Investors can expect Telstra Corporation Ltd (ASX: TLS) shares to open higher on Monday morning after the group announced to the market late on Friday night (at 7:12 pm) that it had agreed to sell a 47.7% stake in Chinese online business Autohome for $2.1 billion.
Here are the details that we know so far:
- Telstra has entered an agreement with Ping An Insurance Group
- The sale price has been struck at US$29.55 a share which represents a 12.7% premium to the volume weighted average price of Autohome over the past 60 days
- Telstra will retain a 6.4% interest in Autohome
- Telstra is expected to book an accounting gain of $1.8 billion on the sale of Autohome in its second half results. A superb return considering the original investment was only made in 2008.
- CEO Andy Penn noted that Telstra "will take a balanced approach in considering the use of these funds, which includes potential capital management options."
Now What:
Telstra's share price closed Friday's trading session at $5.24 which is only around 5% above its 52-week low of $4.98.
Telstra remains a key income stock for many investors boasting a fully franked dividend yield of close to 6%.
The stock also looks attractively priced on a price-to-earnings multiple of around 15 times.
With a domestic market leadership position, asset experience which is resulting in Telstra playing a key role in the nbn rollout, and significant cash inflows from Autohome, the prospects for Telstra's business performance over the coming years appears to be reasonable.
