ASX Today — Live ASX News | Pushpay’s Shareholders Reject Takeover Bid, Sayona Flags Capital Raise

Pushpay shareholders did not approve a takeover big by Pegasus Bidco that would see the fintech acquired for NZ$1.34 cash per share.

For the scheme to proceed, two voting thresholds needed to be met:

• 75% or more of the votes in each interest class, and
• More than 50% of the total number of Pushpay shares on issues must vote in favour

The latter threshold was satisfied, with 54% voting for the scheme.

However, the former threshold was not met.

While 100% of the votes in the first interest class voted in favour, only 56% of the votes in the second interest class — being all other shareholders excluding associates of BGH Capital and Sixth Street — were in favour.

Why the interest classes?

Because the bidder — Pegasus Bidco — is a consortium associated with both Sixth Street and BGH Capital. One of Pushpay’s directors, John Connolly, is a senior advisor to Sixth Street. Mr Connolly recused himself from the board’s involvement in the scheme.

In a presentation prepared for the special meeting of shareholders pending the scheme vote, Pushpay’s directors warned:

“The Non-Conflicted Directors believe the Scheme represents the most compelling risk-adjusted value for shareholders. It provides shareholders with an opportunity to accelerate a capital return, while also mitigating the risks and uncertainties that are otherwise involved in delivering the opportunities from executing Pushpay’s strategic plan over time.

“No superior proposal has been received prior to this meeting and the Non-Conflicted Directors believe that a superior proposal is unlikely to emerge. Pushpay’s share price will likely fall if the Scheme is not implemented.”

Pushpay’s shares did fall following the vote. PPH shares closed 6.6% lower.

Friday’s trading activity could be summed up in a gif:

But next week promises to be a cracker.

Next Monday, the Melbourne Institute releases its inflation gauge and on Tuesday, the Reserve Bank meets to hand down its cash rate decision. Consensus has the RBA raising rates by 25 basis points to take the official cash rate to an 11-year high of 3.60%.

Tuesday will also see the release of detailed retail trade data, which will shed more light on the finances of Australian households.

On the same day, ANZ and Roy Morgan will release weekly consumer confidence data.

In fact, Tuesday will be a very busy day, as the US Fed’s Jerome Powell will testify to the US Senate Banking committee. A few months ago, his off-the-cuff comments about financial conditions sent US stocks higher. Will he be more circumspect? Hawkish? Dovish?

Next Wednesday, our central bank head Philip Lowe will make a speech at the AFR Business Summit, elucidating the Bank’s cash rate decision, no doubt.

And on Friday, US February nonfarm payrolls data will be released. This will be eagerly anticipated by markets, as the Federal Reserve thinks more slack in the labour market is needed to really get on top of inflation.

The benchmark ASX 200 is on track to notch its fourth straight week of losses.

The XJO gained 8.8% from the start of the year to the start of February but has steadily deflated since.

The index is now down ~3.6% since the start of February and is up ~1.9% over the past 12 months.

The world’s largest battery producer, Contemporary Amperex Technology (CATL) has a new pricing strategy. CATL will supply batteries to auto makers at a huge lithium discount.

As Barron’s noted last week, CATL’s move is a preemptive one:

“The potential loss of business might be one reason that CATL recently unveiled a new pricing strategy that would supply batteries to auto makers with an embedded lithium cost of about $30,000 per metric ton. Lithium spot prices today are around $70,000 a ton.

“Rising prices, and a desire to control key components in the EV supply chain, has led most auto makers to announce plans for battery capacity. General Motors (GM), Ford Motor (F) and Chrysler parent Stellantis (STLA) all have battery plants operating, under construction or on the drawing board.”

But CATL’s move can trigger a lithium price war.

Firms don’t lower prices willy-nilly. I cited a recent research paper earlier this week that neatly ties in with this point. The paper summed up the microeconomics literature on firm behaviour, concluding:

“Firms compete over market shares, but if they lower prices to gain territory from other firms, they must expect their competitors to respond by lowering their prices in turn. This can result in a race to the bottom which destroys profitability in the industry. Price wars are very risky for firms that are already in the market and are therefore typically launched by new entrants.”

So will CATL’s rivals respond with further discounts? Or does CATL know they can’t afford to and is flexing its market-leader status?

Of course, if CATL knew rivals wouldn’t be able to respond to its pricing strategy, why did it only initiate it now?

This is likely less about its current rivals and more about disincentivising future rivals — that is, automakers entering the upstream supply chain who’ve had enough of high input costs.

Battery giant $CATL is offering big #lithium discounts to automakers.

Will that lead to a price war? pic.twitter.com/tvVdZ2UGrM

— Fat Tail Daily (@FatTailDaily) March 3, 2023

He hopes Vulcan’s process could help decarbonise the whole lithium industry, and suggests it could even be used, in the right circumstances, to extract metals such as copper and zinc from brine.

But then he recalls that first he actually has to deliver on his own promises to the shareholders who have ridden the Vulcan rollercoaster.

“This is the year of implementation and execution,” he says, more than once. “Vulcan has to transform into an implementation company.”

“Under our feet is lithium for Germany’s EV industry and renewable power for its people,” he says. “We just need to get it out – 2023 is about financing and execution.”’

Today, we’ll leave markets aside and instead focus on Tesla’s first Investor Day.

In a close to four-hour presentation in Tesla’s Texas gigafactory, the EV maker presented its third master plan.

Markets were clearly disappointed that instead of unveiling a new car, the company showed this:

Even then, from hearing how Tesla sees the world moving away from fossil fuels and using less resources, to announcing it’s opening a new Tesla factory in Mexico…there was still plenty to chew on.

If you’re interested, you can watch the whole thing here.

But one clear takeaway from the day is that Tesla is laser focused on scaling up production to lower costs.

As Musk put it:

‘The desire for people to own a Tesla is extremely high. The limiting factor is their ability to pay for a Tesla.’

As he mentioned, after recently lowering prices, they found that a small price change has quite an effect on demand.

So, along with improving efficiencies, Tesla has been rethinking manufacturing.

One way it’s looking to disrupt manufacturing is through its ‘unboxed process’, where instead of working on the whole car body, Tesla divides it in parts, allowing more people (or robots) to work on the vehicles at the same time.

Tesla expects this process could cut production costs by half.

But all in all, Tesla is planning on lowering costs to increase market share…and it’s set quite an ambitious target: to produce 20 million vehicles per year by 2030.

That’s 10 times the amount they produce today…

https://www.moneymorning.com.au/20230303/what-teslas-first-investor-day-revealed-about-lithium.html

Lithium developer Sayona Mining (ASX:SYA) is in a trading halt pending a capital raise announcement.

At a conference on Wednesday, Sayona reiterated it is on track to ‘deliver first lithium production in March 2023’.

Two days later, Sayona entered a trading halt pending a capital raise announcement.

In FY22, SYA’s total equity rose over $500 million, having issued nearly 4 billion new shares in 2022.

“Late in the spring of 2020, Jan Marsalek, an Austrian bank executive, was suspended from his job. He was a widely admired figure in the European business community—charismatic, trilingual, and well travelled. Even at his busiest, as the chief operating officer of Wirecard, Germany’s fastest-growing financial-technology company, he would assure subordinates who sought a minute of his time that he had one, just for them. “For you, always,” he used to say. But he would say that to almost everyone.

“Marsalek’s identity was inextricable from that of the company, a global payment processor that was headquartered outside Munich and had a banking license. He had joined in 2000, on his twentieth birthday, when it was a startup. He had no formal qualifications or work experience, but he showed an inexhaustible devotion to Wirecard’s growth. The company eventually earned the confidence of Germany’s political and financial élite, who considered it Europe’s answer to PayPal. When Wirecard wanted to acquire a Chinese company, Chancellor Angela Merkel personally took up the matter with President Xi Jinping.

“Then, on June 18, 2020, Wirecard announced that nearly two billion euros was missing from the company’s accounts. The sum amounted to all the profits that Wirecard had ever reported as a public company. There were only two possibilities: the money had been stolen, or it had never existed.

“The Wirecard board placed Marsalek on temporary leave. The missing funds had supposedly been parked in two banks in the Philippines, and Wirecard’s Asia operations were under Marsalek’s purview. Before leaving the office that day, he told people that he was going to Manila, to track down the money.

“That night, Marsalek met a friend, Martin Weiss, for pizza in Munich. Until recently, Weiss had served as the head of operations for Austria’s intelligence agency; now he trafficked in information at the intersection of politics, finance, and crime. Weiss called a far-right former Austrian parliamentarian and asked him to arrange a private jet for Marsalek, leaving from a small airfield near Vienna. The next day, another former Austrian intelligence officer allegedly drove Marsalek some two hundred and fifty miles east. Marsalek arrived at the Bad Vöslau airfield just before 8 p.m. He carried only hand luggage, paid the pilots nearly eight thousand euros in cash, and declined to take a receipt.

“Philippine immigration records show that Jan Marsalek entered the country four days later, on June 23rd. But, like almost everything about Wirecard, the records had been faked. Although Austrians generally aren’t allowed dual citizenship, Marsalek held at least eight passports, including diplomatic cover from the tiny Caribbean nation of Grenada. His departure from Bad Vöslau is the last instance in which he is known to have used his real name.”

So began a mesmerising New Yorker essay on the crazy collapse of Wirecard. Wirecard’s story has it all — intrigue, crime, private militias, spies, and even pornographers.

Ben Taub unwinds the collapse of Wirecard, a fintech company that operated with dirty money and had ties to the Russian state. https://t.co/gG9Htlrg7c

— The New Yorker (@NewYorker) February 27, 2023

US Federal Reserve governor Christopher Waller said yesterday that recent ‘hot data’ indicates the central bank hasn’t made as much progress as it thought.

Waller admitted his outlook on inflation shifted after a ‘barrage of data’ last month challenged his view of how monetary policy was tracking against rising prices.

Waller provided a nice summary of this data barrage:

“The shift in the data started with a bang on February 1, with a big increase in the number of job openings in December that reversed the gradual easing over several months in what is a key indicator of tightness in the labor market. Part of the FOMC’s plan to lower inflation is reducing this excess tightness, which has been driving elevated wage growth and contributing to high inflation. The Job Openings and Labor Turnover Survey data can be noisy so, at times, there is a tendency to downplay large moves. But then on February 3, the job report for January showed a stunning 517,000 increase in employment and the unemployment rate moved down to a level not seen in over 50 years.These data indicated that, instead of loosening, the labor market was tightening. A little over a week later, on Valentine’s Day, instead of a box of chocolates, we got the consumer price index (CPI) inflation report for January and revisions to 2022. By this measure, not only had inflation stopped declining in January, it also slowed a lot less in the second half of last year than previously reported. Later that week, data on producer prices and last week’s report on personal consumption expenditures (PCE) prices reinforced these two points. Retail sales for January also came in much stronger than expected, suggesting the economy was slowing less than it had appeared just a month earlier, a picture that was confirmed by data on personal spending, which represents almost 70 percent of gross domestic product. Continuing progress on inflation depends on lowering demand and moderating economic activity, and the retail sales and spending data suggest that progress on reducing aggregate demand may have stalled.”

The fight to tame inflation ‘will be slower and longer than many had expected just a month or two ago’.

Waller also gave insight into the Fed’s thinking ahead of its March 21-22 FOMC meeting:

“If job creation drops back down to a level consistent with the downward trajectory seen late last year and CPI inflation pulls back significantly from the January numbers and resumes its downward path, then I would endorse raising the target range for the federal funds rate a couple more times, to a projected terminal rate between 5.1 and 5.4 percent. On the other hand, if those data reports continue to come in too hot, the policy target range will have to be raised this year even more to ensure that we do not lose the momentum that was in place before the data for January were released.”

It’s shaping up to be a quiet day on the ASX as the frenzy of the reporting season subsides.

Right now, the ASX feels like a metropolis the morning after festivities. Little to no activity, a sense of a reset, and musing on what went on before.

As for what happened overnight, US stocks rebounded but by nothing to brag about.

The major stock indexes were trading mostly down overnight until comments from Atlanta Fed President Bostic, who said there was a ‘plausible case’ the Fed’s past interest rate hikes would slow the economy more later on, easing the need for more rate hikes in the future.

Bostic did also say the US federal funds rate should be raised to between 5% and 5.25% and left there ‘until well into 2024’.

That may sounds drastic to someone, but Bostic has his reasons:

“History teaches that if we ease up on inflation before it is thoroughly subdued, it can flare anew. That happened with disastrous results in the 1970s. After the FOMC loosened policy prematurely, it took about 15 years to bring inflation under control, and then only after the federal funds rate hit 20 percent.”

In Europe, there was some bad news on the inflation front.

Consumer price growth slowed slightly to 8.5% in the year to February, from 8.6% in January. Economists forecasted — or hoped — inflation would fall to 8.2%.

Prices for services, goods and food rose strongly despite energy prices falling. Economists polled by Reuters had expected the figure to fall to 8.2 per cent.

Core inflation, which excludes energy and food prices, rose to a new eurozone record of 5.6%, actually up from 5.3% in the previous month.