Market update: ASX 200 (XJO) flat

The ASX 200 (ASX: XJO) is currently flat, though it has been both negative and up higher during morning trade.

The market has fallen since the morning conferences about the latest COVID-19 case numbers. Victoria has seen a record 532 cases and NSW saw another 17 new confirmed cases with one case uncertain of its origin.

Big acquisition by Perpetual (ASX: PPT)

Perpetual has announced it’s going to acquire a 75% interest in US-based asset manager Barrow, Hanley, Mewhinney & Strauss (BHMS) for $465 million.

Investment and management team members will retain their 25% ownership, which should hopefully mean strong alignment and continuity for BHMS’ clients and Perpetual.

BHMS is a global investment management business with around US$44.1 billion, or AU$63.9 billion, in funds under management (FUM) across US, global and emerging market equities and fixed income mandates.

The acquisition price represents 8x pro forma EBITDA (click here to learn what EBITDA means). It’s expected to add more than 20% to underlying profit/earnings per share (EPS) on an annual basis from the date of completion, which is expected by the end of the first half of FY21.

Perpetual will carry out a fully underwritten institutional placement of $225 million at a price of $30.30. This is a 9.8% discount to Perpertual’s last closing price last week.

Bubs (ASX: BUB) share price down 5%

Goat milk infant formula company Bubs has seen a share price drop of 5% after announcing a June 2020 update.

The company announced that its FY20 fourth quarter revenue fell by 5% to $13 million with infant formula sales increasing by 20%.

Bubs said the decline was due to a strong pull-forward of demand from the third quarter drive by pantry stocking in multiple markets and challenging international logistics. Bubs also said that whilst consumer demand remains strong in all markets, the growth momentum has been temporarily impacted by the “changing China channel mix dynamics.”

China direct sales in the fourth quarter increased by 26% and now represents 22% of gross revenue. Other export market, excluding China, sales were up 71% in the fourth quarter.

This meant the company was able to report the total sales for FY20 increased by 32% to $62 million.

Bubs has launched ‘Vita Bubs’. This is vitamin and mineral supplements for children. It will have a national ranging in 400 Chemist Warehouse stores from October 2020.

Bubs has announced that Jennifer Hawkins will become Bubs’ global brand ambassador. It’s a three-year agreement and works well because Ms Hawkins is a new mother who has influence with her almost 2 million social media followers.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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