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Business Briefing

With Neiman Marcus deal, an unofficial tally of Canadian clout Add to ...

These are stories Report on Business is following Monday, Sept. 9., 2013.

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I’ll take Manhattan
No, as a Canadian I don’t have an inferiority complex. Or the need to prove something.

But ever since the British government poached Mark Carney to head the Bank of England, I’ve been keeping a tally of sorts of how Canadians rule.

Chalk up another one today, with the Canada Pension Plan’s investment arm buying a piece of Neiman Marcus Group, the century-old luxury goods chain in the United States.

That, just after Hudson’s Bay Co., with more than a little help from the Ontario Teachers’ Pension Plan, gobbled up Saks Inc., another high-end retailer in the U.S.

I’m setting aside here the tremendous artistic talent of the likes of Margaret Atwood, Leonard Cohen, Neil Young, Arcade Fire – and, okay, some might add Rush to that list – and just looking at business and finance.

Here goes:

1. The Canada Pension Plan Investment Board today announced it has joined a U.S. private equity firm in a $6-billion (U.S.) takeover of Neiman Marcus.

2. HBC will soon own Saks, and bring its name to Canada.

3. Mr. Carney is governor of the 319-year-old Bank of England.

4. Moya Greene heads Britain’s Royal Mail (who, oops, just had to give back a £250,000 payment to help buy a house).

5. Stephen Elop heads Nokia Corp., and, given the recent deal with Microsoft Corp., is likely headed to a top job there.

6. Glenn Murphy is chief executive of Gap Inc.

7. Dominic Barton is worldwide managing director of McKinsey & Co.

8. Italian-Canadian Sergio Marchionne is chief of the Fiat group.

9. Michael Rapino is chief of Live National Entertainment Inc.

10. Mitch Garber runs Caesars Interactive Entertainment.

11. Sue Gardner is executive director of the Wikimedia Foundation.

As The Globe and Mail's Jaqueline Nelson reports, the CPPIB and Ares Management LLC will hold equal stakes in the high-end U.S. retailer, with Neiman Marcus managers owning a minority interest.

“This is an excellent opportunity to invest in a leading omni-channel luxury retailer, operating two of the most iconic retail brands in the U.S.,” André Bourbonnais, senior vice-president of private investments at the CPPIB, said in a statement.

“We believe the company’s strong market position, combined with an expected increase in U.S. luxury goods spending, provide attractive opportunities for future growth. We are excited to partner once again with Ares, a like-minded, long-term partner of ours.”

This comes after Hudson’s Bay Co., with more than a little help from the Ontario Teachers’ Pension Plan, struck a deal for Saks Inc.

“Neiman is an excellent brand and an excellent company,” retail consultant Michael Appel told Bloomberg News.

 “The question is what can the buyers do with it? Hope springs eternal. Perhaps they feel that their management and their ability to work with companies will get them the return they are looking for.”

Gabriel seeks clarification
Gabriel Resources Ltd. is trying to confirm statements by Romanian Prime Minister Victor Ponta and other ministers regarding rejection of a draft bill allowing the company to build Europe’s largest gold mine.

The Canadian mining company said today it's “urgently seeking confirmation of the actual statements made and clarification of the impact on the proposed permitting of the project,” The Globe and Mail's Bertrand Marotte reports.

Media reports quoted Mr. Ponta as saying that the Rosia Montana gold-and-silver project in a small Romanian town is “case closed” after a week of protests by environmentalists and citizens throughout the country concerned over the use of cyanide in the extraction process.

The project, which Gabriel has been pursuing since the late 1990s, would also involve the razing of four mountains to allow for a giant open pit mine.

Cameco to miss target
Cameco Corp.’s problems in launching ore production at the Cigar Lake uranium mine in northern Saskatchewan continue with the company now saying it won’t be able to meet its 2013 production target, The Globe and Mail’s Bertrand Marotte reports.

Saskatoon-based Cameco, one of the world’s biggest uranium producers, said today more work needs to be done before jet boring to mine ore cavities can begin.

Cameco said it now expects to start ore production in the first quarter of 2014.

Anti-Keystone crusader in new campaign
A U.S. billionaire crusading against the Keystone XL pipeline is turning up the heat in his campaign against the controversial project.

Tom Steyer, who founded the Farallon hedge fund and now is the face behind the anti-Keystone NextGen Climate Action group, has launched what he says is a $1-million (U.S.) series of ads to convince Americans the TransCanada Corp. project isn’t in their best interests.

The first ad ran yesterday on U.S. political shows, and the group plans three more.

Mr. Steyer is not a household name in Canada, but in the United States rubs shoulders with the likes of President Barack Obama, Warren Buffett and Bill Gates.

He’s a thorn in the side of TransCanada, which has rejected his arguments against the pipeline meant to carry Alberta crude to the U.S. Gulf Coast.

His first ad puts him in Port Arthur, Tex., and he says in it that he’ll soon be in Arkansas. The main point of the latest ad is that Keystone will carry oil sands crude to the Gulf Coast, only to be used for shipments to other nations, such as China, which would then sell oil products back to the United States.

“Keystone oil will travel through America, not to America,” he says in the ad.

“Deals have been cut, and America has been cut out,” he adds.

As The Globe and Mail’s Barrie McKenna reports, this comes as Joe Oliver, Canada’s Natural Resources Minister, is in Washington today to help sell the pipeline.

‘The month of living dangerously’
Just one week in, September is shaping up as “the month of living dangerously,” as Douglas Porter sees it.

The chief economist at BMO Nesbitt Burns cites five reasons for uncertainty in the markets.

“Two classic investment saws are being put to a serious test: Markets hate uncertainty, and September is the cruelest month for stocks,” Mr. Porter said in a research note.

“It’s tough to know where to begin when considering the many layers of uncertainty now facing investors.”

Here are the five points Mr. Porter makes in his report, The Month of Living Dangerously:

1. “Will Congress give Obama consent to strike Syria, and will that trigger a broader conflagration?”

2. Will the Federal Reserve begin later this month to pull back on its massive bond-program, known as quantitative easing or QE3? Friday’s August jobs report has left analysts wondering, though many believe the U.S. central bank will, in fact, begin to “taper,” as it’s known.

3. Will Chancellor Angela Merkel still be in power after the Sept. 22 German elections? Ms. Merkel has been the primary force in the euro crisis, pushing an agenda of restraint.

4. Who will succeed Ben Bernanke as Fed chairman? While he hasn’t said so definitively, Mr. Bernanke appears not to want another term, meaning President Obama must choose a new leader for the world’s most powerful central bank. So far, the front-runners are seen to be Larry Summers and Janet Yellen.

5. Will U.S. officials strike a deal on the debt limit by mid-October?

(Mr. Porter actually has a sixth point: Who will start in net for the Toronto Maple Leafs? But let’s not go down that road given that the Leafs’ season is as uncertain as a U.S. debt deal.)

“It’s hardly surprising that equity markets have been choppier given these mine-filled waters, further threatened by 10-year Treasury yields kissing the 3-per-cent level for the first time in more than two years [last] week,” Mr. Porter said.

“Perhaps the surprise is how well stocks are holding in.”

And this Friday, of course, is the 13th. Just sayin’.

Miners meet at Vatican
The CEOs of some of the world's top mining companies did not come to the Vatican to pray, see Pope Francis or traipse through the sweltering halls of the Vatican Museums.

They came to discuss ways to make their industry a bit less devilish. And, The Globe and Mail’s Eric Reguly reports today from Rome, you have to give the Vatican credit for all-star drawing power.

Saturday's “day of reflection with the mining industry,” which was organized by the Pontifical Council for Justice and Peace, the Vatican department that deals with earthly matters such as promoting humans rights, included the CEOs of Anglo American, Rio Tinto and Newmont Mining. The chairmen, presidents or senior executives of dozens of other companies made the pilgrimage too.

Why did they come? It was certainly not to seek publicity. AngloGold floated the idea of a Vatican mining conference in January. There was no formal press conference. A post-conference chat in the offices of the president of the pontifical council, Cardinal Peter Turkson (who was a leading contender to replace Pope Benedict XVI) was attended by precisely one journalist – Mr. Reguly.

The goal instead, said Rio Tinto boss Sam Walsh, was “to open a dialogue where mining interfaces with the community ... to hear other views with the promise of all of us making a difference.

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