The S&P/ASX 200 Index (ASX:XJO) was almost flat on Wednesday. Westpac Banking Corp (ASX:WBC) announced the sale of its insurance.
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The S&P/ASX 200 Index (ASX: XJO) was almost flat today, rising slightly to 6,590 points.
Here are some of the highlights from the ASX:
Westpac Banking Corp (ASX: WBC)
Westpac revealed today that it is going to sell Westpac General Insurance Limited and Westpac General Insurance Services Limited to Allianz and enter into an exclusive 20-year agreement for the distribution of general insurance products to Westpac’s customers.
The sale price of $725 million represents a multiple of 1.3x FY20 gross written premium and is estimated to result in a small post-tax gain on sale in FY21. The sale of the general insurance business adds around 12 basis points to Westpac’s common equity tier 1 (CET1) capital ratio.
The transaction also includes contingent payments subject to integration milestones and business performance over the next five years, as well as ongoing payments in accordance with the distribution agreement.
The new distribution arrangement expands the ASX 200 bank’s existing partnership with Allianz, which has seen Westpac distribute a range of Allianz’s products to customers including auto, travel, boat and business insurance since 2015.
Westpac group CEO, Peter King, said: “This transaction is another step in simplifying our business while continuing to help customers with their general insurance needs.
“General insurance products are important for many Australians and we are pleased to be entering a long-term partnership with a global insurance expert to continue to help customers protect the things they value.”
Westpac will retain responsibility for certain pre-completion matters and provide protection to Allianz via a combination of provisions, warranties and indemnities.
Completion of the transaction is subject to various regulatory approvals and is expected to occur in the second half of 2021.
The Westpac share price finished up by 0.2% in reaction to this news.
Mesoblast Limited (ASX: MSB)
The Mesoblast share price went up around 7% today after making an announcement saying that the US Food and Drug Administration (FDA) has granted ‘fast track’ designation for remestemcel-L in the treatment of acute respiratory distress syndrome (ARDS) due to COVID-19 infection.
The ASX 200 share said that fast track designation by the FDA is intended to facilitate development and expediate the review of therapies to treat serious and life-threatening conditions with no or limited treatment options so that an approved product can reach the market quickly. Under the fast track designation, a biological license application (BLA) for remestemcel-L is eligible for both rolling submission and priority review.
Downer EDI Limited (ASX: DOW)
Only a couple of weeks ago Downer announced it was selling its blasting services business for $62 million. Today, the company announced that it was going to divest 70% of its laundries business for $155 million.
The proposed buyer of the majority shareholding is Australian private equity outfit, Adamantem Capital.
Grant Fenn, the CEO of Downer, said that this deal represented a significant step in Downer’s urban services strategy:
“The sale of 70% of laundries achieves the objective of removing one of the most capital-intensive businesses from the Downer balance sheet. Laundries continues to perform well as it recovers from the COVID-19 lockdowns in New Zealand and Victoria and by retaining a 30% interest we will participate in this ongoing recovery.
“We look forward to working closely with Adamantem and its management team providing market-leading services for our customers and employment opportunities for our people.”
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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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.