Codan (ASX:CDA) share price falls on acquisition news

2021 has been a big year for mergers and acquisitions on the ASX.

| More on:
Investor looking dismayed at computer screen with falling asx share price

Image source: Getty Images

The Codan Limited (ASX: CDA) share price is down 2.46% in morning trade, currently at $9.50 per share.

The S&P/ASX 200 Index (ASX: XJO) is struggling as well, down 0.6%.

Below we take a look at the acquisition announcement from the ASX communications and tech share.

What acquisition was announced?

The Codan share price is sliding after the company reported that its subsidiary, Domo Tactical Communications (DTC), has acquired 100% of the shares in Broadcast Wireless Systems Limited (BWS) from its founders.

The United Kingdom-based BWS’ technology portfolio encompasses wireless video camera links and video broadcast products.

Commenting on the acquisition, Paul Sangster, president of Domo Tactical Communications, said:

The quest for improved production quality, cost efficiencies and the challenges caused by the pandemic are fuelling the transition of broadcasters to adopt remote production capabilities and the combined offering of DTC and BWS will enable this.

DTC’s customers will now be offered a low-latency, high performance solution which has been validated in critical and challenging operations such as the opening ceremony for the Olympic Games in Japan and some of the world’s most prestigious and demanding motor racing events.

Codan reported it will fund the acquisition via its consisting debt facility. It will pay $3.7 million upfront and potentially up to $4.8 million more “if certain earn-out targets” are reached over 3 years.

The company said that the total assets it’s acquiring are approximately equal to the purchase price, and it expects no change to Codan’s shareholder equity.

Codan also expects the acquisition to immediately be earnings-per-share accretive. For the financial year ending 30 June, BWS delivered earnings before interest and taxes (EBIT) of $600,000. And the company notes its financial performance during that year was hampered by the global pandemic.

Codan share price snapshot

The Codan share price is down 15% in 2021. That compares to a year-to-date gain of 10% posted by the ASX 200.

Over the past month Codan, shares have dropped 5%.

Should you invest $1,000 in Codan right now?

Before you consider Codan, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Codan wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Mergers & Acquisitions

A man takes his dividend and leaps for joy.
Mergers & Acquisitions

Why the A2 Milk (ASX:A2M) share price is jumping 8% despite the market selloff

Key points A2 Milk has been named as a potential takeover target Saputo is rumoured to be planning to make …

Read more »

BNPL shares

Why is the Sezzle (ASX:SZL) share price rocketing 20% higher?

Key points Sezzle shares are rocketing after confirming takeover talks with Zip Zip is looking to acquire Sezzle but talks …

Read more »

two business men sit across from each other at a negotiating table. with a large window in the background.
BNPL shares

Zip (ASX:Z1P) share price higher amid Sezzle acquisition talks

Key points Zip has confirmed that it is in talks to acquire Sezzle Talks are at a preliminary stage No …

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Mergers & Acquisitions

Fortescue (ASX:FMG) share price slides on $310 million acquisition

Key points Fortescue to acquire Williams Advanced Engineering for approximately AU$310 million Fortescue Future Industries (FFI) to manage the integrated …

Read more »

mobile phone depicting online casino next to cards, casino chips and roulette wheel
Mergers & Acquisitions

Why the Aristocrat Leisure (ASX:ALL) share price is one to watch today

Key points Aristocrat is aiming to acquire UK listed Playtech for $5 billion Rival bidder, JKO Play, has withdrawn its …

Read more »

share price plummeting down
Mergers & Acquisitions

Silver Lake (ASX:SLR) share price drops today following this bidding news

Key points Silver Lake declared successful bidder for Canada’s Harte Gold Company to acquire 2% net smelter royalty on the …

Read more »

Woman using Square at the counter of a shop.
Technology Shares

Block (ASX:SQ2) shares are now trading on the ASX

The S&P/ASX 200 Index (ASX: XJO) has welcomed its latest addition this morning. At 11am AEST, the Block, Inc. (ASX: SQ2) …

Read more »

Rising share price chart.
Mergers & Acquisitions

Minotaur Resources (ASX:MEP) share price spikes on Andromeda, quarterly update

Key points Investors have responded well to Minotaur’s quarterly cash flow and activities update for the period ended 31 December 2021 Minotaur’s …

Read more »