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.
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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. Investors may be hoping these ASX tech shares will become takeover targets as well.
Are any other tech shares rising strongly?
Also giving the S&P ASX All Technology index a lift is a strong performance by the Dicker Data Ltd (ASX: DDR) share price.
This 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.
