quarter for lithium prices appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price is on course to end the week in the red.

In late morning trade, the iron ore producer’s shares are down over 2% to $14.10.

This latest decline means the Fortescue share price is now down 6% in October.

Why is the Fortescue share price sliding today?

The weakness in the Fortescue share price today appears to have been driven by a sharp pullback in iron ore prices overnight.

It isn’t just Fortescue’s shares that are being impacted. Also falling today are fellow mining giant BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

Their shares are down approximately 3% at the time of writing, mirroring similar declines by their London and New York listed shares last night.

What’s the latest on the iron ore price?

Traders were selling down iron ore prices overnight amid bearish sentiment in respect to steel prices and demand.

According to Metal Bulletin, the iron ore 62% fines Qingdao cfr price dropped US$7.14 or 5.75% to $116.93 per tonne.

It was a similar story for the low grade iron ore that Fortescue products. The price of 58% fines dropped 6.3% or US$5.99 per tonne to US$88.98 per tonne.

Is this a buying opportunity for investors?

According to a recent note out of Bell Potter, its analysts see a lot of value in the Fortescue share price.

The broker has a buy rating and $20.87 price target on its shares, which implies potential upside of 48%. It is also forecasting a massive 23% fully franked dividend yield in FY 2022 based on the current Fortescue share price.

Commenting on its share price weakness in recent months, the broker said: “While the share price currently looks like a falling knife, we are of the view that it remains a robust and attractive long-term investment and the current market valuation is an opportunity to build exposure.”

The post Why the Fortescue (ASX:FMG) share price is falling again on Friday appeared first on The Motley Fool Australia.

More reading

• These are the 5 highest yielding dividend stocks in the ASX 200
• Why the Fortescue (ASX:FMG) share price could be dirt cheap
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• Why is the Fortescue (ASX:FMG) share price stalling on Monday?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Cardno Limited (ASX: CDD) share price has launched itself into the stratosphere on Friday. This move follows news of the company selling multiple divisions to Canada-based engineering services company, Stantec Inc (NYSE: STN).

At the time of writing, shares in the infrastructure and services company are exchanging hands for $1.525, up 17.8%. However, the company’s shares had opened at an intraday high of $1.60.

Let’s take a look at the deal that has catapulted the Cardno share price today.

Pocketing $500 million in division sales

In a release made well after the market close last night, Cardno revealed the details of an agreement with the much larger services company, Stantec. In early trade, investors are bidding up the Cardno share price in response.

According to the release, Cardno has entered into share sale agreements to sell its Americas consulting division and its Asia Pacific consulting division to Stantec. The agreed-upon consideration for the two consulting divisions is US$500 million, or roughly A$667 million.

To the delight of shareholders, the company intends on distributing between A$567 million to $600 million of the proceeds to Cardno shareholders. This would equate to somewhere between $1.40 to $1.49 per share, depending on the decision. The distribution will be comprised of a mix of capital return and an unfranked dividend.

Additionally, Cardno plans to retain approximately A$64 million of cash from the division sales. The capital will be used to support the remaining International Development and South American operations. Pleasingly, Cardno will have a clean balance sheet following the transaction, holding no debt. This is likely another contributing factor to the positive Cardno share price move today.

Furthermore, the deal had been struck following the company’s extensive global strategic review. This undertaking was announced to the ASX on 9 June 2021. Reportedly, a notable number of international groups opened Cardno’s books and took a squizz.

From here, the transaction remains conditional on a handful of details. For example, the deal will need approval from shareholders at Cardno’s upcoming extraordinary general meeting. This meeting is expected to be held on 6 December 2021.

In the meantime, the Cardno board unanimously recommends shareholders vote in favour of the transaction.

Management commentary

Commenting on the transactions, Cardno CEO Susan Reisbord stated:

I am excited about the opportunity for Cardno’s Asia Pacific and Americas Consulting Divisions to become part of Stantec, a top tier consulting firm that is recognized for creative technology-forward thinking and collaboration. This is not simply a great culture fit for our Cardno Asia Pacific and Americas Consulting Division teams, this merger provides new career opportunities for staff, additional resources and services for our clients, and a new platform for combined growth in the marketplace.

Likewise, Stantec CEO Gord Johnson highlighted the companies cultural compatibility. Specifically, both the services and geographies are highly complementary.

Cardno share price snapshot

The Cardno share price has been an exceptional performer over the last year. In fact, it is likely up there with some of the best performers on the ASX over the 12 month time period. While the S&P/ASX 200 Index (ASX: XJO) has delivered a return of 20% in the last year, Cardno has soared 346%.

At the current share price, Cardno is trading on a trailing price-to-earnings (P/E) ratio of 16.4 times.

The post Cardno (ASX:CDD) share price rockets 20% on $500 million deal appeared first on The Motley Fool Australia.

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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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