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The Square Inc (NYSE: SQ) share price has surged in the last 12 months. While the S&P 500 Index is up 33% in that time, Square shares are 80% higher. That means Square outperformed the market by just under 50 percentage points.

There are going to be many ASX investors who will want to know more about the company after it agreed to buy Afterpay Ltd (ASX: APT) shares in scrip. Square will acquire 100% of Afterpay shares at an exchange rate of 0.375 Square shares for every 1 Afterpay share.

At market close in the US, Square shares were trading for US$247.26. This was down 3.14%.

Let’s take a look at some of the stories that have seen the Square share price accelerate over 52 weeks.

What’s seen the Square share price rise?

New products and acquisitions

Afterpay isn’t the only acquisition Square has made in the year. Back in November, the fintech company bought the tax unit of Credit Karma. The purchase, for US$50 million cash, for the free tax-filing service sent the Square share price up 5% on the day. Square integrated the filing service into its Cash App business.

In a statement, Square said the purchase of the service would:

…expand Cash App’s diverse ecosystem of financial tools — which currently includes peer-to-peer payments, Cash Card, direct deposit, as well as fractional investing … giving customers another way to manage their finances from their pocket. 

Only last week, Square shares jumped 11% when it announced a suite of new products. These included checking, saving, and business financing banking services. Shares leapt another 7% in September last year when it launched a service to allow workers to access their earned wages before they physically receive their pay.

With its latest expansion into buy now, pay later (BNPL), Square is looking to diversify even more. Let’s see what this will mean for the Square share price going forward.

Earnings and expert analysis

On the release of its third-quarter earnings report, the Square share price rocketed 11% to a then all-time high.

Net revenue grew 140% year-on-year to more than US$3 billion. The Cash App alone generated US$385 million in gross profit for the group. This was a 300% increase on the prior corresponding period (pcp). Gross profit grew 63% on the pcp – its biggest growth rate in at least three years.

Japanese bank Mizuho sent the Square share price soaring 5% last August when it slapped a buy rating on Square. At the time it said shares could reach as much as US$225 from its then price of US$158. As stated, Square shares are above that price target, currently trading for around US$247.

As well as phenomenal growth over the year, its growth longer term has been mind-boggling. In the last 5 years, the Square share price has exploded by more than 2,100%.

Square Inc has a market capitalisation of $153 billion AUD.

The post The Square (NYSE:SQ) share price has gained 80% over the last year appeared first on The Motley Fool Australia.

More reading

• Here’s why ASX tech shares are up 6% on Monday
• All about Square, the US company acquiring Afterpay (ASX: APT) shares
• What will happen to Afterpay (ASX:APT) shares following the Square acquisition?
• Afterpay (ASX:APT) share price up 29% after takeover & FY 2021 update
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T 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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It has been a very positive day for the Australian tech sector on Monday. At one stage today, the S&P ASX All Technology index was up as much as 6%.

This is playing a key role in driving the S&P/ASX 200 Index (ASX: XJO) 1.1% higher this morning.

Why is the tech sector storming higher?

A key driver of the S&P ASX All Technology index’s gain on Monday has been the performance of the Afterpay Ltd (ASX: APT) share price.

The buy now pay later (BNPL) provider is the biggest company included on the technology-focused index. So, with Afterpay shares currently up 22% after agreeing to a $39 billion takeover by US payments giant Square, it is giving the index and other ASX tech shares a major boost.

Afterpay is recommending shareholders accept an offer of 0.375 shares of Square Class A common stock for each share they hold. Based on the latest Square share price of US$247.26, this implies a transaction price of approximately $126.21 per Afterpay share.

This news is also rubbing off on fellow BNPL providers. Both Sezzle Inc (ASX: SZL) and Zip Co Ltd (ASX: Z1P) shares are racing higher this morning, with investors perhaps hoping that they will become takeover targets as well.

What else is happening?

Also giving the S&P ASX All Technology index a lift is a strong performance by the Dicker Data Ltd (ASX: DDR) share price.

The ASX tech share is up over 11% in response to a late announcement on Friday. That announcement revealed that Dicker Data is making a key acquisition. The IT distributor has entered into a binding agreement to acquire the Exeed Group business operating across Australia and New Zealand for $68 million.

This transaction will see Dicker Data’s New Zealand business become the second largest IT distributor in that market. Management estimates that the two companies will have NZ revenue of over NZ$500 million.

The post Here’s why ASX tech shares are up 6% on Monday appeared first on The Motley Fool Australia.

More reading

• The Square (NYSE:SQ) share price has gained 80% over the last year
• All about Square, the US company acquiring Afterpay (ASX: APT) shares
• What will happen to Afterpay (ASX:APT) shares following the Square acquisition?
• Afterpay (ASX:APT) share price up 29% after takeover & FY 2021 update
• What does the Square acquisition mean for the Afterpay (ASX:APT) share price?

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. owns shares of and has recommended AFTERPAY T FPO, Dicker Data Limited, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Dicker Data 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 Vulcan Energy Resources Ltd (ASX: VUL) share price is moving higher, up 2% in morning trade.

Below we take a look at the latest partnership announcement from the ASX energy share.

What partnership deal did Vulcan announce?

The Vulcan Energy share price is lifting after emerging from Friday’s trading halt and announcing it had entered into a 5-year strategic partnership with Renault Group within the Zero Carbon Lithium Project.

The agreement will see Renault purchase between 6,000–17,000 tonnes per year of battery grade lithium chemicals produced in Germany by Vulcan. It will enable Renault to avoid some 300–700 kilograms of CO2 emissions for each 50-kWh battery it produces.

Start of commercial delivery is slated for 2026. The initial 5-year agreement can be extended if both parties agree.

Commenting on the partnership, Vulcan’s managing director, Francis Wedin said:

It is important that we work with companies who share our ethos on sustainability. Renault Group is a pioneer in the EV space, with the successful introduction of truly affordable, mass market models. Perhaps most importantly, the number one pillar of Renault’s strategy is “Carbon neutrality – Green as a business”, with a commitment to producing carbon-free batteries and becoming carbon neutral.

Gianluca De Ficchy, managing director of Alliance Purchasing Organization at Renault Group added, “We are very proud to partner with a European lithium producer with a net zero greenhouse gas emissions such as Vulcan Energy.”

De Ficchy said it’s critical that the companies Renault partners with share its environmental and social responsibility goals, “if we want to create real value and offer the most sustainable vehicles in the market.”

According to the release, the binding term sheet remains conditional on the execution of a “materially similar” Definitive Agreement by 20 November.

Vulcan Energy share price snapshot

The Vulcan Energy share price has been red hot over the past 12 months, gaining 2,161%. For some comparison, the All Ordinaries Index (ASX: XAO) has gained 27% over that same time.

Year-to-date the Vulcan Energy share price has continued to outperform, up 262% in 2021.

The post Up 2,000% in a year, why the Vulcan Energy (ASX:VUL) share price is gaining again appeared first on The Motley Fool Australia.

More reading

• Why is the Vulcan Energy (ASX:VUL) share price halted?
• Vulcan Energy (ASX:VUL) share price surges 10% on quarterly update
• Vulcan (ASX:VUL) share price on watch following spin-off IPO update
• Why CSL, Humm, IntelliHR, & Vulcan shares are pushing higher
• Why the Vulcan (ASX:VUL) share price is jumping 9% on Monday

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 Creso Pharma Ltd (ASX: CPH) share price is soaring this morning, trading 9% higher at 12 cents apiece at time of writing.

Below, we take a look at the ASX cannabis share’s quarterly results for the period ending 30 June (Q2)

What quarterly results did Creso report?

The Creso Pharma share price is soaring after the company reported a second consecutive quarter of record revenue growth.

Revenue came in at $1.63 million, up 18% from the first quarter of 2021 and up 451% year-on-year.

The company’s Canadian cultivation and sales division, Mernova Medicinal Inc, reported a 21% increase in revenue over the previous quarter, to $966,000. It noted an ongoing shift towards a recurring revenue model with orders from returning customers and province partners.

With its acquisition of Halucenex Life Sciences Inc completed following the end of the quarter, Creso Pharma reported it’s now the “first ASX-listed company with a 100% owned psychedelics subsidiary”. It estimated the addressable market for psychedelic medicines to be worth some US$100 billion.

On the balance sheet, as at 30 June, the company had cash reserves of $13.6 million.

Cash reserves increased by $2.5 million to approximately $16 million as at 31 July as some 50.5 million options were exercised into fully paid ordinary shares. Creso expects that additional outstanding options, worth roughly $5 million, will be exercised over the next months, providing it with extra working capital.

What did management say?

Commenting on the results, Creso’s non-executive chairman Adam Blumenthal said:

This quarter solidified Creso Pharma’s intent to become a world leader in the psychedelic, CBD, and recreational and medicinal cannabis space. The successful acquisition of Halucenex is a major milestone for the company, as it looks to commercialise new psychedelic-assisted psychotherapy treatments in the future.

The merger with Red Light Holland to create The HighBrid Lab presents an opportunity to take advantage of several synergies available across the businesses, allowing the combined company to considerably scale up operations in both the near and long term.

Blumenthal highlighted Creso’s successful listing on the US over-the-counter (OTC) market. “This provides the company with exposure into a deep and liquid pool of North American investors,” he said.

Noting the continuing push towards legalisation in the US on a state-by-state basis, Blumenthal added, “The ever-changing regulatory landscape in the US will allow us to pursue synergies for the HighBrid Lab and scale up activities to further commercialise our business divisions.”

Creso Pharma share price snapshot

Over the past 12 months, the Creso Pharma share price has leapt 290% higher, compared to a gain of 27% on the All Ordinaries Index (ASX: XAO).

Year-to-date, however, Creso Pharma’s share price has gone the other direction, down 35% in 2021.

The post Why the Creso Pharma (ASX:CPH) share price is soaring 9% higher today appeared first on The Motley Fool Australia.

More reading

• Here’s why the Creso Pharma (ASX:CPH) share price is surging 15% higher
• Blazing it? How the top ASX cannabis shares performed in FY21

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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Inflation – it’s something we are hearing a lot more about lately. The Australian Bureau of Statistics revealed last week that Australia’s inflation rate rose 3.8% for the year. While the rise is steep, it is hard to say whether it is transitory or not.

Nonetheless, investors of ASX shares might be wondering how to protect against the effects of inflation.

One Australian fund manager has shared their take on inflation and how to structure a portfolio against it.

Let’s dive in…

How to pick inflation busting ASX shares

A concern for investors is rising inflation. If inflation rises, interest rates move in tandem – meaning higher returns on cash deposits. Typically, when investors can get reasonable risk-free returns on cash, ASX shares tend to lose momentum.

On the other hand, inflation can increase the operating costs for companies. Unless companies can pass the increased cost onto consumers, or reduce costs in other areas, profits can shrink.

Portfolio Manager and Head of Research at Airlie Funds Emma Fisher recently discussed the prospects for ASX shares and how to combat inflation.

Ultimately when we look across the portfolio, I think the key thing to worry about is that the businesses you’re invested in have pricing power. Inflation is going up in the near term… the unanimous feedback from corporates is that they are seeing raw material and labour market inflation coming through. Their hope is that they are going to be able to pass that through to the end consumer in the form of higher prices.

While Fisher admitted that it is unknown whether inflation will continue to rise at its current pace, the fund manager explained the types of companies the fund holds have pricing power.

These ASX-listed shares include James Hardie Industries PLC (ASX: JHX), Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW), and Reece Ltd (ASX: REH).

Businesses like that, we think can navigate choppy cost-inflationary environments and come out the other side protecting margins and really benefitting.

When is Woolworths expected to report to ASX?

Being one of the largest ASX-listed companies, Woolworths’ FY21 annual report is highly anticipated. The grocery retail giant is expected to release its annual results on 26 August 2021.

Shareholders are also watching attentively for any developments in regulatory concerns surrounding Woolworths. Announced last week, the New Zealand competition regulator voiced concerns of a duopoly.

The post Pricing power shares like Woolworths (ASX:WOW) help fight inflation: expert appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• Woolworths (ASX:WOW) share price struggles amid NZ duopoly concerns
• Why the Endeavour (ASX:EDV) share price just hit a new all-time high
• July has been a great month for the Woolworths (ASX:WOW) share price
• ASX 200 Weekly Wrap: Just like that… ASX back to record highs

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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Australia and New Zealand Banking GrpLtd (ASX: ANZ) shares have been in fine form in 2021.

Since the start of the year, the banking giant’s shares are up almost 21%.

Is now a good time to buy ANZ shares?

The good news for investors is that a number of leading brokers still see a lot of value in ANZ shares even after this strong gain.

One of those brokers is Morgans. It recently retained its add rating and $34.50 price target on the bank’s shares.

Based on the current ANZ share price of $27.90, this implies potential upside of almost 24% over the next 12 months.

And with Morgans forecasting fully franked dividends per share of $1.45 in FY 2021 and $1.65 in FY 2022, the potential return on offer stretches to approximately 29%.

What did the broker say?

Morgans thinks ANZ shares are great value and are its top pick among the big four banks.

The broker is expecting stable asset quality, better than expected net interest margins, and solid cost reductions in the near term.

In addition to this, it sees scope for the bank to increase its capital management plans. This follows the recent announcement of a $1.5 billion on-market share buyback.

Morgans commented: “[ANZ] intends to conduct an on-market buyback of up to $1.5bn of shares as part of its capital management plan. The proposed buyback start date is 3 August 2021, and the proposed end date is 18 July 2022.”

“We have adjusted our forecasts for ANZ accordingly and we now forecast a CET1 ratio of 12.5% at end-FY22, equating to surplus CET1 capital (above a CET1 ratio of 11.0%) of $6.6bn. We therefore see potential for further capital management,” it added.

Elsewhere, Macquarie currently has an outperform rating and $30.00 price target and Bell Potter has a buy rating and $30.00 price target on ANZ’s shares.

The post Could it be time to consider buying ANZ (ASX:ANZ) shares? appeared first on The Motley Fool Australia.

More reading

• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• The ANZ (ASX:ANZ) share price has only gained 10% in 5 years. But have the dividends paid off?
• 2 buy-rated ASX 200 dividend shares with attractive yields
• ANZ (ASX:ANZ) share price dips as bank flags cost of Sydney lockdowns
• What to expect from the ASX 200 during earnings season

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.

At first glance, the companies may seem very similar. Not only did they develop the first two COVID vaccines authorized by the Food and Drug Administration, they used messenger RNA (mRNA). It’s a set of genetic instructions that direct cells to make proteins that trigger an immune response training your body for any future encounter. The technology had never been approved for a vaccine in humans.

Yet, dig a little deeper and Moderna (NASDAQ: MRNA) and BioNTech (NASDAQ: BNTX) differ in important ways. They began differently, they are managed differently, and the path they are taking post-COVID is also diverging. So which one will make a better investment? A few clues offer a possible answer.

1. Different companies from the beginning

Moderna went public in 2018 in what was to that point the largest biotech initial public offering (IPO) in history. It valued the company at $7.5 billion. To get there, it had to acquire the technology for delivering mRNA into cells via a license from a Canadian biotech. Despite a legal battle, the U.S. Patent and Trademark Office upheld the intellectual property claim last year. Although Moderna says its delivery technology has advanced far beyond the one it licensed, preclinical documentation submitted by the National Institutes of Health (NIH), and the company itself, may contradict that claim. It appears to describe a mechanism directly covered by the license. The story could be an unwelcome surprise for shareholders in the future.

About a year later, BioNTech had its IPO. Far from the hype surrounding Moderna, BioNTech sold fewer shares than anticipated, and did so at a lower price than it expected. At the time, the company was valued at $3.4 billion. While Moderna CEO Stéphane Bancel has been labeled as brash, aggressive, and having an ego, BioNTech ‘s Uğur Şahin is described as holding meetings in jeans and carrying around a bike helmet and backpack. Pfizer CEO Albert Bourla has said of him, “he’s a scientist and a man of principles. I trust him 100 percent.” Those are just opinions, but sometimes it’s all we have as individual investors.

2. What gets prioritized gets done

Even before the SARS-CoV-2 virus was spreading around the globe, Moderna was focusing on vaccines. Bancel felt the one or two jabs for inoculation made it easier to deliver mRNA than a therapeutic. It was a business decision intended to mitigate the risk of any one failure. It’s the type of calculated decision you would expect from someone who went to Harvard Business School. It turned out to be the reason the company was able to deliver a vaccine candidate so quickly. It had been working with the NIH on a drug to prevent a different coronavirus — Middle East respiratory syndrome (MERS). It’s just one of the viruses the company had been working on for years.

BioNTech was much more focused. Its mission was to individualize cancer medicine. Its foray into the COVID-19 vaccine sweepstakes was an opportunistic gambit. On March 16, 2020 it announced it would initiate clinical testing on its vaccine candidate and the next day it introduced Pfizer as its partner. Aside from Comirnaty — the name of the vaccine the partners ultimately developed — its only non-cancer program with real progress is another venture with Pfizer. That drug is a vaccine for influenza. For most of their adult lives, Şahin and his wife — the company’s chief medical officer — have been dedicated to research that to help defeat cancer.

3. Wall Street shows one more love

Despite the similarity in approach, Wall Street continues to value Moderna at nearly twice BioNTech. Although the latter has to share revenue with Pfizer, that doesn’t account for the disparity in the sales multiple.

MRNA PS Ratio data by YCharts

Whether it’s Moderna’s broad ambitions, relationship with the NIH, large pipeline, or aggressive management, Wall Street clearly sees a difference.

Metric	Moderna	BioNTech
Market capitalization	$142.5 billion	$79.5 billion
2021 estimated revenue	> $19.2 billion	> $14.7 billion
Estimated 2021 capacity	800 million to 1 billion doses	3 billion doses
Estimated 2022 capacity	Up to 3 billion doses	> 3 billion doses
Active clinical trials	14	11

Data Sources: Moderna, BioNTech.

When Pfizer recently reported earnings, it upped its guidance for 2021 Comirnaty revenue from $26 billion to $33.5 billion. That should bode well for shareholders in BioNTech when it reports earnings in August. It jives with some analysts’ projections for vaccine sales of $29 billion this year — almost twice what the company has committed to.

The tiebreaker

Both companies have done something truly remarkable by launching a vaccine within a year. Each is an innovator. And both Moderna and BioNTech are in excellent financial shape to fund the rest of their pipeline of mRNA drugs.

Choosing between them is like ordering dessert — there really isn’t a wrong selection. That said, the tiebreaker for me is the owner mindset. I would rather invest in the understated focus of BioNTech and its leader than the more promotional head of Moderna. BioNTech was founded by Şahin and his wife. And despite seeing his net worth climb astronomically over the past year, he has yet to sell a share.

Although Bancel might as well be a founder — he was hired shortly after the company was created. He has taken advantage of the rising stock price in a way a founder may not have. In a report last year, it was revealed that the CEO had sold stock outside of normal processes when the company announced positive news. It netted him at least $40 million. No wrongdoing was alleged. He has every right to sell stock and diversify his net worth. It just highlights the difference between the two leaders. On some level, choosing between companies is answering the question “whom do you trust with your money?” For me, the answer is easy.

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

The post Better biotech stock: Moderna vs. BioNTech appeared first on The Motley Fool Australia.

More reading

• TGA approves Pfizer vaccine for kids aged 12-15 years old
• Why Moderna topped the market on Thursday
• 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?

Jason Hawthorne owns shares of BioNTech SE. 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 Santos Ltd (ASX: STO) share price is up in early Monday morning trading. This comes after the energy producer announced a revised merger proposal with Oil Search Ltd (ASX: OSH).

On Friday’s market close, Santos shares finished the day down 1.07% to $6.45. At the time of writing, the price is 2.09% higher to $6.58.

Santos ups the ante

In today’s statement, Santos advised it has increased its offer to acquire all of the shares in Oil Search.

The non-binding and indicative merger proposal would see Oil Search shareholders receive 0.6275 new Santos shares for each Oil Search share held.

This follows an earlier proposal from Santos to acquire Oil Search shares last month. The offer of 0.589 per Santos share for every Oil Search share owned was rejected by the Oil Search board.

Under the revised proposal, Oil Search shareholders will own roughly 38.5% of the merged group, as opposed to 36.9% in the original offer. Santos shareholders will control the remaining 61.5%.

In monetary terms, the transaction translates to a price of $4.29 for each Oil Search share based on the closing price of Santos and Oil Search shares on July 19 (the day prior to disclosure of the first proposal). This represents a premium of about 16.8% for Oil Search shareholders.

Santos managing director and CEO Kevin Gallagher commented on the takeover offer:

It represents a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets.

The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns.

The Revised Merger Proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders.

Next steps

Santos has granted due diligence access to Oil Search, subject to both parties entering a confidentiality agreement. In return, Oil Search has also permitted Santos to conduct its own due diligence on an exclusive basis. It is expected that this process will take approximately 4 weeks.

Once the due diligence is satisfactorily completed, the Oil Search board intends to unanimously recommend that shareholders vote in favour of the revised proposal. It believes the takeover will present Oil Search shareholders with the opportunity to become a part of the top 20 largest global oil and gas companies.

About the Santos share price

Since the start of the year, Santos shares have moved in circles. The company’s share price is up around 5% on the period. When looking at the past 12 months though, Santos shares have posted a gain of around 25%.

On valuation grounds, Santos has a market capitalisation of about $13.8 billion with more than 2 billion shares on its registry.

The post Santos (ASX:STO) share price rises on revised merger proposal appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• Oil Search (ASX:OSH) share price struggles despite rising oil price
• 5 things to watch on the ASX 200 on Wednesday
• Santos (ASX:STO) share price backtracks despite upbeat drilling results

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

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The ASX is off with a bang this week after Afterpay Ltd (ASX: APT) announced it was to be acquired by Square Inc (NYSE: SQ).

As part of the takeover offer, Afterpay investors will see their shares in the buy now, pay later (BNPL) giant transformed into Square stock at a ratio of 0.375 Square Class A common stock for each Afterpay share.

Square is a US-based payment processing provider. It has performed exceptionally well on the New York Stock Exchange in recent years.

The news broke this morning and the Afterpay share price is rocketing, up 23.18% on its previous close. Shares in the BNPL giant are trading at $119 apiece at the time of writing.

Afterpay’s board has already recommended the offer to its shareholders.

As the owners of Afterpay shares may soon become Square shareholders, let’s take a deep dive into Square and its time on the NYSE.

What is Square?

Afterpay investors may soon see their shares transformed into Square stock. But what is Square and what does it do?

Square’s business model comes down to its 2 products.

The first is Square’s point-of-sale (POS) offering. It allows businesses to process card payments quickly and efficiently with set fees.

In addition to its POS system, Square offers a range of Square Readers. Square Readers are POS hardware that can be used through a smartphone or tablet app, allowing businesses to use their POS systems anywhere they have a mobile signal.

Square’s second product is Cash App. Cash App lets users transfer money to others, purchase goods, invest in stocks, and even buy Bitcoin.

Cash App also has a Boost feature that gives customers discounts, cashback, or even Bitcoin rewards when making purchases. Our colleagues over at The Motley Fool US recently reported on Square’s Boost feature’s profit model.

Square’s performance on the NYSE

Market watchers likely know about the outstanding performance of Afterpay shares and might worry this acquisition could stall their investment’s growth.

Fortunately, Square is also a major stock market mover.

Square’s initial public offering (IPO) happened way back in late 2015.

Under its prospectus’ offer, Square shares went for US$9.00 ($12.26 at today’s exchange rate). Now, shares in Square are swapping hands for US$247.26 ($336.73).

That leaves Square shares a whopping 2,647.33% higher than they were just under 6 years ago.

On the other hand, the Afterpay share price has gained 3,176.61% since it merged with formerly ASX-listed Touchcorp back in July 2017 to create the Afterpay we know and love.

The Motley Fool US recently reported that analysts expect Square’s sales growth to increase by 110.6% over the US 2021 financial year (which ends 30 September). However, it is expected to slow in the coming US financial year to a growth rate of 14.1%.

Additionally, Square has been performing better than Afterpay on their respective markets in recent times.

The Square share price has gained 11% year to date, and 83% over the last 12 months.

Afterpay share price snapshot

Afterpay shares haven’t been doing nearly as well lately.

They have gained 0.8% since the start of 2021. However, they are currently trading 69% higher than they were this time last year.

The post All about Square, the US company acquiring Afterpay (ASX: APT) shares appeared first on The Motley Fool Australia.

More reading

• What will happen to Afterpay (ASX:APT) shares following the Square acquisition?
• AMP (ASX:AMP) share price on watch as new CEO commences “rebuild”
• Afterpay (ASX:APT) share price up 29% after takeover & FY 2021 update
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• Afterpay (ASX:APT) to be acquired by Square for $39bn

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 AFTERPAY T FPO, Bitcoin, and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T 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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Afterpay Ltd (ASX: APT) shares are soaring on Monday after the buy now pay later (BNPL) provider agreed to be acquired by US payments giant Square Inc.

The Square-Afterpay deal

As mentioned here, the two parties have agreed an all-scrip deal. This deal will see Afterpay shareholders receive a fixed exchange ratio of 0.375 shares of Square Class A common stock for each Afterpay share they own on the record date.

Based on the latest Square share price of US$247.26, this implies a transaction price of approximately $126.21 per Afterpay share. This values the deal at approximately US$29 billion or A$39 billion.

What will happen to your Afterpay shares following the acquisition?

Given that Square’s offer is all-scrip and not cash, shareholders may be wondering what will happen to their Afterpay shares if the acquisition completes successfully.

The good news is that Square is aiming to make the process as painless as possible. So much so, it plans to give shareholders two options post-completion.

The first option is for shareholders to receive the consideration in NYSE-listed Square stock. For investors that already invest directly in the United States, then this would be a possible option for them.

However, not everyone invests directly in the United States. So, for them, Square intends to establish a secondary listing on the Australian share market. This will allow Afterpay shareholders to trade Square shares via CHESS Depositary Interests (CDIs) on the ASX. This is the same way that Australian investors buy and sell ResMed CDI (ASX: RMD) shares at present.

What about tax?

The good news is that if all goes to plan, there will be no capital gains tax for shareholders to pay when Afterpay shares are converted into Square shares.

Afterpay advised that it will apply for a ruling from the Australian Taxation Office in relation to the availability of scrip-for-scrip capital gains tax rollover relief.

It notes that the stock transaction is intended to be tax-free for Afterpay shareholders in Australia. As such, the receipt of confirmation of such a ruling is a condition precedent to the transaction.

The post What will happen to Afterpay (ASX:APT) shares following the Square acquisition? appeared first on The Motley Fool Australia.

More reading

• AMP (ASX:AMP) share price on watch as new CEO commences “rebuild”
• Afterpay (ASX:APT) share price up 29% after takeover & FY 2021 update
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high
• Afterpay (ASX:APT) to be acquired by Square for $39bn
• These were the worst performing ASX 200 shares in July

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. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended ResMed Inc. 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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