A roundup of some of the North American equities making moves in both directions today
On the rise
Sun Life Financial Inc. (SLF-T) saw gains on Monday after announcing it is raising its dividend after a federal regulator lifted restrictions last week that were put in place in the early days of the pandemic to help protect the country’s financial institutions.
The insurance company announced a supplementary dividend of 11 cents per share. The payment is in addition to the quarterly dividend of 55 cents per share it declared Nov. 3.
Combined, Sun Life says shareholders will receive a total quarterly dividend of 66 cents per share, a 20 per cent increase from the prior quarterly dividend payment.
The company says it remains committed to a dividend payout ratio of 40 to 50 per cent as part of its medium-term financial objectives.
The Office of the Superintendent of Financial Institutions lifted COVID-19-related restrictions last week when it said banks and insurers were free to increase dividends, resume share buybacks and raise executive compensation.
Manulife (MFC-T) was the first insurer to raise its dividend after the announcement when it increased its quarterly payment to shareholders by 18 per cent.
Rogers Communications Inc. (RCI.B-T) was higher after it said it will not appeal the Supreme Court’s decision that ruled in favour of the late founder’s son, Edward Rogers, to constitute a new board.
The Supreme Court of British Columbia ruled in favor of Edward Rogers on Friday, handing him a big victory in a dispute that pitted him against his mother and sisters and had weighed on the stock.
Edward Rogers was removed as the chair of Rogers Communications in September after he lost out in a family feud that started when he tried to dislodge Chief Executive Officer Joe Natale, saying he doubted Natale’s ability to lead the combined entity after the $20-billion Shaw deal in March.
However, following Friday’s ruling, as soon as Edward Rogers was reinstated as chairman of the board, he showed support for Natale in a surprise move.
Open Text Corp. (OTEX-T) was higher after saying it will buy the Dallas-based Zix Corp. (ZIXI-Q) for US$484-million in cash to as it continues its multi-year strategy to deepen cybersecurity offerings for small and medium-sized businesses.
The total transaction is worth US$860-million including debt, and values Zix at US$8.50 per share, slightly below its $8.74 closing price Friday.
The acquisition comes two years to the week after Waterloo, Ont.-based Open Text first announced it would buy another U.S. security software firm, Carbonite Inc., for US$800-million. Open Text has become one of Canada’s most valuable technology companies through such acquisitions, focusing on software that helps large organizations manage customers and automate processes. Its market capitalization is $17.5-billion.
The companies announced the transaction before markets opened Monday morning.
- Josh O’Kane
Aurora Cannabis Inc. (ACB-T) rose after saying it has signed a deal to invest in a significant equity stake in Growery B.V., a Netherlands-based company that holds a license to participate in the country’s controlled cannabis supply chain experiment.
The size of the investment was not immediately available.
The controlled cannabis supply chain experiment is being used by the Dutch government to see how cannabis can be legally supplied to coffee shops and what the effects of this would be.
Aurora says the deal is structured such that it intends to invest an immaterial cash amount of which a portion is due and payable upfront and the remainder dependent on Growery achieving certain milestones.
It will also provide a secured loan to Growery to build a facility, fund early operations and provide technical and operational help through its Netherlands-based research facility for medical cannabis.
Aurora CEO Miguel Martin says the Netherlands is expected to be the largest nationally regulated recreational market outside of Canada.
Toronto-based First Cobalt Corp. (FCC-X) jumped after saying Sunday it’s aiming to create North America’s first specialist facility for producing electric vehicle battery materials such as cathode chemicals, as it announced a name change to Electra Battery Materials.
Automakers are racing to boost their electric vehicle offerings, which need quick and easy access to materials such as cobalt and nickel used to make the lithium-ion rechargeable batteries that power these cars.
Some battery metals, such as nickel and cobalt, are already produced in North America, but the Electra facility could be the first dedicated specifically to EV battery materials.
The company is aiming to produce battery-grade nickel and cobalt and precursor chemicals for the cathode component of the batteries for North America.
Chief Executive Trent Mell expects Electra to be producing cobalt sulfate by the fourth quarter of next year, which is also when its expanded hydrometallurgical battery recycling facility will be producing 5,000 tonnes of cobalt.
“Globalization has created an electric vehicle supply chain that is too long, too costly and increasingly unreliable,” said Mr. Mell.
“Our automaker clients have a strong interest in greater localization of the supply chain to achieve greater reliability, security of long-term supply and a lower carbon footprint.”
Electra is in talks to secure nickel for its nickel sulfate facility in 2024-25 which, when combined with its near-term cobalt output, could supply sufficient raw material to build more than 1.5 million electric vehicles a year.
Warren Buffett’s Berkshire Hathaway Inc. (BRK.A-N, BRK.B-N) rose despite saying on Saturday that global supply chain disruptions kept a lid on its ability to generate profit, while rising equity prices caused it to sell some stocks and boost its cash hoard to a record.
Operating profit rose 18 per cent but missed analyst forecasts, as a resurgence in COVID-19 cases fueled by the Delta variant of the coronavirus caused goods shortages and crimped consumer spending, while damage from Hurricane Ida and European flooding boosted underwriting losses at the Geico car insurer and other insurance units.
Berkshire repurchased US$7.6-billion of its own stock in the third quarter and US$20.2-billion this year, as rising stock markets made buying whole companies increasingly expensive.
The buybacks, which appeared to continue in October, suggest that Mr. Buffett, a 91-year-old billionaire, sees greater value in his own Omaha-based conglomerate, whose businesses include the BNSF railroad and namesake energy unit.
“One of the big parlor games is, what is Berkshire’s next big acquisition,” said Cathy Seifert, a CFRA Research analyst with a “hold” rating on Berkshire. “I think we just saw it: it bought back $20 billion of its own stock.”
Berkshire has also been a net seller of stocks, and sold about US$2-billion more stock than it bought in the quarter. It ended September with US$149.2-billion of cash and equivalents.
“I sure hope there will be more buybacks, because there’s not much evidence of capital being put to work,” said Jim Shanahan, an Edward Jones & Co analyst who rates Berkshire a “buy.”
Third-quarter operating profit rose to US$6.47-billion, or about US$4,331 per Class A share, from US$5.48-billion, or about US$3,488 per share, a year earlier.
Analysts on average forecast US$4,493 per share, according to Refinitiv I/B/E/S.
Net income fell to US$10.3-billion, or US$6,882 per Class A share, from US$30.1-billion. Mr. Buffett believes the huge quarterly swings in net results are usually meaningless, and result from accounting rules he doesn’t control.
McAfee Corp. (MCFE-Q) increased after it said on Monday that a consortium led by U.S. private equity firm Advent International and including the Canada Pension Plan Investment Board will buy the Cyber security firm in a US$14-billion deal.
The deal comes as a pandemic-driven shift to remote working and a rise in cyber attacks have spurred demand for antivirus and digital security software.
The company, founded by U.S. technology entrepreneur John McAfee in 1987, was the first to bring to market a commercial antivirus. Intel bought it in 2011, when McAfee himself no longer had any involvement.
In the last few years, McAfee has strengthened its main cybersecurity software business that focuses on retail customers via price increases, new partner programs and good retention rates.
As part of the transaction, the investor group will acquire all outstanding shares of McAfee common stock for US$26 per share in an all-cash deal that values McAfee at about US$12 billion on an equity basis.
The purchase price represents a premium of 22.6 per cent over McAfee’s closing share price of US$21.21 on Nov. 4, the last trading day before the Wall Street Journal reported about the deal talks.
In a similar deal in August, U.S. cybersecurity company NortonLifeLock Inc had agreed to buy London-listed rival Avast Plc for up to US$8.6-billion to create a leader in consumer security software.
The Advent-led consortium also includes private equity firms Permira Advisers LLC, Crosspoint Capital Partners and Canada Pension Plan Investment Board among others.
On the decline
Tesla Inc. (TSLA-Q) fell after Chief Executive Elon Musk tweeted on Saturday he would sell 10 per cent of his stock if users of the social media network approved the proposal. Around 57.9 per cent of the people voted “Yes.”
“The majority voted for him to sell, which effectively signals that he is going to dump stock on the market,” said Russ Mould, investment director at AJ Bell.
“Investors may look at the situation and try and sell before he does, potentially then buying back at a lower price if they still liked the stock.”
With files from staff and wires