A roundup of some of the North American equities making moves in both directions today
On the rise
Inter Pipeline Ltd. (IPL-T) rose on Tuesday after announcing it has signed a deal to sell a majority of its European bulk liquid storage business to the CLH Group for $715-million.
The sale includes all of Inter Pipeline’s bulk liquid storage and handling assets in the United Kingdom, Ireland, the Netherlands and Germany.
The assets include 15 storage terminals and approximately 18 million barrels of storage capacity.
Inter Pipeline says it will keep its eight terminals in Sweden and Denmark comprising of 19 million barrels of aggregate storage capacity.
The company says proceeds from the sale will be used to reduce debt, strengthen its balance sheet and help with financing its capital spending, including its Heartland Petrochemical Complex.
The deal is expected to be completed in the fourth quarter, subject to closing conditions and regulatory approvals.
In a research note, Industrial Alliance Securities analyst Elias Foscolos said: “This morning’s announcement of the sale of the majority of IPL’s European Bulk Liquids Storage (BLS) business for $715-million should be viewed positively by investors, as the sales price appears fair. This also positions IPL to streamline its operations, and significantly de-risks the Company while it looks to secure a JV partner for its crown jewel project, the Heartland Petrochemical Complex (HPC). As a result, we have revised our financial projections and increased our target price to $17.00 while maintaining our Hold rating.”
Brookfield Property Partners LP (BPY-UN-T) rose amid news it is cutting 20 per cent of its workforce in its retail division, as the pandemic has accelerated online shopping and resulted in a string of store closings.
The Chicago-based mall operator, which operates 170 mall properties, has more than 2,000 employees in its retail division, according to the company.
“2020 has had a profound impact on us all, both personally and professionally,” Jared Chupaila, CEO of Brookfield Properties' retail group, wrote in a email to its employees. “''Our business has been frustrated, interrupted and constrained. All of our constituents — retailers, lenders, communities, partners and our own employees— have been affected by the events of this year and forced to revisit their relationships with our industry and our company.”
Mr. Chupaila noted in the email, furnished by the company, that while other companies were quick to furlough and lay off people at the onset of the pandemic, it made the “conscious decision” to keep all of its team employed while it gained a better understanding of its long-term impact on the company.
Knight Therapeutics Inc. (GUD-T) and TherapeuticsMD Inc. (TXMD-Q) announced the approval of Bijuva capsules by Health Canada.
The Montreal-based company’s shares finished narrowly higher.
Bijuva helps with menopause symptoms, such as hot flashes and night sweats, the company said.
Knight signed a license agreement with TherapeuticsMD in July 2018 for the exclusive Canadian commercialization rights to Bujuva. The agreement sees Knight pay TherapeuticsMD a milestone fee for the regulatory approval in Canada of Bijuva, as well as sales milestone fees and royalties.
DavidsTea Inc. (DTEA-Q) was up after it swung to a $2.6-million profit in its latest quarter, despite a 41-per-cent decrease in sales during the COVID-19 store closings.
The insolvent Montreal-based beverage company says it earned 10 cents per diluted share for the period ended Aug. 1, compared with a loss of 44 cents per share or $11.3-million a year earlier.
Excluding one-time items, including $3.2-million in restructuring costs and a Canadian government COVID-19 subsidy, DavidsTea says its adjusted loss was reduced to $1.72-million or six cents per share, from a loss of $6.3-million or 24 cents per share in the second quarter of 2019.
Sales plunged to $23-million from $39.2-million in the prior year’s quarter but were up 35 per cent from the first quarter.
Sales came from a 190-per-cent increase in e-commerce and wholesale revenues.
After the quarter-end, 18 stores reopened in Canada. The company also received court protection from its creditors while it restructures to a digital-led operation.
U.S. online used-car retailer Carvana Co. (CVNA-N) soared and opened at more than six-week high after it said on Tuesday it expects record revenue and retail sales in the third quarter due to a strong rebound in demand for vehicles in the United States, following easing of lockdown restrictions.
Shares of the company have nearly doubled in value this year.
“The momentum that we saw in the second quarter accelerated into the third, leading to record performance for Carvana,” Chief Executive Officer Ernie Garcia said.
Auto sales in North America have continued to recover from the COVID-19 pandemic, since hitting a bottom in April. A rebound in sales has seen major automakers scramble to ramp up production and boost inventories at dealerships.
Carvana also said it plans to offer up to US$1-billion in aggregate principal amount of senior notes, due in 2025 and 2028.
Carnival Corp. (CCL-N) increased after the cruise operator announced the sale of its two Princess Cruises ships - Sun Princess and Sea Princess - to undisclosed buyers.
“Sun Princess and Sea Princess contributed to significant growth in Australian cruising,” said Princess Cruises president Jan Swartz. “Both ships defined the premium cruise experience with Australians and New Zealanders spending close to 14 million nights aboard these ships. While it is never easy to say goodbye to any ship in our fleet, this will allow us to deploy newer ships enhancing our offerings for Australia cruisers and focus on bringing into service exciting newbuilds like the upcoming delivery of Enchanted Princess.”
Ralph Lauren Corp. (RL-N) gained after announcing it has decided to cut its global workforce by the end of its fiscal year as part of a company-wide restructuring to focus more on online sales, it said on Tuesday.
The company did not respond to a request for comment on how many employees were likely to be affected by the plan.
The COVID-19 health crisis has hammered demand for high-end handbags, apparel and accessories in retail stores, forcing luxury goods companies to slash costs and slow brick-and-mortar expansion plans.
However, their e-commerce sales have surged. Ralph Lauren said it would invest in digital platforms to support e-commerce operations, expand product personalization and add new features like augmented reality. It will also move some human resource and planning systems to online cloud platforms.
The luxury apparel maker said the layoffs are expected to result in gross annual pre-tax savings of about US$180-million to US$200-million. It expects to incur one-time pre-tax charges of about US$120-million to US$160-million in fiscal 2021.
On the decline
Bombardier Inc. (BBD.B-T) shares fell to a new low Tuesday after Spirit AeroSystems said some closing conditions on its planned acquisition of Bombardier’s aerostructures business remain unmet, injecting a degree of uncertainty into the deal.
The US$500-million sale of facilities in Belfast and Morocco forms a key part of Bombardier’s shift from a commercial plane-and-train maker to a pure-play manufacturer of private jets.
The deal is also critical to buoying the Montreal-based company’s balance sheet, which is currently weighed down by more than US$9 billion in debt.
Spirit AeroSystems says the agreement will automatically terminate if conditions are not satisfied by Oct. 31.
The Kansas-based company says the conditions include an absence of legal barriers, receipt of third-party consents and no major adverse changes to the business, which includes fuselage and wing factories.
Bombardier shares fell by one cent or three per cent to 38 cents in mid-afternoon trading on the Toronto Stock Exchange, a new 25-year-low for the Quebec mainstay.
Analyst Walter Spracklin of RBC Dominion Securities says he believes Bombardier has time to fulfil the closing conditions, but that the deal is less likely to close than previously expected.
The agreement was initially anticipated to wrap up in May of this year.
Toronto-based Dye & Durham Ltd. (DND-T) fell in the wake of signing a deal to buy U.K.-based rival Property Information Exchange Ltd. for $52.9-million.
Property Information Exchange offers cloud-based real estate due diligence products in the United Kingdom.
Dye & Durham said the company is a direct competitor and it plans to integrate and streamline the offerings of the two business.
In connection with the deal, Dye & Durham said Tuesday it will raise $50=million in a private placement of shares that will be used to help pay for the acquisition.
The company completed its initial public offering and began trading on the Toronto Stock Exchange on July 17. It raised $172.5-million in the offering and over-allotment option.
The acquisition was announced as Dye & Durham reported a loss of $3.8-million or 18 cents per share in its fourth quarter compared with a year-earlier profit of $1.7-million or 8 cents per share.
See also: Soaring Dye & Durham IPO could lead to surge in new Canadian tech issues, bankers say
Tesla Inc. (TSLA-Q) fell after Chief Executive Officer Elon Musk warned about the difficulties of speeding up production as an expert cautioned the carmaker’s increased reliance on large-scale aluminum parts could bring new manufacturing challenges.
While carmakers such as Mercedes-Benz have said automation has limitations, Mr. Musk has pressed on with plans to create a hyper-automated factory, which he refers to as the “alien dreadnought”, or “the machine that builds the machine”.
On Twitter, Mr. Musk said:
Musk’s warning comes ahead of a “battery day” later on Tuesday, when Tesla is expected to unveil steps to boost battery production.
See also: Tesla traders bet on Musk battery pitch to spark rally
For its new Model Y, Tesla plans to replace 70 components glued and riveted into the car’s rear underbody with a single module made using the world’s biggest aluminium casting machine in its new factory in Brandenburg, near Berlin.
China is unlikely to approve an “unfair” deal Oracle Corp. (ORCL-N) and Walmart Inc. (WMT-N) said they have struck with ByteDance over the future of video-streaming app TikTok, the state-backed Global Times newspaper said in an editorial.
Oracle stock fell on Tuesday, while Walmart was narrowly higher.
The U.S. majors have said they would buy into a new mainly U.S.-owned company, TikTok Global, with a board of directors comprised mainly of Americans, as the parties work to pacify the administration of U.S. President Donald Trump, which had planned to ban TikTok in the United States on security grounds.
In contrast, ByteDance has said TikTok Global would be its U.S. subsidiary with 80-per-cent ownership.
“It is clear that these articles (terms) extensively show Washington’s bullying style and hooligan logic. They hurt China’s national security, interests and dignity,” the newspaper said in an editorial in its English edition published late on Monday. It was also carried in its Chinese edition.
“From the information provided by the U.S., the deal was unfair. It caters to the unreasonable demands of Washington. It’s hard for us to believe that Beijing will approve such an agreement,” it said, echoing comments on Twitter the same evening from its editor-in-chief, Hu Xijin.
Hu on Tuesday, responding to comments Trump made to Fox News about how TikTok Global was going to be “totally controlled” by Oracle, said on Twitter: “Stop extorting. You think TikTok is a company from a small country?”
See also: TikTok proposes social media coalition to curb harmful content
With files from Brenda Bouw, staff and wires
David Leeder