A roundup of some of the North American equities making moves in both directions
On the rise
Aurora Cannabis Inc. (ACB-T) was higher despite missing Wall Street expectations for fourth-quarter revenue as pandemic-related restrictions weighed down consumer demand, leading Canadian provinces to cut orders.
After more than three years into Canada’s legalization of recreational cannabis, profits have been wearing thin at most pot firms, weighed down by fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.
Aurora last week said it would shut down a facility in Edmonton without disclosing the number of employees that would be impacted by the move.
The company laid off hundreds of employees last year to mitigate the impact of the pandemic, shut facilities and amended its loan agreements.
Net revenue at its consumer cannabis business, its second largest segment, slumped 45 per cent to $19.5-million in the fourth quarter.
The Edmonton-based company’s total net revenue fell 20 per cent to $54.8-million, below Refinitiv analysts’ expectations of $56.28-million.
Aurora sold 11,346 kilograms of cannabis in the quarter, compared with 16,748 kilograms a year earlier.
On an adjusted basis, the company lost 68 cents per share, compared with Wall Street expectations for a loss of 27 cents per share, according to data from Refinitiv.
Ford Motor Co. (F-N) rose after the U.S. automaker and its Korean battery partner SK Innovation said they would invest US$11.4-billion to build an electric F-150 assembly plant and three battery plants in the United States.
Ford also said late Monday it now expects to have 40 per cent to 50 per cent of its global vehicle volume to be all-electric by 2030, up from its prior forecast of 40 per cent
The companies intend to create nearly 11,000 jobs by opening assembly and battery plants in Stanton, Tennessee, and two additional battery factories in Glendale, Kentucky, as part of Ford’s previously announced plan to spend more than US$30-billion through 2030 on electrification, Ford said. Plants on both sites will open in 2025.
Monday’s announcement is the single largest manufacturing investment in Ford’s 118-year history. The Tennessee assembly and battery complex will be about three times the size of Ford’s sprawling, century-old Rouge manufacturing complex in Dearborn, Michigan, Ford North American Chief Operating Officer Lisa Drake told Reuters in an interview. She emphasized there will be room to expand on that site.
“For us, this is a very transformative point where we are putting our capital in place now in a very big way to lead the transition to EVs,” Ms. Drake said.
U.S. chemical products maker Huntsman Corp. (HUN-N) jumped after activist hedge fund Starboard Value acquired an 8.4-per-cent stake, saying it bought the shares as they were undervalued.
Earlier this month, Box Inc won a proxy contest against Starboard Value, in a rare defeat for the hedge fund, after the cloud services provider’s shareholders backed all three board directors the hedge fund was challenging.
Huntsman said it engages with its shareholders on an ongoing basis, and that it was looking forward to a constructive dialog with Starboard Value.
Guelph, Ont.-based Linamar Corp. (LNR-T) finished flat with the premarket announcement that it has entered into an exclusive manufacturing and licensing agreement with Michigan-based eMatrix Energy Systems, Inc. to gain access to its modular battery pack technology.
“The agreement positions Linamar as the exclusive manufacturing partner of eMatrix’s modular battery packs and grants Linamar exclusive licensing privileges in key markets. With the new partnership and investment, Linamar has taken a meaningful minority equity position in eMatrix ownership,” the company said.
Terms of the investment were not disclosed.
On the decline
Shares of Kirkland Lake Gold Ltd. (KL-T) dropped after announcing before the bell it will be acquired by Agnico Eagle Mines Ltd. (AEM-T) in an all-stock deal worth about $13-billion, that will see existing Agnico’s long serving chief executive Sean Boyd move to executive chair, with Kirkland’s top executive Tony Makuch becoming the CEO of the merged entity.
Toronto-based Agnico will pay 0.7935 of its shares for each Kirkland share, valuing Kirkland at $50.06 a share, or more than $5 a share lower than its most recent close of $55.70 a share. Kirkland shares had risen steeply in the past few trading sessions after the mining blog IKN reported that a number of big mining companies were in contention to buy the company. Still even without the recent runup in Kirkland’s shares, the takeover price doesn’t provide a huge premium. The price is about 1-per-cent higher than Kirkland’s average close over the ten day period to last Friday.
The deal will see two of the industry’s most highly valued companies combine, with mines located in some of the safest jurisdictions, including Canada, and Australia.
Agnico’s reserves will rise to 48 million ounces of gold as a result of the deal, with the addition of long-life assets such as Kirkland’s Detour Lake mine in northern Ontario.
- Niall McGee
Enbridge Inc. (ENB-T) closed lower after announcing partnerships with Royal Dutch Shell and Vanguard Renewables, as the pipeline operator pushes ahead with its emission reduction goals.
The company will purchase two billion cubic feet (bcf) of renewable natural gas (RNG) annually from Vanguard Renewables, while it will collaborate with Shell on potential green and blue hydrogen production.
Enbridge, which had set emission reduction targets in November, hopes to be a net zero emitter of greenhouse gases by 2050, as the industry faces pressure to limit carbon discharge.
The company said on Tuesday it would buy RNG from the anaerobic digesters that Vanguard will invest US$200-million to build in the U.S. Northeast, Southeast, and Midwest
Enbridge will also will invest about US$100-million in RNG upgrading equipment to convert the farm-derived gas into pipeline quality renewable natural gas and provide services to market it to U.S. customers.
Carbon-negative RNG is produced when carbon emissions are captured from dairies and turned into a transportation fuel, reducing the harmful effects of long-term climate change.
Blue hydrogen, where carbon emissions from its production are not released into the atmosphere, and green hydrogen, which is made with renewable power, are attracting huge interest as a clean alternative to natural gas that can be used for heating homes, heavy industry and transportation.
The Calgary-based company is aiming to add 2 gigawatts of incremental renewables capacity with a targeted investment of $3-billion by 2025, aiming to “accelerate its growth with a focus on customer-centred renewables and storage through the execution of its 3 GW development pipeline.”
It also declared a quarterly dividend of 5 cents, up 11 per cent from its previous 4.5 cent payout.
In a research note, ATB Capital Markets analyst Nate Heywood said: “The headline bullets are focussed on a material investment in customer-centered renewables ($3-billion through 2025), more details on the off-coal strategy including suspension of the Sundance 5 repowering and retirement of Keephills 1 (YE2021) and Sundance 4 (April 2022), and an 11-per-cent increase to the current dividend. Overall, the strategy is in line with our investment thesis as we continue to expect the stock could rerate as the Company increases its proportion of renewable generation capacity supported by long-term PPAs. While we had previously modelled in a modest dividend increase for 2022 of 6 per cent, the 11-per-cent bump exceeds consensus expectations and should convey confidence in the Company’s current direction.”
It is targeting 4 per cent to 6 per cent annual organic revenue growth for SNCL Engineering Services and reaffirmed 8-10-per-cent adjusted earnings before the interest and taxes for the segment through 2024.
“Overall, we are pleased with the growth objectives and FCF conversion target unveiled this morning, which are aligned with SNC’s core engineering services capabilities. We believe management’s comments on its capital deployment strategy should be a key driver for the stock today,” said Desjardins Securities analyst Benoit Poirier.
A potential deal could help Merck, which sells the blockbuster cancer drug Keytruda, to add drugs for rare diseases to its pipeline.
Cambridge, Massachusetts-based Acceleron focuses on the discovery, development and commercialization of therapeutics to treat blood-related disorders. It had a market capitalization of US$10.89-billion, as of its last close.
A Bloomberg report on Friday said Acceleron was in talks to be acquired for more than US$11-billion. Bloomberg had reported that several drugmakers including Merck’s rival Bristol-Myers Squibb Co, which owns 11.5 per cent of Acceleron’s stock, were seen as potential suitors.
Acceleron currently earns royalties from sales of Reblozyl, a drug to treat two blood related disorders, and is developing another treatment for a type of high blood pressure that affects the lungs.
Reblozyl, which is jointly co-promoted by Bristol and Acceleron, brought in sales of US$274-million in 2020, according to Bristol Myers.
With files from staff and wires