Here are the top reads on deals and financial services over the last week:
Canada Goose share sale went bust after Huawei CFO arrest - and investment banks lost millions: On Nov. 26, Canada Goose announced a secondary offering of common shares, a deal that allowed its private equity backer, Bain Capital, to unload more stock at a rich valuation. A week later, it was revealed that Canadian authorities had arrested Huawei CFO Meng Wanzhou and Canada Goose’s stock price quickly cratered. Because the deal was not fully sold by the time the stock started to fall, the underwriters, Credit Suisse and Canadian Imperial Bank of Commerce, were at risk of losing millions of dollars. Story (Tim Kiladze, for subscribers)
RBC mortgage clients say errors cost them due to extra interest: Royal Bank of Canada is correcting errors that caused some clients to pay down their mortgages more slowly than they had intended, leaving them facing higher interest costs over the long run. An internal review of documents discovered an issue with the bank’s process for calculating and issuing mortgage renewals. Story (James Bradshaw, for subscribers)
Scotiabank names Beauchemin, Sinclair new co-heads of global investment banking: Bank of Nova Scotia has named new heads of global investment banking, following the previous leader’s departure. Dany Beauchemin and Adam Sinclair are taking over as co-heads of global investment banking and Canadian corporate banking, following the departure of Charles Emond earlier this month. The bank made the announcement in an internal memo to staff on Friday. Story (Alexandra Posadzki, for subscribers)
Green Growth’s Aphria play: Why the hostile takeover bid is so unusual – and so bold: Green Growth Brands Inc. filed its formal bid for Aphria Inc. this week and two things are clear: This is no ordinary takeover bid, and winning over the target’s shareholders will be an uphill battle. The terms of the hostile bid, outlined in a takeover circular, are rare – if not almost unheard of. In a normal takeover, the acquirer is usually bigger than the target; in this case, a newly created U.S. company is trying to snap up one of the largest legal cannabis growers in the world. Story (Tim Kiladze and Christina Pellegrini, for subscribers)
Why Canadian companies are poised to do more deals in the U.S. and abroad: Canadian companies are hunting for merger and acquisition targets outside of their home base and the United States remains by far the preferred locale, despite its chaotic politics and trade uncertainty. In an overall optimistic outlook for corporate deal-making in 2019, 96 per cent of corporate and private-equity M&A professionals surveyed by Citigroup Inc.'s Canadian unit and the Mergermarket data and publishing service said they expect an increase in the number of deals involving Canadian businesses buying foreign ones, known as outbound transactions, in 2019. A similar majority – 94 per cent – see a higher overall value of deals. Story (Jeffrey Jones, for subscribers)
Smaller investment dealers hit by rising costs, dispirited markets: Depressed market conditions and rising operating costs could lead to an exodus of independent investment dealers over the coming year. Small and mid-size dealers have been struggling in recent years, with more than 50 of them vanishing since 2013, according to the Investment Industry Association of Canada. Some merged with rivals or were swallowed up by other firms, while others simply shut their doors, IIAC president and chief executive Ian Russell said in a letter published earlier this week. Story (Alexandra Posadzki, for subscribers)
Great-West Life to sell U.S. unit for $1.6-billion: Great-West Lifeco Inc. is selling its U.S. individual life-insurance and annuity business for $1.6-billion, trading a low-growth, but stable, arm for cash that can be re-invested in higher-margin businesses. The Canadian life-insurance company announced on Thursday that its Colorado-based subsidiary, Great-West Life & Annuity Insurance Company (GWL&A), has struck a deal to unload its individual life insurance and annuity business to Protective Life Insurance Company, the primary subsidiary of Protective Life Corporation. Story (Clare O’Hara and Tim Kiladze, for subscribers)
Bombardier snaps up wing-making business of Triumph Group in first acquisition since 2001: Bombardier Inc. is making its first notable acquisition in nearly two decades, announcing plans to buy an aircraft wing manufacturing operation from U.S. supplier Triumph Group Inc. in a bid to boost its private jet business. The Canadian plane and train maker said Thursday it will take over the manufacturing operations and assets of Triumph’s wing making unit related to Bombardier’s new Global 7500 private jet. That includes Triumph’s Red Oak facility in Texas, where 400 unionized workers assemble wings for the large-cabin plane. Story (Nicolas Van Praet, for subscribers)
Ecofuel cleantech seed fund raises $40.6-million: Canada’s fledgling cleantech industry is getting another financial boost after Montreal-based Ecofuel closed its inaugural venture-capital fund, raising $40.6-million from Quebec funders including the government of Quebec, Desjardins and the venture arms of labour funds Fonds de solidarité FTQ and Fondaction. Story (Sean Silcoff, for subscribers)
Hydro One pays US$103-million termination fee to kill Avista takeover: Hydro One Ltd. formally called off its planned $4.4-billion takeover of Avista Corp. on Wednesday and will pay the U.S. utility a US$103-million termination fee for a deal that failed due to perceived political interference from Ontario’s Progressive Conservative government. Story (Andrew Willis, for subscribers)
Saskatoon restaurant scheduling company 7shifts raises $10-million in financing: Coming from a family of quick-service restaurateurs, Jordan Boesch can vividly recall his father’s desk covered in sticky notes with staff shift requests. So after teaching himself to code, he set out to make that all-consuming task simpler – at least for his father’s Quiznos locations in Regina. Story (Josh O’Kane, for subscribers)
Former Wells Fargo executive to helm BMO Global Asset Management: BMO Global Asset Management has hired Kristi Mitchem, the former chief executive officer of Wells Fargo Asset Management, as its new CEO. Bank of Montreal said on Wednesday Ms. Mitchem will replace Richard Wilson, who has been CEO of BMO GAM since 2014 and will retire in June. Story (Clare O’Hara, for subscribers)
Why Maxar shareholders found it hard to sell during the stock’s big plunge: Canadian shareholders didn’t find it so easy to sell Maxar Technologies Ltd. earlier this month, even as the stock plummeted. However, it wasn’t a question of loyalty to the company once known as MacDonald Dettwiler & Associates Ltd., a stalwart of the country’s technology industry. Instead, thanks to a quirk of a seemingly minor corporate transaction, the company’s Canadian stockholders possessed no shares to sell over two trading days when investors punished Maxar. To place a successful “sell” order those two days, a Canadian Maxar shareholder likely required extra help from their brokerage. Story (David Milstead, for subscribers)
Frank Stronach’s court fight threatens to put his business legacy on the ropes: Like a boxer who has stepped into the ring too many times, entrepreneur Frank Stronach is seeing his business reputation take a pounding in an increasingly nasty courtroom battle with his daughter and her allies for control of the family’s fortune. At the age of 86, Mr. Stronach should be basking in the glow of his Business Hall of Fame achievements as founder of Magna International Inc., now one of the world’s largest auto-parts companies. Opinion (Andrew Willis, for subscribers)
Cannabis sector to see more mergers this year as sector begins to mature: The pace of mergers and acquisitions in the Canadian cannabis industry is expected to intensify this year, possibly eclipsing initial public offerings as the sector begins to mature. The early days of the fledgling cannabis industry’s growth were characterized by a flood of IPOs as companies looked to finance their expansion, particularly ahead of the federal government’s legalization of recreational marijuana in October of last year. Story (Alexandra Posadzki and Jeffrey Jones, for subscribers)
Green Growth Brands formally files offer to buy Aphria: Green Growth Brands Inc. has formally filed its unsolicited offer to buy Aphria Inc., one of Canada’s largest cannabis companies. In the takeover bid made public on Tuesday, Green Growth said it would give investors in Aphria 1.5714 shares of the Columbus, Ohio-based company for each Aphria share. Green Growth stock closed Tuesday at $5.98. At that price, the deal would be worth $2.3-billion. Aphria has a market capitalization of $2.35-billion. Story (Christina Pellegrini, for subscribers)
Tilray snaps up cannabis grower Natura to increase cultivation capacity: Tilray Inc. is buying an upstart Ontario-based cannabis producer in a bid to shore up cultivation space amid a severe supply crunch that has hampered sales. Nanaimo, B.C.-based Tilray said Tuesday it has agreed to pay $35-million in stock-and-cash to acquire Natura Naturals Holdings Inc., a Leamington, Ont.-based firm that’s licensed to grow cannabis but not yet permitted to sell it to consumers. Natura was founded by the late Claudio Mastronardi, a businessman and greenhouse grower. Former Ontario minister of finance Dwight Duncan is a director at the company. Story (Christina Pellegrini, for subscribers)
Anbang holds preliminary talks with investors about sale of Bentall Centre: Anbang Insurance Group’s broker has held preliminary talks with more than a dozen institutional investors about the sale of the Bentall Centre in downtown Vancouver, according to people familiar with the matter. The broker, commercial realtor CBRE, is running the sale of the four office towers, as Anbang restructures after being seized by the Chinese government last year. Story (Rachelle Younglai, for subscribers)
How some Canadian ETF investors got clipped last year by using hedging: The book on protecting your U.S.-stock returns against currency fluctuations is that a hands-off approach is best if you plan to stay invested for 10 or more years. But as the past year has shown, the short-term differences between owning a hedged U.S. equity ETF and an unhedged fund can be large. The S&P 500 index had a weak year in 2018, losing 4.4 per cent on a total-return basis. That’s by and large your result if you own an exchange-traded fund that tracks the S&P 500 and uses hedging to limit the impact of currency fluctuations on returns to investors. An unhedged U.S. equity ETF, with returns translated into Canadian dollars, made 4.2 per cent last year. Quite the difference, right? Story (Rob Carrick, for subscribers)
Frank Stronach’s ventures lost $800-million, daughter Belinda alleges in court filing: Industrialist Frank Stronach is alleged to have lost $800-million on several misguided investments, a track record that daughter Belinda Stronach says should prevent the 86-year-old from taking back control of the businesses he built over a lifetime. Story (Andrew Willis, for subscribers)
CIBC Wood Gundy changes compensation structure for advisers: Canadian Imperial Bank of Commerce’s brokerage arm has changed its compensation scheme after employees complained it influenced some advisers to push clients into accounts with fixed annual fees. CIBC Wood Gundy is reinstating restricted share options for transactional advisers who charge clients commissions for every trade. Until recently, the bonus shares were paid only to advisers on the so-called fee-based model, in which their clients pay an annual fee, usually about 1 per cent of assets. Story (Clare O’Hara, for subscribers)
Barrick leaves door open to sale of its biggest copper mine as Zambia tax hikes loom: Barrick Gold Corp is leaving the door open to a sale of its biggest copper mine as it faces potential tax hikes in Africa. In a press release, Barrick said the Zambian government had proposed tax changes for its Lumwana property that would “imperil the mine’s ability to sustain returns to all stakeholders.” Story (Niall McGree, for subscribers)
This week’s Santander moment changes nothing in the world of outrageous bankers' pay: The Santander moment might have you believe the banking world has changed, that outrageous pay for bankers with the mental makeup of a Las Vegas card shark is finally becoming a relic of the decadent past. Populism has hit the pay world – thank you Bernie Sanders, Alexandria Ocasio-Cortez, Jeremy Corbyn and the other headline-grabbing socialists who equate overpaid bankers with broken, late-stage capitalism and the greediest bankers with the end of civilization, Rome in the fourth century. If only it were that simple and uplifting. Sadly, it’s not. Opinion (Eric Reguly, for subscribers)
Financial services innovation is leaving too many Canadians behind: We see tremendous potential in financial services innovation, but we are not convinced that it has taken all Canadians forward. As academics and practitioners, we have spent time trying to understand the financial services ecosystem and its evolution. Opinion
MORE FINANCIAL SERVICES AND DEALS NEWS FROM FRIDAY
Mortgages: Canada is considering subjecting private lenders to the same mortgage stress-test rules faced by banks to prevent housing markets from being destabilized by the lenders’ rapid growth, three sources with direct knowledge of the matter said. Story
The Streetwise newsletter is Tuesday to Saturday. If you’re reading this on the web, or if someone forwarded this e-mail to you, you can sign up for Streetwise and all Globe newsletters on our signup page.