Analysts fearlessly forecast a bidding war for Emergis, but the market is signalling Telus will win the data processing company without a fight.
Since Telus tabled an $8.25-a-share offer for Emergis last week as part of a larger push into health care services, a number of tech analysts raised their stock price targets for Emergis to $9 in expectation of a rival offer.
But Emergis continues to trade just below what Telus is offering, closing yesterday at $8.18 on the Toronto Stock Exchange, a clear sign the sharp-eared hedge fund crowd hears this auction is done, and Telus will win the day with its $763-million bid. Chatter in tech circles had Emergis being quietly shopped for months before Telus stepped up.
Who might bid for Emergis, which was spun out of BCE three years ago? Special situations analyst Husein Kirefu at Evergreen Capital Partners nominates First Data (recently purchased by buyout firm Kohlberg Kravis & Roberts) General Electric, Metavante, WellPoint, IBM or Amex as possible buyers.
Blackmont Capital tech analyst Lawrence Rhee mentions IBM, as well as Express Scripts, McKesson Corp. and Microsoft. Both analysts noted that Emergis executives stated last Thursday there were other interested parties when they started talks with Telus.
All this talk of Emergis's attractive prospects, but no actual bid from a rival, is music to the ears of Telus CEO Darren Entwistle. He caught investors off guard with the Emergis offer. He defended the strategy in a conference call with analysts Thursday by saying he's as excited about the prospects of data processing today as he was about wireless seven years ago when Telus snapped up Clearnet in a far larger acquisition that's now viewed as a resounding success.
Instinet plans ATS system
Instinet is ramping up plans to launch an alternative trading system, or ATS, in Canada by changing the name of the upstart electronic stock trading service to better reflect its ties to a successful European platform.
Instinet is expected to announce today that its planned ATS will be called Chi-X Canada when it opens for business early in the new year as a rival to the Toronto Stock Exchange. The name plays off Instinet's successful introduction of Chi-X Europe in April. Previously, the platform was called the Instinet Canada Cross. Students of the classics will recognize the Chi-X name is derived from the 22nd letter of the Greek alphabet, symbolizing the "crossing," or matching, of the two sides of a trade.
Instinet wants to establish a brand that reminds potential customers this firm, unlike many rivals, has successfully built ATSs in other parts of the world, and that those networks are hardwired into the Canadian market. Instinet is one of five players currently trying to launch a domestic ATS, and all those platforms need the support of the same institutional investors and investment dealers.
Instinet senior vice-president Tal Cohen says the Chi-X business plan is based on luring new investors into Canadian stocks, and grabbing a lion's share of the extra buying and selling, rather than trying to steal market share from the TSX and other exchanges.
ACE shareholder-friendly
With little fuss, ACE Aviation Holdings is delivering on its promise to wind itself down in a shareholder-friendly manner.
ACE announced a $1.5-billion buyback late Monday that could retire up to 40 per cent of the company's shares. RBC Dominion Securities will run what's known as a "modified Dutch auction" that will see the shares repurchased at between $27.70 and $30 each.
The precise price will be set between now and Jan. 10, as shareholders tender their stakes and the price at which they would be willing to sell. ACE is offering to repurchase all classes of its common stock, along with convertible preferred shares. This will allow long-time backer Cerberus Capital Management to cash in part of its holdings, at a time when the U.S. private equity fund has all sorts of places it could use extra capital.
Once the buyback is complete, the collapse of the holding company will enter its final stage. ACE will likely spin out its remaining stakes in Aeroplan and Jazz. The parent company sold $757-million of units in the two trusts in October. That, in turn, will finance another share buyback, predicts TD Securities analyst Brian Morrison, then some sort of reverse takeover that sees ACE Aviation folded into Air Canada, it largest operating unit.
Sales desk musical chairs
Do all roads lead back to the Street? It seems so. Paul Gill left research-focused boutique Ross Smith Energy Group in Calgary almost a year ago, got married, and tried his hand at backing a restaurant. Now he's back on the sales desk at Genuity Capital Markets, which has been steadily building its energy team in recent months.
In another Calgary hire, Fred Kerr recently joined Acumen Capital Finance Partners after a two-year break from the industry, which followed a stint at FirstEnergy Capital. Grant Beasley left the Toronto desk of UBS Securities in the spring, spent the summer working on his home, and, and is now at Westwind Partners.
Andrew Willis