A roundup of some of the North American equities making moves in both directions today
On the rise
Bonterra Energy Corp. (BNE-T) rose on Tuesday after saying its board of directors has unanimously rejected a takeover offer by rival Obsidian Energy Ltd. (OBE-T)
The Bonterra board says the offer is not in the best interests of the company and urged shareholders to reject the proposal.
Obsidian has offered two of its shares for each share of Bonterra.
Bonterra says investment firm Peters & Co. Ltd. has delivered a written opinion to the board that the offer is inadequate from a financial point of view.
See also: Obsidian’s play for Bonterra shows the oil patch is ripe for consolidation
Power Corp. (POW-T) was up after The Globe and Mail reported its alternative-asset management arm, Sagard Holdings, is adding to its financial services portfolio with the purchase of a majority stake in Alberta-based high-net-worth wealth manager Grayhawk Investment Strategies Inc.
On Tuesday, Sagard will announce it is acquiring an undisclosed majority holding in Grayhawk Investments, a portfolio management company with about $800-million in assets under management that serves high- and ultrahigh-net-worth households across Canada.
Ultrahigh-net-worth accounts typically have more than $30-million in investable assets and can include multiple generations of family wealth. Sagard’s chief executive Paul Desmarais III told The Globe and Mail he particularly wants to target middle market entrepreneurs – business owners with less than $1-billion in investable assets – through the partnership with Grayhawk.
- Clare O’Hara
Hydro One Ltd. (H-T) rose after an equity analyst at Raymond James upgraded its stock before the bell.
“With bond rates continuing to hover at all time lows, we believe material valuation upside remains in regulated utilities like Hydro One," said David Quezada. "Further, we see a lengthy runway of capital deployment in Ontario providing longer term upside to rate base growth, which — when coupled with a supportive regulatory backdrop and lack of exposure to COVID-19 — supports our move to Outperform.”
Late Monday, Hydro One announced that its wholly-owned subsidiary, Hydro One Inc., has priced an offering of $1.2-billion of medium term notes.
Southwest Airlines Co. (LUV-N) sat higher after saying late Monday it is asking unions to agree to pay cuts in order to prevent furloughs and layoffs through 2021 as the industry struggles to stem losses from the coronavirus pandemic in the absence of more federal aid.
Unions represent about 83 per cent of roughly 61,000 Southwest employees. Non-union staff salaries will be cut by 10 per cent until Jan. 1, 2022, when they will return to the current level.
“Our objectives are to make this quick and simple and avoid furloughs,” Chief Executive Gary Kelly said in an interview.
The union representing Southwest pilots said it had tentatively agreed to meet and discuss cost savings if a second COVID-19 relief package does not pass in Washington. The flight attendants and mechanics unions did not immediately comment.
Rivals American Airlines and United Airlines began furloughing 32,000 employees last week when a ban on job cuts expired without another US$25-billion in federal payroll support that airlines have been seeking.
Southwest, which has never furloughed any workers, has said it may have to follow suit as air travel remains down 70 per cent.
Calgary-based Founders Advantage Capital Corp. (FCF-X) jumped higher after announcing it has entered into an agreement to acquire the remaining 40-per-cent interest in Dominion Lending Centres Limited Partnership.
In a research note, Desjardins Securities analyst Gary Ho said: “When we upgraded the stock in August, we pointed to FCF refocusing on DLC and streamlining its structure as a potential catalyst for the stock. We believe investors will view the transaction favourably (vs the prior attempt in 2018).”
U.S.-listed shares of BioNTech (BNTX-Q) gained after the European health regulator said it had started a real-time review of the COVID-19 vaccine being developed by the German biotech firm and U.S. drugmaker Pfizer Inc. (PFE-N).
Pfizer’s shares also rose.
The European Medicines Agency (EMA) said on Tuesday its human medicines committee was evaluating the first batch of data on the vaccine, and would continue to do so until enough data is available for a final decision.
Pfizer and BioNTech said in a joint statement the start of the review is based on data from laboratory and animal testing, as well as early testing on humans, while continuing talks to submit data as it emerged.
Clearwater Seafoods Inc. (CLR-T) was higher after The Globe and Mail reported it is weighing a takeover offer backed by East Coast First Nations after striking what was billed as a “historic” deal last month to sell lobster licences to a Nova Scotia Indigenous group.
Halifax-based Clearwater fielded at least three bids that value the company at approximately $1-billion, according to investment banking sources, analysts and media reports, after launching a strategic review in March that is expected to result in the company’s sale.
The leading contender is Premium Brands Holdings Corp., according to sources that include seafood industry publication Undercurrent News. The Vancouver-based company’s offer includes roles for Newfoundland’s Miawpukek First Nation and the Membertou First Nation of Nova Scotia. The other bidders are the Ontario Teachers' Pension Plan Board and privately owned Cooke Aquaculture Inc. of Blacks Harbour, N.B., which made an unsuccessful offer for Clearwater in 2011.
- Andrew Willis
Macy’s Inc. (M-N), the largest U.S. department store operator, rose in the wake of signing a deal to invest in Swedish payments group Klarna, joining investors including rapper Snoop Dogg and BlackRock in betting on the “buy now, pay later” online payments market.
The deal includes a five-year partnership between the two companies under which Macy’s customers could choose to make payments in four equal, interest-free installments at the online checkout.
Macy’s would be one of the first department store companies to offer Klarna’s “buy now, pay later” (BNPL) service. Klarna has a similar tie-up already with H&M , the world’s second-biggest fashion retailer.
“We are in discussions with some global retailers on exclusive deals,” Klarna Chief Executive Officer Sebastian Siemiatkowski told Reuters.
“We at Klarna take a very long-term approach and this investment demonstrates a shared commitment and vision to the continual development of retail over the next years to meet customers changing expectations and preferences.”
The value of Macy’s investment was not disclosed.
AMC Entertainment Holdings Inc’s (AMC-N) shares gained after the largest theater chain in the world said most of its theaters in the United States and Europe would remain open, with several releases lined up for October and November.
The move comes a day after rival Cineworld, the world’s second-biggest cinema operator, said it would close all its screens in the United States and Britain after studios delayed major releases such as the latest James Bond film.
AMC said more than 80 per cent of its theaters in the United States, more than 90 per cent of Odeon Cinemas Group theaters across Europe and all AMC Cinemas in the Middle East would remain open.
The company said it would launch The War With Grandpa starring Robert De Niro and Yellow Rose this weekend in the United States, with other titles including The Croods: A New Age, Happiest Season and Soul expected to release in November.
On Monday, AMC shares dropped 11 per cent on the Cineworld news.
Toronto-based Cineplex Inc. (CGX-T), which dropped almost 30 per cent, rebounded on Tuesday.
See also: Cineworld shutdown heightens movie-theatre industry fears
Toronto-Dominion Bank (TD-T) was narrowly higher after confirming the closing of the acquisition of TD Ameritrade Holding Corp. by The Charles Schwab Corp. (SCHW-N).
Under the deal, TD received an approximately 13.5-per-cent stake in Schwab, consisting of 9.9 per cent voting common shares and the remainder in non-voting common shares which are convertible into voting common shares upon transfer to a third party.
See also: TD subsidiary launches Tesla battery project to support power grid
Cisco Systems Inc. (CSCO-Q) was up in the wake of a U.S. judge on Monday ordered it to pay US$1.9-billion after a Virginia company accused it of infringing patents related to complex computer network security functions.
U.S. District Judge Henry Morgan in Norfolk, Va., concluded after a non-jury trial that Cisco infringed four patents belonging to the plaintiff Centripetal Networks Inc, of Herndon, Va.
On the decline
Boeing Co. (BA-N) erased early gains and dropped after it cut its rolling 20-year forecast for airplane demand on Tuesday as economic turmoil from the COVID-19 pandemic lays waste to deliveries in the next few years.
Boeing, which dominates jet sales together with Europe’s Airbus, forecast 43,110 commercial aircraft deliveries over the next 20 years, down 2 per cent from 44,040 projected a year ago and worth an unchanged US$6.8-trillion at list prices.
While fleets are still expected to almost double, it is the first time Boeing has cut the 20-year demand forecast in terms of the number of deliveries since the 2009 financial crisis.
Boeing also for the first time gave a partial breakdown for the first half of the 20-year period, showing steep declines for the coming decade on the heels of the COVID-19 crisis.
It predicted 18,350 deliveries in 2020-2029, down 10.7 per cent from an unpublished forecast of 20,550 embedded in the last report.
Separately, American Airlines (AAL-Q) has delayed plans to begin scheduling Boeing 737 MAX training for its pilots in November, a spokesman for the Allied Pilots Association said.
Last month, American said the plans could be canceled if the 737 MAX, which is awaiting regulatory approval on a series of changes following two fatal crashes, is not recertified in time.
Shares of audio device makers Sonos Inc. (SONO-Q) and Logitech (LOGI-Q) fell on Tuesday after their speakers were removed from Apple Inc’s online stores.
Apple’s website now only has products from Beats, a company it bought in 2014, and its own speakers and headphones, checks made by Reuters on Tuesday showed.
Cupertino, California-based Apple has taken this approach in the past around new product launches. It stopped selling Fitbit Inc’s fitness bands and smart watches after coming up with the Apple Watch, according to media reports.
Bloomberg reported late on Monday that the rival products were removed from its online store in late September and that its employees at their brick-and-mortar stores were also asked to remove the products in recent days.
With files from staff and wires
David Leeder