A roundup of some of the North American equities making moves in both directions today
On the rise
Oil producer Whitecap Resources Inc. (WCP-T) rose over 1.5 per cent after it said before the bell it would buy NAL Resources Ltd, owned by Manulife Financial Corp, for $155-million as it looks to boost its core Alberta and Saskatchewan assets.
Whitecap said it would issue 58.3 million of its shares to Manulife in exchange for all the issued and outstanding shares of NAL, which operates in Canada’s Saskatchewan and Alberta.
Insurance and financial services provider Manulife will own about 12.5 per cent of the combined company.
The deal marks growing interest in mergers among smaller Canadian oil producers to bolster their portfolios, as uncertainty about future oil demand persists.
The COVID-19 pandemic destroyed fuel demand and left dozens of energy companies without the prospect of drilling their way out of debt or bankrupt, making consolidations a viable solution for many smaller players.
The offer values Bonterra at about $35-million, or $1.06 per share, a 29.3-per-cent discount to its Friday close. Bonterra shareholders would own about 48 per cent in the combined company, Obsidian said.
Last month, top independent U.S. oil producer ConocoPhillips said it would buy land from Kelt Exploration Ltd in Canada’s Montney shale oil play in a $375-million deal.
Bonterra shares were up 0.7 per cent.
The high-flying shares of Apple Inc. (AAPL-Q) and Tesla Inc. (TSLA-Q) rose 3.4 per cent and 12.6 per cent, respectively, after a split into smaller portions that makes it easier for retail investors to own the shares.
It was Apple’s latest stock split since a 7-for-1 move in 2014 and its fifth since going public in 1980.
Splitting stocks is a way for companies to make it less expensive to buy individual shares although moves by some retail brokerages to offer slices or fractions of shares to smaller investors has made the impact increasingly marginal.
California-based Aimmune Therapeutics Inc. (AIMT-Q) soared 171 per cent after Swiss food group Nestle SA offered to pay US$2-billion for full ownership of the peanut allergy treatment maker to expand its fast-growing health science business.
Known for its KitKat chocolate bars and Nescafe instant coffee, Nestle set up Nestle Health Science (NHS) in 2011 to open up a new area of business between food and pharma.
Nestle said in a statement that its offer for Aimmune values the California-based biopharmaceutical firm, which it has been working with since 2016 and in which it already has a stake of around 25.6 per cent, at US$2.6-billion.
“Aimmune has $261 million in cash and $134 million in debt. With our prior investment of $473 million in Aimmune, we’ll be making a cash payment of just under $2 billion,” NHS head Greg Behar told Reuters in an interview.
Nestle estimates that up to 240 million people worldwide suffer from food allergies, with peanut allergy being the most common, and with Aimmune, NHS will have prevention, diagnostic and medical treatment options available, Behar said.
The sides expect to finalize an advance purchase agreement under which Novavax will supply doses of its potential vaccine to Canada beginning as early as the second quarter of 2021.
On the decline
Berkshire Hathaway Inc. (BRK.B-N) was lower by 0.2 per cent on news it has bought a 5-per-cent stake in each of Japan’s five biggest trading houses, together worth over US$6-billion, marking a departure for Chairman Warren Buffett as he looks beyond the United States to diversify his conglomerate.
The long-term investment in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp could see the stakes rise to 9.9 per cent, Berkshire said on Sunday, Mr. Buffett’s 90th birthday.
“The five major trading companies have many joint ventures throughout the world and are likely to have more,” Mr. Buffett said in a statement. “I hope that in the future there may be opportunities of mutual benefit.”
The investment will help reduce Berkshire’s dependence on the U.S. economy, which in the last quarter contracted the most in at least 73 years as the COVID-19 pandemic took hold. Many of its businesses have struggled, including aircraft parts maker Precision Castparts from which it bore a US$9.8-billion writedown.
Mr. Buffett’s choice in Japan, however, surprised market players as trading houses have long been far from investor favorites. As well as significant exposure to the energy sector and resource price volatility, tangled business models involving commodities as varied as noodles and rockets have long been a turn-off.
Bausch Health Companies Inc. (BHC-T) slipped 2.4 per cent after announcing a plan to reduce debt by US$100-million through the redemption of outstanding senior notes, using cash generated from operations.
The Laval, Que.-based company said it will redeem $100-million aggregate principal amount of its outstanding 5.875-per-cent senior notes due 2023 on Sept. 30.
Honeywell International Inc. (HON-N) was down 1.7 per cent, while Amgen Inc. (AMGN-Q) and Salesforce.com Inc. (CRM-N) rose 0.1 per cent and 0.8 per cent, respectively, after the three became part of the blue-chip Dow Jones Industrial Average index on Monday.
They replace Exxon Mobil Corp, Pfizer Inc and Raytheon Technologies Corp.
The changes follow Apple Inc’s decision to split its stock, which would reduce the index’s weight in the global industry classification standard information technology sector, S&P Dow Jones Indices said.
“We plan to now pool together the results from the two studies to see if we can better understand this phenomenon in post-hoc explorations. We want to thank all of the investigators for their participation, and Acasti for sponsoring the Trilogy program,” said Dr. Dariush Mozaffarian, Professor at Tufts University and academic PI of the trial.
The combined purchase price for the investments in Global Gourmet and Allseas is approximately $139 million, consisting of $115-million in cash, $10-million in Premium Brands common shares and up to $14-million in contingent consideration.
Premium said the combined revenues of the two businesses is approximately $204-million and both transactions are expected to be immediately accretive to Premium Brands’ earnings per share and free cash flow per share on an annual basis.
FSD Pharma Inc. (HUGE-CN) lost 4 per cent after announcing it has submitted to the U.S. Food and Drug Administration an Investigational New Drug Application (IND) for the use of FSD201 (ultramicronized palmitoylethanolamide, or ultramicronized PEA) to treat COVID-19.
“As previously announced, FSD Pharma is focused on developing FSD201 for its anti-inflammatory properties to avoid the cytokine storm associated with acute lung injury in hospitalized COVID-19 patients,” the company said.
With files from staff and wires