A roundup of some of the North American equities making moves in both directions today
On the rise
Cominar REIT (CUF.UN-T) soared as an investor group led by Canadian real estate company Canderel agreed to take it private in a $2.14-billion deal, as it looks to expand its presence in Montreal, Quebec City and Ottawa.
The investor consortium, which includes FrontFour Capital Group, Artis Real Estate Investment Trust and partnerships managed by the Sandpiper Group, will acquire Cominar for $11.75 in cash per unit, Canderel said in a statement on Sunday.
The offer represents a premium of 13.4 per cent to Cominar’s last close on Friday. Including debt, the deal is valued at $5.7-billion, according to Canderel.
The investor group will then sell some of Cominar’s retail and office properties to real estate developer Groupe Mach for about $1.5-billion, the statement said.
Group Mach said the deal would expand its position in the province of Quebec.
According to Canderel, the consortium will also sell Cominar’s industrial portfolio to Blackstone Inc for an undisclosed sum, while intending to retain portions of its retail and office portfolio.
In a research note, iA Capital Markets analyst Frédéric Blondeau said: “We expect the consortium to be successful, while the overall situation is, and is expected to remain, relatively complex. In the present context, generally speaking, we would recommend CUF’s current investors to redeploy the capital into Artis REIT.”
Montreal-based The Lion Electric Company (LEV-T) saw gains after announcing before the bell it has received a conditional purchase order for 1,000 all-electric LionC school buses from Student Transportation of Canada, a subsidiary of Student Transportation of America, whose controlling shareholder is Caisse de dépôt et placement du Québec.
In a research note, Desjardins Securities analyst Benoit Poirier said: “We are very pleased with this conditional order given it: (1) confirms Lion’s leadership position (65-per-cent-pls market share, according to management) in the all-electric school bus market in North America; (2) should accelerate orders in Canada outside of Québec as large operators rush to secure grants from Infrastructure Canada; (3) significantly increases Lion’s backlog from 703 units in 2Q21—for reference, our model did not anticipate a backlog of 1,700+ units until 2Q23; and (4) solidifies the school bus business to continue growing the nascent truck venture (TAM is 10 times larger than the school bus market at US$100-billion). Bottom line, this order strengthens our bullish stance on the name longer-term, especially given the recent weakness in the stock. We would be buyers of the shares this morning.”
Tesla Inc. (TSLA-Q) jumped to a record high after Hertz Global Holdings Inc. (HTZ-N) said on Monday its has ordered 100,000 cars for delivery by the end of 2022 as it invests to build the largest electric vehicle rental fleet in North America.
Shares were also buoyed by news of the company’s Model 3 becoming the first electric vehicle to top monthly sales of new cars in Europe.
The order from Hertz comes as Tesla is coping with a backlog of unfulfilled orders for its vehicles and continuing supply chain disruptions, but it does solidify the mainstream appeal of electric cars.
“Our backlogs are continuing to grow and average customer wait times are extending,” Chief Financial Officer Zach Kirkhorn told investors last week.
Tesla also said on Monday it had built a research centre and a separate data center in Shanghai, where it manufactures Model 3 sedans and Model Y sport-utility vehicles.
The auto research and development centre, Tesla’s first outside the United States, employs engineers for software, electronics, materials and charging, it said in a statement.
The new data centre for factory production will store Tesla’s operation data locally. Last month, China’s industry ministry published new draft measures that require companies to store important industry-related data locally.
During a wide-reaching global semiconductor chip shortage over the past months, Tesla’s research team had tweaked some software programs and made adjustments to ease the pressure brought by the chip shortage, according to the statement.
PayPal Inc. (PYPL-Q) increased after announcing late Sunday it is not pursuing an acquisition of Pinterest Inc. (PINS-N) at this time, the payments company said late on Sunday, responding to media reports that it was in talks to buy the digital pinboard site for as much as US$45-billion.
Bloomberg News first reported on the companies’ talks last Wednesday that was later confirmed by Reuters. A source at that time told Reuters that PayPal had offered US$70 per share, mostly in stock, for Pinterest.
However, sources had cautioned Reuters that no deal was certain and that the terms could change.
The Pinterest deal would have been the biggest acquisition of a social media company at the reported price, far surpassing Microsoft Corp’s US$26.2-billion purchase of LinkedIn in 2016.
It would have also allowed PayPal capture more e-commerce growth, as more shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram, TikTok and even Pinterest.
Paypal, among the big pandemic winners, has done a few takeover deals this year, including its US$2.7-billion acquisition of Japanese buy-now-pay-later (BNPL) firm Paidy.
It also acquired Happy Returns, a company which helps online shoppers return unwanted merchandise, for an undisclosed sum in May to bolster its e-commerce offerings and build on its $4 billion acquisition of online coupon finder Honey Science in 2019.
Vancouver-based ESE Entertainment Inc. (ESE-X) was up after announcing a binding agreement to acquire Frenzy sp. z.o.o., a European esports media and technology company, for $1.24-million.
Frenzy is a Warsaw-based media and production infrastructure company with a focus on the video game industry, creating esports and gaming events, broadcasts, and media content.
Facebook Inc. (FB-Q) turned higher despite Reuters reporting employees had warned for years that as the company raced to become a global service it was failing to police abusive content in countries where such speech was likely to cause the most harm, according to interviews with five former employees and internal company documents.
For over a decade, Facebook has pushed to become the world’s dominant online platform. It currently operates in more than 190 countries and boasts more than 2.8 billion monthly users who post content in more than 160 languages. But its efforts to prevent its products from becoming conduits for hate speech, inflammatory rhetoric and misinformation - some which has been blamed for inciting violence - have not kept pace with its global expansion.
Internal company documents viewed by Reuters show Facebook has known that it hasn’t hired enough workers who possess both the language skills and knowledge of local events needed to identify objectionable posts from users in a number of developing countries. The documents also showed that the artificial intelligence systems Facebook employs to root out such content frequently aren’t up to the task, either; and that the company hasn’t made it easy for its global users themselves to flag posts that violate the site’s rules.
On the decline
Burger King and Tim Hortons are struggling with a staffing crunch and the Delta variant keeping coffee-loving office workers at home, causing parent Restaurant Brands International Inc. (QSR-T) to miss estimates for quarterly revenue on Monday.
Shares of the company fell in both Toronto and New York.
Restaurant Brands also faced stiff competition from McDonald’s Corp. (MCD-N) and Wendy’s Co. (WEN-Q) doubling down on marketing and launching new menu items.
“COVID-19 contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures,” Restaurant Brands said in a statement.
Burger King, like most rivals, has struggled to ensure its restaurants have sufficient staff, with its newly launched hand-breaded chicken sandwich also considered a labor-intensive product.
Wendy’s launched a new ‘Big Bacon Cheddar Cheeseburger’ and reformulated its french fries to keep them crispy for longer earlier this year, while McDonald’s collaborated with boy band BTS and rapper Saweetie to draw customers.
Same-store sales at the Tim Hortons coffee chain, the biggest revenue maker for Restaurant Brands, jumped 8.9 per cent in the third quarter, while those at Burger King rose 7.9 per cent. Analysts on average had expected increases of 9.8 per cent and 9.3 per cent, respectively.
Analysts have said marketing behind some Burger King products have been lackluster, with the brand singled out as the biggest drag on Restaurant Brands’ overall performance.
Restaurant Brands said on Monday it expected to continue to invest more in its digital and marketing capabilities, noting a pandemic-led shift to online orders.
Total revenue rose to US$1.50-billion in the quarter ended Sept. 30, compared with US$1.34-billion a year earlier. IBES data from Refinitiv had estimated revenue of US$1.53-billion.
Net income attributable to common shareholders rose to US$221-million, or 70 US cents per share, from US$145-million, or 47 US cents per share, a year earlier.
Excluding items, it earned 76 US cents per share, beating estimates of 74 US cents.
Rogers Communications Inc. (RCI.B-T) was lower after Edward Rogers was reappointed chair at a Sunday board meeting that was called invalid by three rival family members as well as the five company directors who Mr. Rogers says he has now replaced.
Mr. Rogers is at odds with his mother and two sisters over which independent directors sit on the company’s board. The power struggle at Canada’s largest wireless carrier erupted after Mr. Rogers attempted to unseat CEO Joe Natale and remove other executives. The company is in the middle of a $26-billion takeover of Shaw Communications Inc.
- Alexandra Posadzki
See also: Martha Rogers calls for brother Edward’s resignation as chair of family trust
Kiladze: A Rogers family drama exposes the illusion of independent governance
Shares of Digital World Acquisition Corp. (DWAC-Q) fell lower on Monday.
The blank-cheque acquisition company rose 842 per cent last week after announcing on Wednesday it would merge with Trump Media & Technology Group, which aims to launch a social media network called TRUTH Social.
From zero to US$12-billion, investors chase Trump stock hype
Trump Media was worth US$8.2-billion based on the closing price of Digital World shares on Friday, while the company that would be created with the merger would have a close to US$12-billion valuation. This assumes Digital World valued its shares in the deal at US$10, as is customary for special purpose acquisition companies (SPACs). A detailed regulatory filing that will allow a precise calculation is expected this week.
With files from staff and wires
David Leeder