A roundup of some of the North American equities making moves in both directions today
On the rise
Canopy Growth Corp. (WEED-T) was up 4.4 per cent on Thursday after announcing it has entered into a definitive agreement to acquire U.S.-based marijuana firm Acreage Holdings Inc. (ACRG.U-CN) in a deal valued at $3.4-billion.
It’s seen as one of the first major cross-border cannabis deals.
“Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” said Canopy chairman and co-CEO Bruce Linton. “By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.”
Under the terms of the agreement, Acreage Holders will receive an immediate aggregate total payment of US$300-million or approximately US$2.55 per Acreage subordinate voting share. Those shareholders will also receive 0.5818 of a common share of Canopy Growth for each Acreage subordinate voting share held.
On Thursday before market open, New York-based Acreage announced its subsidiary, High Street Capital Partners, LLC, is buying Deep Roots Medical LLC, a cannabis operator in Nevada in a cash-and-share deal valued at US$120-million.
“We continue to deliver on our shareholder commitments to aggressively expand our presence in the West," said founder and CEO Kevin Murphy in a press release. "We could not be more excited for what we believe will become a leading operation in the state of Nevada, one of the most important states in the cannabis industry.”
Shares of Acreage Holdings were down 0.6 per cent.
The Vancouver-based biotech company, which specializes in minimally invasive transcatheter mitral valve replacement technologies and in the development of minimally invasive devices for the treatment of refractory angina, said it has resolved three claims for correction of patent inventorship made by Edwards Lifesciences CardiAQ LLC in the United States District Court for the District of Massachusetts.
“For reasons of efficiency and economy, and without reaching the merits of the dispute, the parties agreed to a judgment ordering CardiAQ’s Jeremy Brent Ratz and Arshad Quadri be added as co-inventors of U.S. Patent No. 9,241,790, U.S. Patent No. 9,248,014 and U.S. Patent No. 9,770,329, which the Court ordered,” the company said.
The sides agree to cover their own legal costs and no monetary damages were awarded.
The mining giant announced sales of 1.37 million ounces of gold and 103 million pounds of copper, as well as preliminary first quarter production of 1.37 million ounces of gold and 106 million pounds of copper. Both fell in line with its guidance.
The average market price for gold in the first quarter was US$1,304 per ounce, while the average market price for copper in the first quarter was US$2.82 per pound.
Barrick said it has “made good progress in achieving its short-term goals as well as its full-year objectives during the first quarter ... After setting a production record at the Kibali mine in 2018, the Company [said] the operation is on track for another record performance in 2019. Barrick is also rapidly progressing the implementation of the joint venture agreement signed with Newmont in March, which will create the world’s single-largest gold producer and allow both partners to realize the enormous potential of Nevada’s mineral endowment.”
Blackstone Group LP (BX-N), the world’s largest manager of alternative assets, jumped 7.8 per cent after announcing Thursday a plan to convert from a partnership to a corporation, in a bid to get more investors into its stock.
Blackstone is hoping the move will boost its share price, which has for more than a decade traded at a discount to traditional asset managers such as BlackRock Inc.
“I am pleased to announce the compelling next step in Blackstone’s evolution as a public company: the firm’s conversion to a corporation,” said chairman and chief executive officer Stephen Schwarzman in a release. “Blackstone has established itself as one of the leading public companies in the world, with robust long-term revenue and earnings growth and one of the most powerful brands in financial services. We believe the decision to convert will make it significantly easier for both domestic and international investors to own our stock and should drive greater value for all of our shareholders over time.”
At the same time, Blackstone also announced first-quarter earnings on Thursday, reporting distributable earnings - the actual cash available for paying dividends - of US$538-million in the first quarter, up from US $502-million a year earlier.
This translated to distributable earnings per share of 41 US cents, lower than the 51 US cents analysts had predicted on average.
The Omaha-based company’s net income rose to US$1.4-billion, or US$1.93 per share, in the first-quarter ended March 31 from US$1.31-billion, or US$1.68 per share, a year earlier.
Analysts, on average, expected a profit of US$1.89 per share and revenue of US$5.50-billion. Total operating revenue fell to $5.4-billion from $5.5-billion.
Union Pacific’s operating ratio, a key measure of performance, increased 1 point to 63.6 per cent from a year ago.
“We delivered record first quarter financial results driven by improved operating performance, while dealing with significant weather challenges,” said man, president and chief executive officer Lance Fritz. “Unified Plan 2020 created a more resilient and robust network, allowing us to quickly return to normal operations.”
American Express Co.’s (AXP-N) was up 1.7 per cent as its quarterly profit exceeded Wall Street’s expectations, while its revenue results missed forecasts.
Total revenue, excluding interest expense, rose 7 per cent to US$10.36-billion, falling short of analysts’ estimates of US$10.5-billion.
Net income fell to US$1.55-billion, or US $1.80 per share, in the first quarter from US$1.63-billion, or US$1.86 per share, a year earlier.
Excluding items, the company earned US$2.01 per share, ahead of analysts’ expectations of a profit of US$1.99 per share.
“With FX-adjusted revenues up 9 percent we are off to a solid start in 2019,” said chairman and CEO Stephen Squeri in a release. "This growth was broad based and well-balanced across spend, lend and fee revenues, reflecting the benefits of our integrated business model.”
On the decline
Consolidated revenue fell 1 per cent year-over-year to $3.59-billion, missing the consensus expectation of $3.72-billion. Adjusted EBITDA and earnings per share of $1.34-billion and 78 cents, respectively, also failed to reach the analysts’ forecast ($1.43-billion and 93 cents).
In a research note, Desjardins Securities analyst Maher Yaghi said: “This morning, RCI reported 1Q19 results which were below expectations on most metrics, with wireless and wireline subscribers materially below expectations. RCI is trading below the sector on EV/EBITDA, but we believe its wireless operations are the most exposed to SJR’s wireless push—which we believe was apparent in the quarter—and its cable operations face tepid growth prospects.”
In a separate release, the company announced that the Toronto Stock Exchange has accepted a notice filed by Rogers of its intention to commence a normal course issuer bid for its Class B Non-Voting shares.
Under the NCIB, Rogers may, during the twelve month period commencing April 24, 2019 and ending April 23, 2020, purchase on the TSX, the New York Stock Exchange, other designated exchanges and/or alternative trading systems the lesser of 35,758,662 Class B shares, representing approximately 10 per cent of the public float of the Class B shares, and that number of Class B shares that can be purchased under the NCIB for an aggregate purchase price of $500-million
“The Board of Directors of Rogers has authorized such share repurchases because it believes that, at certain times, the purchase of Class B shares may represent an appropriate and desirable use of Rogers’ available funds when, if in the opinion of management, the value of the Class B shares exceeds the trading price of such shares. Such purchases would provide additional liquidity to shareholders and benefit the remaining shareholders by increasing their proportionate equity interest in Rogers,” the company said in a release.
Aphria Inc. (APHA-T) dipped 2.1 per cent after announcing late Wednesday the pricing of US$300-million aggregate principal amount of 5.25-per-cent convertible senior notes due in a private placement to qualified institutional. It has also granted the initial purchasers of the notes an option, exercisable within a 30-day period, to purchase up to an additional US$50-million aggregate principal amount of notes.
The marijuana producer intends to use the net proceeds from this offering to support its international expansion initiatives, for future acquisitions and for general corporate purposes.
Village Farms International Inc. (VFF-T) was down 4.5 per cent after announcing that it has completed its previously announced bought deal offering of 1 million common shares for aggregate gross proceeds to the Company of $20-million.
The company plans to use the proceeds for working capital purposes, including the growth of its U.S. hemp business.
TransAlta Corp. (TA-T; TAC-N) sat 2.7 per cent lower after announcing late Wednesday that shareholder Mangrove Partners has withdrawn its application before the Alberta Securities Commission (ASC) for a hearing related to TransAlta’s recent transaction with Brookfield.
"As previously released, Mangrove originally filed applications on April 8, 2019 before both the ASC and the Ontario Securities Commission (OSC) complaining about the Brookfield transaction," the company stated. "On April 15, 2019, the OSC issued a decision declining to assert jurisdiction, which left the matter solely within the jurisdiction of the ASC."
The U.S. activist investors were attempting to get regulators to delay TransAlta.’s $750-million partnership deal with Brookfield Renewable Partners LP.
With files from staff and wires