A roundup of some of the North American equities making moves in both directions today
On the rise
Brookfield Asset Management Inc. (BAM.A-T) closed higher after it said it would buy the remaining stake it does not already own in its commercial real estate business Brookfield Property Partners (BPY.UN-T) for about US$6.5-billion, the companies said on Thursday.
The deal was a raise from the US$5.9-billion the alternative-asset manager offered in January this year.
The COVID-19 pandemic has driven a shift to remote working and kept people away from malls and shopping centres, hurting real estate companies such as Brookfield Property.
Unitholders of Brookfield Property will get US$18.17 per unit, a premium of 26 per cent to stock’s last close on Dec. 31, before the announcement was made.
Mississauga-based Cargojet Inc. (CJT-T) jumped on the premarket announcement that it has entered into a new Air Transportation Services Agreement with Amazon Canada Fulfillment Services, expanding its existing commercial relationship with Amazon (AMZN-Q).
Under the deal, Cargojet will operate two Amazon-owned B767-300BDSF aircraft as part of the Amazon Air network on a CMI basis within Canada starting mid-2021.
Cargojet expects the agreement, which has a four-year term with three successive two-year renewal options, to “generate additional revenue growth to Cargojet’s earnings and cash flows over time.”
In a research report, ATB Capital Markets analyst Chris Murray said: “We believe the announcement provides some clarity to how the Amazon relationship may evolve as e-commerce continues to grow in the Canadian market alleviating concerns that Amazon could internalize its freight operations away from Cargojet. We believe this announcement creates a new opportunity and permits the Company to grow its domestic network with other customers freight and likely with Amazon’s as well as two aircraft are insufficient to reach all destinations the Company currently serves.”
Inter Pipeline Ltd. (IPL-T) increased after it said late on Wednesday it has adopted a shareholder rights plan to support a strategic review, weeks after investment firm Brookfield Infrastructure Partners (BIP.UN-T) said it would go ahead with its $7.1-billion takeover of the Canadian company.
Earlier this month, Inter Pipeline had asked shareholders to reject Brookfield’s hostile bid, saying the offer “significantly undervalues” the Canadian oil and gas transportation company.
Inter Pipeline on Wednesday said the rights plan includes a “technical revision” to treat certain financial derivatives, which have already been utilized by Brookfield, as equivalent to beneficial share ownership.
The company said its shareholder rights plan was not intended to prevent Brookfield from acquiring Inter Pipeline, but was modified to support and facilitate the strategic review.
Last month, Inter Pipeline launched a review of options, including a possible ‘corporate transaction’, just a week after it rejected an unsolicited bid from its largest shareholder.
Contract chipmaker Taiwan Semiconductor Manufacturing Company Ltd. (TSM-N) gained ground in the wake of saying it plans to invest US$100-billion over the next three years to increase capacity at its plants, days after Intel Corp. (INTC-Q) announced a US$20-billion plan to expand its advanced chip making capacity.
TSMC, whose customers include Apple Inc and Qualcomm Inc, had already flagged a plan to spend of between US$25-billion-US$28-billion this year, to develop and produce advanced chips.
The move comes as global companies reel from a shortage of semiconductor chips that initially forced auto companies to cut production, but is now hurting makers of smartphones, laptops and even appliances amid a pandemic-fuelled rise in demand.
“We are entering a period of higher growth as the multiyear megatrends of 5G and high-performance computing are expected to fuel strong demand for our semiconductor technologies in the next several years,” TSMC said in a statement to Reuters.
“In addition, the COVID-19 pandemic also accelerates digitalization in every aspect,” it said.
Micron Technology Inc. (MU-Q) soared after it forecast fiscal third-quarter revenue above Wall Street estimates due to a rise in demand for memory chips thanks to 5G smartphones and artificial intelligence software that is pushing memory chip prices upward.
The Boise, Idaho-based company, which makes NAND memory chips that serve the data storage market as well as DRAM chips that are widely used in laptops and other computing devices, benefited from the coronavirus pandemic as a global shift to remote work boosted chip demand.
On top of that, a global chip shortage has spurred buyers such as personal computer makers to begin snapping up supplies, sending memory chip prices upward. Analyst firm Trendforce said prices for DRAM rose between 3 per cent and 8 per cent in the first calendar quarter and predicts prices between 13 per cent and 18 per cent in the second calendar quarter.
The chipmaker expects current-quarter revenue to be US$7.1-billion, plus or minus US$200-million, while analysts on average were expecting US$6.79-billion, according to IBES data from Refinitiv.
The company’s revenue for the fiscal second quarter ended March 4 rose to US$6.24-billion, beating estimates of US$6.21-billion, according to IBES data from Refinitiv. Second-quarter adjusted profit was 98 US cents per share, beating analyst expectations of 95 US cents per share, according to Refinitiv data.
On the decline
The Smiths Falls, Ont.-based cannabis company says it has acquired Ace Valley, a Toronto company that makes vapes, gummies and pre-rolls.
Financial terms were not immediately available.
Rade Kovacevic, Canopy’s president and chief product officer, said his company was keen on the deal because its stores were among the first to stock Ace Valley, which quickly revealed the strength of the brand.
The Ace Valley deal adds yet another name to Canopy’s roster of brands including Deep Space, Quatreau and Doja, and partnerships with Martha Stewart and actor Seth Rogen’s Houseplant.
The deal comes as cannabis companies are facing brand loyalty challenges because of temporary pot store lockdowns triggered by COVID-19.
Johnson & Johnson (JNJ-N) slid after it said on Wednesday it had found a problem with a batch of drug substance for its COVID-19 vaccine, which did not meet quality standards at Emergent Biosolutions’ production site in Baltimore, Maryland.
The issue was identified and addressed with Emergent and shared with the U.S. Food & Drug Administration, J&J said, adding it was sending more people to supervise manufacturing at the plant.
Workers at the plant manufacturing coronavirus shots for J&J and AstraZeneca accidentally conflated the vaccines’ ingredients several weeks ago, the New York Times earlier reported, adding that Federal officials attributed the mistake to human error.
J&J tapped contract manufacturers Catalent Inc and Emergent to scale up production and meet its global supply targets. Catalent provides the final stage - called fill and finish - while Emergent makes the drug substance.
Boeing Co. (BA-N) was down after the Federal Aviation Administration (FAA) said on Wednesday it had approved the design for the 737-8200, part of the Boeing 737 MAX series, a necessary step before the U.S. planemaker can begin delivering the airplanes to Ryanair.
The FAA said the 737-8200 incorporates all of the design improvements that were part the 20-month review of the 737 MAX that led to the ungrounding of the MAX in November, more than a year after two fatal crashes killed 346 people.
Ryanair first ordered the 737-8200 plane, which seats 197 passengers, in 2014. The European Union Aviation Safety Agency still must approve the aircraft, a move that could come soon after the FAA approval.
Boeing said Wednesday it would “continue to work with global regulators to safely return the 737-8 and -9 to service. Our teams are also focused on ensuring future members of the 737 family meet all regulatory requirements
With files from staff and wires