A roundup of some of the North American equities making moves in both directions today
On the rise
Inter Pipeline Ltd. (IPL-T) was higher in early trading on Monday in the wake of signing a deal to acquire the Milk River pipeline system from a subsidiary of Plains All American Pipeline LP, in exchange for its 100-per-cent ownership interest in the Empress II and 50 per cent ownership interest in the Empress V straddle plants.
Plains will also pay Inter Pipeline $35-million in cash.
The Milk River pipeline system includes two 16-kilometre pipelines with current throughput volume of about 90,000 barrels per day and links Inter Pipeline’s Bow River pipeline system from Milk River, Alta., to the Canada-U.S. border.
Inter Pipeline will also acquire pumping and metering facilities, two crude oil storage tanks and truck unloading facilities as part of the deal.
The two straddle plants, which are operated by Plains and located near Empress, Alta., are on the eastern leg of the TC Energy Alberta system.
The deal is expected to close early next year.
In a research note, ATB Capital Markets analyst Nate Heywood said: “Overall, we view the announcement as positive as the transaction will relieve IPL of some volume exposed cash flows and provide meaningful synergies with the Company’s existing conventional oil business.”
U.S. oil and gas producer Devon Energy Corp. (DVN-N) rose after it said before the bell it will buy peer WPX Energy Inc. (WPX-N) for US$2.56-billion, the company said on Monday, as it looks to expand its presence in the Delaware portion of the Permian Basin across Texas and New Mexico.
Shares of Tulsa-based WPX also jumped with the news.
The deal values WPX at $4.56 per share, just 2.7 per cent higher than the stock’s closing price on Friday.
Deals at little or no premium are becoming the norm in the oil and gas industry as producers seek out combinations to tide over a coronavirus-induced slump in demand and a crash in prices of hydrocarbons.
Devon’s deal is the second major merger in the troubled oil and gas industry following the price shock in April when crude oil briefly traded in negative territory, and points to growing consolidation in the sector.
Devon said it will own 57 per cent of the combined company, which will have an enterprise value of around US$12-billion, after the all-stock deal closes.
WPX shareholders will receive 0.5165 shares of Devon common stock for each share of WPX common stock owned.
Vancouver-based Dye & Durham Ltd. (DND-T) increased after it announced a new credit agreement of up to $165-million. It includes a $140-million revolving term loan facility with an additional uncommitted accordion of up to $25-million.
The company said it used the proceeds to repay the amounts outstanding under its prior term loan facility, with the remaining amounts to be used for general corporate purposes and acquisitions.
“We believe the new credit agreement will significantly improve our levered free cash flow, which we can now better deploy to fund our strategy of acquiring, integrating and operating businesses in our sector to drive EBITDA,” said Matt Proud, CEO of Dye & Durham.
Boeing Co. (BA-N) shares rose after the FAA Chief Steve Dickson said the agency is set to conduct a 737 MAX evaluation flight this week, a key milestone as the planemaker aims for approval to resume flight.
The Boeing 737 MAX has been grounded since March 2019 after two fatal crashes killed 346 people. Mr. Dickson, who was previously a commercial airline pilot, plans to undergo simulator training before the flight and will then share his observations with FAA technical staff.
It is not typical for an FAA administrator to fly an airplane before it returns to service. Mr. Dickson has repeatedly said he would not sign off until he flew it himself and was “satisfied that I would put my own family on it without a second thought.”
The FAA told U.S. lawmakers in an email Friday that Mr. Dickson and FAA Deputy Administrator Dan Elwell “will be in Seattle next week to take the recommended training.” The flight by Mr. Dickson will fulfill “his promise to fly the aircraft before the FAA approves its return to service.”
American Airlines (AAL-Q) was up after it said late Friday it has secured a US$5.5-billion government loan and could tap up to US$2-billion more in October depending on how the U.S. Treasury allocates extra funds under a US$25-billion loan package for airlines.
Airlines have until Sept. 30 to decide whether to take the U.S. Treasury loans, which were authorized under the CARES Act coronavirus relief bill passed by Congress in March.
American Airlines was originally allocated US$4.75-billion, but carriers including Delta Air Lines and Southwest Airlines have already said they do not intend to take their share of the package, opening the door for the funds to be used by other airlines.
Vista Outdoor Inc. (VSTO-N) rose after it said on Monday it would buy some parts of U.S. gunmaker Remington Outdoor Co Inc’s ammunition and accessories businesses for about US$81-million.
Remington in July filed for Chapter 11 bankruptcy protection for the second time in two years as it faced financial troubles partly because some retailers placed restrictions on gun sales after school shootings in the United States.
“By rescuing the Remington ammunition businesses from bankruptcy, we will protect hundreds of jobs, support wildlife and habitat conservation and ensure that hunting and shooting sports enthusiasts can continue,” Vista Outdoor Chief Executive Officer Chris Metz said in a statement.
Vista Outdoor was one among the many bidders in the auction process of Remington’s Chapter 11 bankruptcy cases pending in the United States Bankruptcy Court for the Northern District of Alabama.
Remington’s rifle was used in the Sandy Hook elementary school shooting in Connecticut in 2012 that killed 20 children and six adults, making it central to debates over gun policy.
Vista will also acquire Remington’s ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property, including the Remington brand and trademarks.
Caesars Entertainment Inc. (CZR-Q) increased after it said on Monday it would offer 30 million shares and intends to use the net proceeds to finance a portion its possible takeover of William Hill. The company gave no indication on pricing of the offer.
The offer would be valued at US$1.7-billion at Caesars' closing price of US$57.07 on Friday.
Chinese internet company Sina Corp. (SINA-Q), owner of social media platform Weibo, rose after announcing it will be taken private in a US$2.6-billion deal with Chief Executive Officer Charles Chao.
The offer price of US$43.3 per share is at an 18-per-cent premium to the stock’s closing price on July 2, the last trading day before Sina received the preliminary offer of US$41 per share.
Chao’s holding company, New Wave, is the largest shareholder of Sina, with a 12.15-per-cent stake as of July 10, according to Refinitiv-Eikon data.
Many Chinese companies are opting out of U.S. stock exchanges, following rising tensions between the world’s two largest economies, by considering go-private deals or returning to equity markets closer to home.
E-commerce firms Alibaba and JD.com have completed secondary listings in Hong Kong. Others including travel firm Ctrip and Baidu were considering Hong Kong listings, Reuters reported earlier this year.
Sina said Morgan Stanley Asia Ltd is acting as a financial adviser to the special committee it had formed to evaluate the proposal.
On the decline
Lundin Mining Corp. (LUN-T) was down after announcing late Sunday that processing activities have been interrupted at its Chapada mine in Brazil after a power outage that morning.
The Toronto-based company said the protection system at the operation’s main electrical substation failed when power was restore, resulting in “significant damage to all four SAG and ball mill motors.”
It said it has retained a third-party to conduct an independent investigation.
Aurora Cannabis Inc. (ACB-T) slipped after announcing 280 Park ACI Holdings LLC., led by U.S. billionaire investor Nelson Peltz, has resigned as senior advisor to the company.
Mr. Peltz had been providing services since March 2019 with respect to its U.S. strategic initiatives.
Inovio Pharmaceuticals Inc. (INO-Q) plummeted after it said on Monday a planned mid-to-late-stage trial of its experimental coronavirus vaccine candidate was put on partial clinical hold by the U.S. Food and Drug Administration, which sought additional information.
The U.S. drug developer said it was working to address the agency’s queries by October, including on the vaccine delivery device, after which the U.S. agency would have 30 days to decide whether the trial should proceed.
The company said the pause was not due to any side effects in its early-stage study of the vaccine, which is continuing.
Shares of the company were halted after the news.
The company in June had reported encouraging results from an early-stage human trial of its experimental coronavirus vaccine. INO-4800.
Inovio’s development timeline is already lagging behind those of rivals such as Moderna Inc., Pfizer Inc. and AstraZeneca, all of which have begun late-stage studies of their coronavirus vaccine candidates.
With files from Brenda Bouw, staff and wires