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The S&P/ASX 200 Index (ASX: XJO) rose by around 0.7% today to 6,917 points.

We’re now into the thick of reporting season, with results flowing from both the blue chips and some of the smaller ASX shares.

Here are some of the highlights from today:

BHP Group Ltd’s (ASX: BHP) big dividend

The ASX 200’s biggest resource company announced its FY21 half-year result to investors today.

One of the main headline-grabbers was that the BHP board decided to increase its interim dividend by 55% to US$1.01 per share.

BHP reported that its profit from operations rose by 17% to US$9.75 billion. Statutory attributable profit fell by 20% to US$3.9 billion which included an ‘exceptional’ loss of US$2.2 billion predominately relating to the impairments of New South Wales Energy Coal (NSWEC) and the associated deferred tax assets, and Cerrejon.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21% US$14.7 billion and underlying attributable profit rose 16% to US$6 billion.

Net debt reduced by 7% to US$11.84 billion after net operating cashflow rose 26% to US$9.37 billion. Free cashflow was US$5.2 billion, reflecting higher iron ore prices and copper prices with strong operational performance, according to BHP.

BHP’s management said that the divestment process for its interests in BHP Mitsui Coal, NSWEC and Cerrejon is progressing, with extensive due diligence being undertaken to assess both demerger and trade sale opportunities by the ASX 200 business.

The CEO of BHP, Mike Henry, said: “Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change. These factors, combined with population growth and rising living standards, are expected to drive continuing growth in demand for energy, metals and fertilisers.”

Redbubble Ltd (ASX: RBL)

The Redbubble share price ended the day lower by around 18% after revealing its FY21 half-year result.

The artist product e-commerce business reported that its marketplace revenue was up 96% to $353 million, whilst gross profit grew by 118% to $144 million.

Redbubble generated $80 million of operating cashflow and $42 million of earnings before interest and tax (EBIT).

The business finished with $130 million of cash on the balance sheet.

Redbubble disclosed that for the month of January 2021, marketplace revenue (paid) grew by 66%, or 82% on a constant currency basis.

The Redbubble CEO, Michael Ilczynski, said: “The strategic priority for the group now is to ensure we extend that market leadership we have established. We intend to invest in both the artist and customer experiences, to improve loyalty and retention and to ensure long-term growth.”

National Australia Bank Ltd (ASX: NAB)

The NAB share price rose by more than 1% today after announcing its FY21 first quarter result.

The big ASX 200 bank said that it generated $1.7 billion of statutory net profit and $1.65 billion of cash earnings. NAB said that cash earnings were 47% higher than the FY20 second half quarterly average. It said that the net interest margin (NIM) declined but was stable excluding the impact of markets and treasury, and higher liquids.

Compared to the prior corresponding period, cash earnings rose by 1%, though cash profit before tax and credit impairment charges fell 6%.

NAB said that its credit impairment charges fell by 98%, compared to the FY20 second half quarterly average, to $15 million.

The big four ASX bank said that its group common equity tier 1 (CET1) ratio was 11.7%, which was an increase from 11.5% on 30 September 2020.

NAB’s CEO Ross McEwan said: “Implementation of our strategy is proceeding well as we invest for the long-term and focus on initiatives that make a real difference to our customers and colleagues. While there is still much to do, it is pleasing to see momentum building in our core businesses as we simplify and streamline our processes and policies and enhance our digital offerings.”

More reading

• NRW (ASX:NWH) share price jumps on acquisition update
• The NAB (ASX:NAB) share price is up after 47% profit growth in Q1
• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today
• 2 ASX dividend shares rated as buys by brokers
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

Motley Fool contributor Tristan Harrison 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 Nearmap Ltd (ASX: NEA) share price appears to have put its short seller attack behind it.

This afternoon the aerial imagery technology and location data company’s shares closed the day around 1% higher at $2.11.

This means the Nearmap share price is now up 23% since coming out of its trading halt.

It is also trading 11.1% higher than where its shares were trading prior to the release of the short seller report.

Can the Nearmap share price go even higher?

According to a note out of Goldman Sachs, it believes the Nearmap share price can still go higher from here.

In response to its half year results, this morning the broker reaffirmed its buy rating and increased its price target on the company’s shares by 7% to $2.95.

Based on the current Nearmap share price, the implies potential upside of approximately 14% over the next 12 months.

What did Goldman Sachs say?

Goldman was pleased with Nearmap’s performance during the first half and notes that a number of key metrics came in ahead of its forecasts.

It commented: “NEA delivered a solid start to 1H21 with Annualised Contract Value growth, revenues and earnings all ahead of our forecasts.”

“We expect NEA’s share price to outperform on continued positive trends on new business growth. In fact, some indicators are supportive of this: growth in subscriber numbers was +4% in ANZ and +24% in North America, while average revenues per subscriber were +5% in ANZ and +13% in North America.”

“These metrics should be broadly indicative of a strong value proposition and as a result we believe that new business wins can accelerate from here. Our investment case remains unchanged per our recent upgrade to Buy,” it added.

Also rating its shares as a buy today were Citi and Morgan Stanley. They both have slightly higher price targets of $3.10 on Nearmap’s shares.

More reading

• ASX 200 rises, JB Hi-Fi profit soars, Altium drops
• ASX 200 up 0.8%: Nearmap jumps, Bendigo and Adelaide Bank impresses
• Nearmap (ASX:NEA) share price soars 14% after response to short sellers
• Why Atomos, Bendigo and Adelaide Bank, Coca-Cola Amatil, & Nearmap are racing higher
• Why the Nearmap (ASX:NEA) share price is surging 12% higher

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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap 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 Aspermont Ltd (ASX: ASP) share price is one of the best standout performers today, rising 55% to 4.5 cents at the time of writing.

The latest rise in the company’s shares comes after Aspermont reported its quarterly update for 2021 to investors last week.

It’s worth noting that recent surge in the company’s shares marks an all-time record.

Quick take on Aspermont

Headquartered in Australia, Aspermont is a leading media services provider to the global mining and resources industry. The company delivers subscription-based content through digital print, conferencing, and event channels.

Aspermont has offices in the United Kingdom, Australia, Brazil, North America, and the Philippines.

Key highlights of the Aspermont Q1 result

The Aspermont share price is on the move as investors are fighting to get a hold of its shares.

At the end of the December period, Aspermont delivered growth in all revenue streams excluding live events which were suspended due to COVID-19. This equated to total revenue of $15.2 million for the company, with recurring revenue standing at 75%.

The number of subscriptions increased to 7,885 which resulted in a 13% lift year-on-year. Monthly active users came to more than 250,000 users, representing a 20% compound annual growth rate.

Aspermont recorded annual contract value (ACV) at $8.9 million, up 6.4% compared quarter on quarter.

Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) rose 220% to $0.4 million. This was in contrast to the $70,000 achieved over the prior corresponding period (pcp).

Aspermont reported a cash balance of $4.6 million with no debt at the end of December.

Management commentary

Aspermont Managing Director, Alex Kent, hailed the outstanding results, saying:

Aspermont had a solid first quarter despite the impact of COVID-19 on the events business.

Our commercial models have proven to be robust, which enables us to increase revenue by launching new products with improved gross margins for the company despite the economic conditions.

A catalyst for the strong rise in the Aspermont share price?

In the company’s Q1 highlights, management took the time to reflect on the company’s share price. It said:

As a board, we consider Aspermont to be significantly undervalued compared to other global Mediatech peer companies, but we are pleased to see the recent rise in share liquidity as our new Frankfurt stock Exchange listing has attracted new investors in Germany. Our growth prospects are improving quarter by quarter as we enter new markets, with an increased focus on Asia.

More reading

• The Fatfish (ASX:FFG) share price has exploded 155% higher today
• Leading brokers name 3 ASX shares to sell today
• Payright (ASX:PYR) shares get speeding ticket after 32% surge
• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• Why is the Reckon (ASX:RKN) share price on the rise today?

Motley Fool contributor Aaron Teboneras 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 Aspermont (ASX:ASP) share price is rocketing 62% higher appeared first on The Motley Fool Australia.

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The Fatfish Group Ltd (ASX: FFG) share price is going gangbusters today. At the time of writing, shares in the global tech investment company have rocketed a whopping 155.43% higher to 24 cents a share.

With no fresh news from the company, let’s look at what else may have lit the Fatfish share price on fire today.

What’s been happening lately?

Yesterday, we rang in that the Fatfish share price jumped 74%. The price spike came after Fatfish investee iCandy Interactive Ltd (ASX: ICI) announced the conditional sale of iCandy Digital to Rightbridge Ventures for $4.8 million.

The transaction does not drive any material change to Fatfish’s interest in iCandy, so it’s not necessarily a share price mover.

The company maintains that its share price rally has been set off by the buy now, pay later (BNPL) frenzy that the market’s witnessed lately via companies like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).

Both the Afterpay and Zip Co share prices have more than doubled in the past 6-month period.

Investors will likely be keeping an eye on the Fatfish share price on Thursday, 18 February 2021, when the company officially launches its new Smartfunding BNPL service.

Fatfish share price flies following Bitcoin boom

Since last Wednesday, when we talked about how Fatfish is invested in Bitcoin, shares in the company have leapt around 560%.

Fatfish is exposed to Bitcoin via interests through its Sweden-based subsidiary company, Abelco Investment Group AB.

These investments include crypto mining company Minerium and the digital assets platform provider Kyptos-X.

Fatfish CEO Kin Wai Lau is scheduled for an interview later this week on the InvestorStream program. He will discuss the cryptocurrency price trend and the company’s impending transaction with Abelco Investment Group via the InvestorStream program.

Over the past 12 months, the Fatfish share price has smashed more than 920% higher.

More reading

• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• Why the Fatfish (ASX:FFG) share price is up 74% today
• These 3 ASX shares invested in Bitcoin before Tesla (NASDAQ:TSL)

Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below. Here’s why these brokers are bearish on these ASX shares:

Beach Energy Ltd (ASX: BPT)

According to a note out of Goldman Sachs, its analysts have downgraded this energy company’s shares to a sell rating and cut the price target on them to $1.55. Goldman made the move after Beach Energy’s half year update fell short of its expectations. In addition, the broker has concerns about east coast gas repricing risks and higher expected capital intensity for the Western Flank. This has led to Goldman cutting its earnings estimates. The Beach share price is trading at $1.64 today.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

A note out of Morgan Stanley reveals that its analysts have retained their underweight rating but lifted their price target on this regional bank’s shares to $9.90. According to the note, Bendigo and Adelaide Bank delivered a decent half year result this week. It was pleased with its growth and operating leverage, which appears to show that it is over the worst of its troubles now. However, it still feels its shares are overvalued at the current level and sees more value in other banks. The Bendigo and Adelaide Bank share price is trading at $11.26 today.

Treasury Wine Estates Ltd (ASX: TWE)

Analysts at Citi have retained their sell rating and $8.20 price target on this wine company’s shares ahead of its half year results. According to the note, while the broker expects Treasury Wine to outperform the market’s expectations in the first half, it doesn’t believe this will be the case in the second half. The broker suspects it could cost the company more than the market expects to reallocate the wine that would’ve been sold in the China market. The Treasury Wine share price is fetching $9.78 today.

More reading

• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• ASX 200 up 0.8%: Nearmap jumps, Bendigo and Adelaide Bank impresses
• The Beach Energy (ASX:BPT) share price is on the rollercoaster today. Here’s why
• Why Atomos, Bendigo and Adelaide Bank, Coca-Cola Amatil, & Nearmap are racing higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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Payright Ltd (ASX: PYR) is the latest ASX payments share to receive a speeding ticket from the ASX after its share price went ballistic this morning. Payright shares closed at 90 cents yesterday after rising 10.4%. But the company opened at 95 cents a share this morning and rose all the way up to $1.22, a 32% surge. The shares have settled at the time fo writing, but are still going for $1.06, a 17% rise.

These moves have prompted a ‘please explain’ speeding ticket from the ASX soon after lunchtime today. This is standard procedure form the stock exchange if a company experiences a seemingly unprovoked share price rise of that kind of magnitude.

In response, Payright issued a release in which it confirmed in rather direct language that it has no idea what would have caused this surge in share price and trading volume. Here’s the gist of what Payright told the ASX: “No. The Company is not aware of any reason for the recent trading activity in the Company’s securities”.

The last market release that Payright gave the markets was back on 3 February. That release detailed a loan facility that the company has entered into, so we can probably assume that has nothing to do with today’s moves. So what’s going on?

FOMO for Payright shares?

Well, a number of companies in the same payments/fintech space as Payright have seen very similar moves to what thie company has seen today. Yesterday, we discussed how companies like Douugh Ltd (ASX: DOU), IOUpay Ltd (ASX: IOU), and Novatti Group Ltd (ASX: NOV) had all seen double-digit share price rises for no obvious reason. In fact, all 3 of those companies subsequently received speeding tickets from the ASX as a result. The share at the forefront of these rather strange moves appears to be buy now, pay later (BNPL) giant Zip Co Ltd (ASX: Z1P). Zip shares had a corker of a day yesterday, rising more than 17% (despite no major news out form the company). The shares added another 13% this morning before Zip itself got a speeding ticket of its own from the ASX.

These moves almost certainly have nothing to do with these companies’ fundamentals. So perhaps investors are seeing some very committed momentum trading in this space and trying to buy in ahead of the curve. These kinds of things can set off a chain reaction of sorts as momentum investors try and jump on the bandwagon and make a quick profit before things cool down again.

More reading

• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• What’s going on with the Zip (ASX:Z1P) share price?
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• Why BHP, Codan, Seven West Media, & Zip shares are charging higher
• Why the IOUpay (ASX:IOU) share price is halted again today

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 Cirralto Ltd (ASX: CRO) share price is setting 52-week highs today, even though there are no fresh announcements from the company. There appears to be a huge inflow of interest, demonstrated by the volume traded today. Currently, the number of shares traded is sitting around 198 million, which is nearly sixfold the monthly average.

With no news out from the company, let’s take a look at recent announcements and the space that Cirralto operates in.

Buy now, pay later boom!

You guessed it! Cirralto is another high flying buy now, pay later (BNPL) provider. Over the last couple of days, a number of ASX-listed BNPL shares have received an influx in interest. Whether the market has a new-found spur in optimism for the sector or just pure speculation, we have now seen the following shares race to new heights:

• IOUpay Ltd (ASX: IOU) – a recent BNPL entrant to Malaysia, up 259% in the last month
• Fatfish Group Ltd (ASX: FFG) – a tech investment firm that holds a stake in a recent Singaporean-based BNPL entrant, up 156% in the last month.
• Zip Co Ltd (ASX: Z1P) – Afterpay competitor with global operations, up 126% in the last month.

Cirralto offers digital payment services for business to business (B2B) transactions. One of these offerings is an instalment payment service that is essentially a BNPL between businesses, rather than for consumers. The product at the forefront of Cirralto’s campaign is its ‘Spenda’ software solution – integrated with Xero, Myob, Quickbooks, WooCommerce, and more.

Recent Cirralto business activities

The company provided its quarterly activities report for the December ending quarter on 28 January. Cirralto reported quarterly revenue of $329,943 – an increase of 84% from the prior period.

Additionally, Cirralto highlighted agreements made in December with global payment providers Fiserv, Visa, and Mastercard.

As a result of the low cash flows from operating activities, Cirralto also tapped the market for a capital raise of $2.8 million during the period, bringing its cash balance to $3.95 million as of 31 December 2020.

Cirralto share price snapshot

The Cirralto share price at the time of writing is up 29.8%, trading at 8.7 cents a share. In the last 12 months, the share price has appreciated by 1800%. For comparison, the biggest ASX-listed BNPL player, Afterpay Ltd (ASX: APT) increased 284% during the same time frame.

Cirralto’s market capitalisation is now $115 million, making it a small-cap stock.

More reading

• What’s going on with the Zip (ASX:Z1P) share price?
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• Why BHP, Codan, Seven West Media, & Zip shares are charging higher
• Why the IOUpay (ASX:IOU) share price is halted again today
• The Novatti (ASX:NOV) share price rocketed 38% today

Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of 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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The Reckon Limited (ASX: RKN) share price is marching higher today, up 4.19% in afternoon trading.

The accounting software provider’s shares are rising following the release of the company’s results for the first half of the 2021 financial year (H1 FY21).

What did Reckon report?

In this morning’s ASX release, Reckon reported net profit after taxes (NPAT) of $9.7 million. That’s an increase of 19.8% from H1 FY20.

Earnings before income, tax, depreciation and amortisation (EBITDA) came in at $30.6 million, an increase of 6.6% from the previous corresponding period. Revenue of $75.6 million increased by 0.3%. The company reported its recurring revenue stream is strong, with 85% of revenue now subscription based.

Reckon reduced its debt over the half year to $31.8 million, down $5.8 million, or 15%.

The accounting software provider will pay a 2 US cent final dividend, providing a 6% dividend yield.

Commenting on the results, Reckon’s CEO Sam Allert said:

The strong execution of our plan during 2020, which includes a continued focus on investing in cloud-based product development to satisfy client demand, means Reckon is increasingly well placed for growth.

Despite the uncertainty created by the pandemic, Reckon performed well across key financial metrics and in particular continued its positive cloud-based user growth trajectory…

Expanding on the company’s growth outlook, Allert added:

We have a clear growth plan for 2021, which includes more mobile apps for our small business client base, and cloud modules for our APS and Elite Accountant client base, whilst leveraging the power of Reckon One to enhance the back office and payroll function for accounting firms and small businesses alike. This strategy compliments our US cloud Practice Management roadmap and provides strong synergies and cross sell opportunities across our global business.

Reckon share price snapshot

It’s been a good 12 months for Reckon shareholders, with shares up 29%. And that’s despite the plunge in the Reckon share price during the wider COVID-fuelled market selloff last year, which saw shares tumble more than 47% into late March.

Year-to-date the Reckon share price is up 13%. That compares to a gain of 3% on the All Ordinaries Index (ASX: XAO).

More reading

• Here’s why the Cann Group (ASX:CAN) share price is in a trading halt
• NRW (ASX:NWH) share price jumps on acquisition update
• Emyria (ASX:EMD) share price up 131% this month. Here’s why
• What’s going on with the Zip (ASX:Z1P) share price?
• Why the Sims (ASX:SGM) share price is leaping 8% today

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.

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Eagle-eyed followers of ASX cannabis shares might have noticed something strange about the Cann Group Ltd (ASX: CAN) share price this morning. It wasn’t going anywhere.

Cann shares closed at 78 cents yesterday after rising more than 36% at one point last week. That comes after the Cann Group share price rose more than 190% between 20 November and 10 February. But 78 cents is where it will stay, at least for now. That’s right in the middle of the company’s 52-week range (29 cents-$1.26).

So what’s going on here?

Well, this morning Cann released an ASX announcement that told investors the company was seeking a trading halt to its shares. The ASX has obliged, meaning the shares won’t be available for trading again until at least Thursday 18 February.

Trading halt for Cann Group

Why the trading halt? Well, it’s a little embarrassing for Cann. The company has told investors that:

The trading halt is requested pending the application to the Federal Court by the company seeking orders in relation to the company’s inadvertent failure to lodge a cleansing notice under section 708A(5)(e) of the Corporations Act within the prescribed 5 day period after the issue of 306,846 shares in the company on 28 January 2021.

So someone stuffed up, evidently. The shares in question relate to the ASX notice the company posted on 28 January. This notice told the market that 306,846 options (with the code CANAF) expiring 31 March 2022 (with an exercise price of $0.46) would be converted into shares. Today’s notice implies that Cann Group did not follow the correct procedure for lodging the proper paperwork with the ASX. It’s unclear what will happen now, but investors might have to wait until Thursday for any more information.

Today’s trading halt comes just one day after Cann announced the acquisition of the European company Harvest One Cannabis‘ Satipharm business for C$4 million in Cann shares. Satipharm has an exclusive license to develop and market the proprietary Gelpell delivery system for cannabinoids. Satipharm claims that this delivery system offers improved stability and bioavailability of cannabinoids compared to other formulations.

That announcement sent the Cann Group share price up almost 4% yesterday at market open before the shares cooled off over the day. Since that sale is to be funded by new Cann shares as well, investors might be hoping the company doesn’t make the same mistake twice!

More reading

• How did ASX cannabis shares perform in 1H FY21?
• Why the Cann (ASX:CAN) share price is pushing higher
• Why Cann, Creso, LiveTiles, & New Corp shares are tumbling lower today
• Why the Cann (ASX:CAN) share price is crashing 10% lower today
• Why the Cann (ASX:CAN) share price is sinking lower today

Motley Fool contributor Sebastian Bowen 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 NRW Holdings Limited (ASX: NWH) share price is outperforming today as the engineering contractor successfully acquired Primero Group Ltd (ASX: PGX).

The NRW share price surged 3.4% to $2.78 in after lunch trade when the S&P/ASX 200 Index (Index:^AXJO) gained a more modest 0.5%.

Even NRW’s peers are having trouble keeping up. The Downer EDI Limited (ASX: DOW) share price gained 1.5% to $5.80 while the Monadelphous Group Limited (ASX: MND) fell 0.7% to $12 at the time of writing.

Compulsory acquisition lifts NRW share price

NRW announced that it now controls 98.43% of shares in the takeover target. This is well above the 90% threshold that will allow a bidder to compulsorily acquire a target.

Primero shareholders who haven’t pledged their shares to NRW have until 19 February to do so if they want to be paid quicker.

Those who don’t will still get the same offer, but will have to wait longer for their payout if they went through the compulsory acquisition process.

Time value of money argument

“The compulsory acquisition process, which is subject to the Corporations Act, is likely to take approximately 4 to 6 weeks, but may take longer in some circumstances,” said NRW.

“Primero shareholders who have not yet accepted the Offer may still, and are urged to, do so before the Offer closes at 7.00pm (Sydney time) on 19 February 2021 in order to receive their consideration within 10 business days of their acceptance being processed.

“Otherwise, their Primero shares will be compulsorily acquired and they will have to wait at least four weeks to receive their consideration.”

NRW is offering 27.5 cents cash plus 0.106 of NRW shares in exchange for each PGX share.

M&A rational for NRW

Investors could be getting excited about the growth prospects of the enlarged NRW following the circa $100 million takeover. The Primero acquisition will allow NRW to offer a wider range of services to clients as the target’s business is seen to be complementary to NRW.

Primero focuses on the minerals and energy sectors and has a FY21 contract book worth around $285 million. It’s also the preferred EPC contractor on multiple projects totalling around $900 million.

Is bigger really better?

NRW’s takeover comes at a time when mergers and acquisitions (M&As) are in vogue. Northern Star Resources Ltd (ASX: NST) has also completed its merger with Saracen Mineral Holdings (ASX: SAR)

Ultra-low interest rates and the hunt for earnings growth by companies needing to justify the run-up in share price valuation are likely to drive further deals on the ASX.

Let’s hope these mergers work for the sake of shareholders given that most M&As flop.

More reading

• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets
• Why the Ansell (ASX:ANN) share price is lifting this morning
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises, JB Hi-Fi profit soars, Altium drops
• These are the 10 most shorted shares on the ASX

Motley Fool contributor Brendon Lau 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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