A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of TransAlta Corp. (TA-T) jumped 3.9 per cent on Monday after announcing Brookfield Renewable Partners and its institutional partners have signed a $750-million deal to invest in the company’s hydro assets.
Under the terms of the agreement, Brookfield will invest in TransAlta through the purchase of exchangeable securities, which will be convertible into an equity ownership interest in TransAlta’s Alberta hydro assets in the future at a value based on a multiple of the future Hydro Assets’ EBITDA. Brookfield has also committed to purchase TransAlta common shares on the open market to increase its share ownership in TransAlta to 9 per cent.
TransAlta says it will include two Brookfield nominees, Harry Goldgut and Richard Legault, on its slate of directors for election at the upcoming 2019 annual shareholders’ meeting.
“Brookfield's investment is a strong endorsement of TransAlta's strategy and future value," said TransAlta president and CEO Dawn Farrel. "By crystallizing the value of our Hydro Assets, we can accelerate the return of capital to shareholders and invest in coal to gas conversions and strategic gas and renewable developments, while still meeting our goal to reduce senior indebtedness to $1.2 billion by the end of 2020. With Brookfield as a cornerstone shareholder, we are well positioned to invest in our business and increase value for shareholders."
Gluskin Sheff + Associates Inc. (GS-T) soared 29.4 per cent in the wake of Friday announcement that it is set to be acquired by Onex Corp. in a $445-million deal.
The Onex offer of $14.25 a share represents a 28-per-cent premium to Friday’s closing price of $11.17, but Gluskin Sheff is agreeing to be sold at less than half its peak value of early 2014.
In a research note released Monday, CIBC World Markets analyst Marco Giurleo said: “We view Onex’s bid to acquire 100 per cent of Gluskin Sheff’s equity for a purchase price of $14.25 per share (in cash) as a compelling offer for GS shareholders. The bid represents a 28-per-cent premium to the current share price and a takeout multiple of 9.2 times our calendar 2019 estimated EBITDA, which is near the high end of the firm’s historical trading range. Commanding such a multiple on a standalone basis would, in our view, require a material turnaround in net flows as well as elevated performance fees both of which will be challenging to achieve near term. On the other hand, a combination with a reputable partner such as Onex provides an opportunity to stabilize client flows and enhance the earnings power of the company by introducing highly coveted alternative investment strategies. Given the support of the deal by GS’ board and management as well as the 28-per-cent premium offered, we view the probability of an interloper offering a higher price as low.”
Goldcorp Inc. (G-T) shares were up 2.7 per cent after Newmont Mining Corp. (NEM-N) told shareholders it will pay a one-time dividend worth US$470-million in an attempt to sway sentiment for its takeover of the Vancouver-based miner.
Newmont shareholders who own stock as of April 17 will be entitled to 88 US per share. The dividend is payable only if shareholders on both sides approve Newmont’s US$10-billion takeover.
On Friday, Goldcorp shares closed down 2.9 per cent as a growing cadre of Newmont Mining Corp.’s shareholders voiced opposition to the terms of deal.
Shares of Newmont sat 1.2 per cent higher.
Emera Inc. (EMA-T) was up 1.2 per cent after announcing it has entered into a definitive agreement with Enmax Corp. to sell its interest in Emera Maine, its regulated electric transmission and distribution company in Maine, for a purchase price of US$959-million.
"This transaction is part of Emera’s previously announced three-year funding plan and together with the previously announced sale of its New England Gas Generation portfolio will, on closing, fully achieve the targeted asset sale component of the plan. Upon closing of these transactions Emera will have raised approximately $2.1 billion CAD of equity proceeds which will be used to reduce Emera corporate level debt and support its $6.5 billion CAD three-year regulated capital program,” said the company.
Espial Group Inc. (ESP-T), an Ottawa-based tech company, jumped 37.2 per cent after it an agreement to be acquired by Enghouse Systems Ltd. (ENGH-T) in a deal worth $56.5-million.
Under the deal, Espial shareholder will receive $1.57 in cash for each share held, which represents a 39-per-cent premium to Friday’s closing price.
Shares of Markham-based Enghouse were flat on the day.
Boeing Co. (BA-N) rose 2.3 per cent after the planemaker said it will brief pilots and regulators this week on software and training updates for its 737 MAX aircraft, with Ethiopian Airlines and Qatar Airways also expressing confidence in the company despite a recent crash.
The Green Organic Dutchman Holdings Ltd. (TGOD-T) increased 2.3 per cent after announcing the commencement in sales of its certified-organic cannabis.
“The Growers’ Circle is a select group of patients across Canada now receiving TGOD’s first certified-organic flower. The Growers’ Circle launch is a limited production rollout of the Company’s premium product, allowing TGOD to perfect its distribution ahead of its production ramp-up and scaled rollout this year,” said the company.
Tilray Inc. (TLRY-Q) sat 0.9 per cent higher after Cowen and Co. raised its fiscal 2019 revenue projection for the Nanaimo-based cannabis firm to US$179.4-million from US$119.5-million, pointing primarily to its $419-million Manitoba Harvest acquisition.
Arkansas-based BSR Real Estate Investment Trust (HOM.U-T) rose 0.1 per cent after it announced an agreement to purchase Wimberly Apartments in Dallas for US$53.05-million. It expects the deal to be immediately accretive to adjusted funds from operations.
Desjardins Securities analyst Kyle Stanley said: “The acquisition ticks a number of BSR’s external growth strategy boxes, including: (1) it is located in close proximity to the headquarters of several Fortune 500 corporations, (2) it is supported by robust demographic fundamentals in Dallas–Fort Worth, and (3) given the property was built in 1995, we believe there is an opportunity for the REIT to add value through suite and common area renovations. We would expect the transaction to be accretive to our FFO outlook given it did not previously incorporate any acquisition activity.”
On the decline
Canopy Growth Corp. (WEED-T) was down 0.7 per cent after it announced it has received a Health Canada license for a production facility in Fredericton. It expects production will increase by more than 5,000 kilograms annually and create 130 new jobs.
“New Brunswick has emerged as a leader in the legal cannabis sector and the province is an excellent place to do business,” said co-CEO and chairman Bruce Linton. “We will leverage our existing operational expertise to ensure we support the needs of our customers while making a meaningful contribution to the local economy primarily through new job creation.”
BioSyent Inc. (RX-X), a Toronto-based pharmaceutical company, fell 6.4 per cent after it announced late Friday it will receive a Notice of Deficiency (NOD) from Health Canada with respect to its new drug submissions of two cardiovascular products for which it has exclusive distribution rights in Canada.
On Monday, its stock was downgraded by an equity analyst at Cormark Securities.
Apple Inc. (AAPL-Q) was down 1.1 per cent after launching its own video service at an event in California as well as a video game subscription service, news service and a credit card.
The tech giant unveiled Apple News Plus, a subscription-based service that gives access to 300 publications such as the Wall Street Journal and the Los Angeles Times. It will cost US$9.99.
With files from staff and wires
David Leeder