A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of Air Canada (AC-T) rose 3.2 per cent on Thursday after airline and travel company Transat AT Inc. (TRZ-T) agreed to be bought in a $520-million deal between Canada’s largest and third-biggest carriers.
The all-cash takeover worth $13 for each Transat share comes after 30 days of exclusive talks between the two airlines, and is expected to be completed by 2020, the companies said in a joint statement on Thursday morning.
Transat shares were down 5.4 per cent.
AltaCorp Capital analyst Chris Murray said: “We view the transaction as positive for all stakeholders, seeing several complementary synergies available to Air Canada that we expect to enhance earnings in the coming years.”
Read more from the Globe’s Eric Atkins here.
The grocery store operator reported adjusted earnings per share of 46 cents for the fourth quarter, topping the 42-cent forecast on the Street and rising from 35 cents during the same period a year ago.
"The progress being made at Empire Company is clear to see in every financial and customer metric in our fourth quarter and fiscal 2019," said president and CEO Michael Medline. "The team is stronger, more customer focused, results oriented and increasingly innovative. We are especially proud of our annual sales improvement of almost $1 billion and productivity gains that are showing up in significantly higher gross margin. Project Sunrise is progressing even better than we had planned and we expect to exceed our $500 million savings target."
"We now believe that, following our three-year transformation effort, we will be in a strong position to put in place a new three year strategic and financial roadmap to drive even stronger shareholder returns. Our confidence is manifest in our announcement today that we are raising Empire’s dividend 9 per cent, and intend to carry out a $100 million share buyback.”
Pure Multi-Family REIT LP (RUF.UN-T) increased 10.7 per cent after it confirmed on Thursday that it received an unsolicited conditional proposal from American Landmark/Electra America to acquired the REIT’s Class A units.
ALEA is aiming to acquire 100 per cent of Pure’s units at $7.61 per unit in cash.
Electra America had previously approached Pure Multi-Family in December of 2017 with a $7.54 per unit offer, which was later increased to $7.59.
In a research note, Industrial Alliance Securities analyst Brad Sturges said: "We expect Pure Multi’s units to initially react positively to the ALEA’s unsolicited proposal, as well as to Pure Multi’s exclusive negotiations regarding a potential transaction for Pure Multi with a third-party. However, the re-emergence of ALEA does raise some questions yet again about the group’s ultimate intentions with respect to Pure Multi, as well as reigniting questions concerning the last failed sales process. At this stage, it still remains to be seen as to whether Pure Multi will ultimately enter into a definitive transaction agreement.
"Overall, we continue to view Pure Multi as a possible merger and acquisition (M&A) candidate given the high-quality nature of its US Sunbelt multifamily property portfolio combined with is discount valuation to Pure Multi’s underlying real estate value. Recently, Tricon Capital Group (TCN-T, Not Rated) acquired the Starlight US Multi-Family No. 5 Core Fund (Starlight Fund, STUS.A-V, Not Rated) for over $1.4-billion. The Starlight Fund comprises 23 multifamily properties totalling 7,289 rental units located primarily in various US Sunbelt property markets. We view Starlight’s multifamily portfolio to be quite comparable to Pure Multi, with the key differences being a slightly lower average property age, and perhaps a somewhat more suburban location for the Starlight Fund versus Pure Multi. While no cap rate was disclosed, the going-in cap rate of the transaction to be paid by Tricon is believed to be below 5 per cent, which compares favourably to Pure Multi’s 5.2-per-cent implied cap rate (at $7.61/unit). Tricon’s Starlight Fund purchase that equalled a price of ~$192,000 per rental suite also compares favourably to Pure Multi’s implied proposed takeover valuation of $175,000 per suite (based on a price of $7.61/unit).
Walgreens Boots Alliance Inc. (WBA-Q) increased 4.1 per cent after reporting a quarterly profit that exceeded analysts’ expectations on before the bell Thursday, driven in part by an increase in branded drug prices and a rise in the number of prescriptions the drugstore chain filled in the United States.
The company, which also maintained its full-year adjusted profit forecast, announced earnings per share, excluding items, of US$1.47, topping the US$1.43 expectation on the Street.
Walgreens, which replaced General Electric Co on the blue-chip Dow Jones Industrial Average Index last year, is the worst performing stock on the index, with year-to-date losses of 23.4 per cent.
The specialty retailer will expand its offering of Green Growth’s Seventh Sense Botanical Therapy products from 10 to 160 stores.
“The expansion includes Seventh Sense’s CBD-infused body lotions, muscle balms, lip balms and sugar scrubs, and is Green Growth Brands’ second major wholesale agreement since the passage of the Agriculture Act of 2018 in December 2018,” the company said.
Ford Motor Co. (F-N) was up 2.9 per cent after revealing it will have cut 12,000 jobs in Europe by the end of next year to try to return the business to profit, part of a wave of cost reductions in an auto industry facing stagnant demand and record-level investments to build low emission cars.
Following the release of its third quarter results, Shaw Communications Inc. (SJR-B-T) rose 0.3 per cent.
Revenue grew to $1.32-billion this year from $1.29-billion during the same period a year ago, falling just short of the consensus forecast on the Street of $1.34-billion.
Its net income rose to 44 cents per share, versus a loss of $99-million or 20 cents per share a year ago.
Desjardins Securities analyst Maher Yaghi said: “SJR reported 3Q FY19 results, with profitability in line with expectations, wireless subscribers beating consensus and cable subscribers missing the target. Management modified its adjusted EBITDA growth guidance to 6 per cent, up from the previous 4–6-per-cent forecast, excluding one-time items. Management now expects FY19 FCF to be $550-million, vs the previous expectation for FCF “in excess of $500-million”. We believe the updated guidance was somewhat baked into consensus estimates given the strong financial results reported in 1H FY19”
The company said the purchase was funded with proceeds from its existing credit facility. A sale price was not specified, though the company said its “multiple is within PLC’s publicly-stated targeted EBITDA multiple range for transactions of this nature.”
“We are excited to expand our presence in Texas by adding a funeral home to complement our existing cemetery operations in the Houston market. This location will tuck-in to our Houston portfolio and is in line with PLC’s growth strategy,” said chairman Andrew Clark.
On the decline
BlackBerry Ltd. (BB-T) was down 2.5 per cent after a report that the company was at risk of an enforcement action from the U.S. Securities and Exchange Commission for using non-GAAP quarterly results.
In a statement released on Thursday afternoon, BlackBerry said: “The information in our financial disclosures complies with U.S. securities laws that apply to us as a Canadian foreign private issuer, including all rules regarding the use of non-GAAP measures. We believe the non-GAAP information, together with our GAAP information, provides shareholders with valuable information regarding our financial performance."
Shares of Boeing Co. (BA-N) were lower by 2.9 per cent Thursday after the U.S. aviation regulator found a new flaw in the 737 MAX jet, potentially delaying the aircraft’s return to service and piling more pressure on the planemaker’s suppliers.
With files from Brenda Bouw, staff and wires