Insights

What will new acquisition mean for Redcape (ASX:RDC) share price?

Making its first acquisition since returning to full operations, Redcape says the move signifies a return to active portfolio optimisation.
The post What will new acquisition mean for Redcape (ASX:RDC) share price? appeared first on Motley Fool Australia. –

hospitality asx share price represented by people putting beer glasses together in cheers

Redcape Hotel Group Pty Ltd (ASX: RDC) has stepped back into the buyers’ circle. Despite the upbeat news, at the time of writing, the Redcape share price is trading flat at $1.00 after the company announced it has acquired the Gladstone Hotel in Dulwich Hill, Western Sydney, for $38 million. The deal does, however, represent Redcape’s first acquisition since it returned to full operations and resumed dividend distributions to shareholders.

How has the Redcape share price been performing?

Redcape owns and operates a portfolio of 33 pubs and hotels across New South Wales and Queensland. The company’s shares first began trading on the ASX on 30 November 2018.

From there, the Redcape share price gradually moved higher with little volatility, for a gain of 9% by 4 March 2020.

I’m sure you know what happened next.

Like most every share trading on the ASX, especially those tied to hospitality and leisure, the Redcape share price was savaged during the wider COVID-19 market rout.

From 4 March through to 20 March, the share price dropped a gut-wrenching 61%.

Since then, Redcape shares have rebounded strongly, up more than 127% from the March lows. Year to date, the Redcape share price remains down nearly 11%.

By comparison, the All Ordinaries Index (ASX: XAO) is down nearly 1% since 2 January.

A word from Redcape’s CEO

Commenting on Redcape Hotel Group’s $38 million acquisition of the Gladstone Hotel, CEO Dan Brady said:

We are delighted to announce the addition of such a quality asset to our portfolio. Being our first acquisition since returning to full operation and with distribution reinstated, the purchase signifies a return to our strategy of active portfolio optimisation and growing sustainable distributions for our securityholders over the long term. Our vision is to create and nurture sociable and sustainable communities.

Brady added his company plans a major refurbishment program for the Gladstone Hotel, including a focus on developing hospitality professionals. “We look forward to immersing ourselves in the Dulwich Hill community and learning about the Gladstone Hotel’s customers and staff as we look to drive even better outcomes for our staff, our customers and our securityholders.”

With the same family holding ownership of the hotel for the past 40 years, Redcape expects the asset to benefit from its operational platform and refurbishment capabilities.

The company stated it will fund the acquisition from its existing resources. It expects settlement before March 2021, subject to customary conditions.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

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. 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.

The post What will new acquisition mean for Redcape (ASX:RDC) share price? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!