January 23, 2019

Streetwise newsletter: Willis on Frank Stronach’s court fight; More cannabis mergers on the way
  Streetwise newsletter: Willis on Frank Stronach’s court fight; More cannabis mergers on the way

Here are the top reads on deals and financial services over the last 24 hours,

Frank Stronach’s court fight threatens to put his business legacy on the ropes: Like a boxer who has stepped into the ring too many times, entrepreneur Frank Stronach is seeing his business reputation take a pounding in an increasingly nasty courtroom battle with his daughter and her allies for control of the family’s fortune. At the age of 86, Mr. Stronach should be basking in the glow of his Business Hall of Fame achievements as founder of Magna International Inc., now one of the world’s largest auto-parts companies. Opinion (Andrew Willis, for subscribers)

Cannabis sector to see more mergers this year as sector begins to mature: The pace of mergers and acquisitions in the Canadian cannabis industry is expected to intensify this year, possibly eclipsing initial public offerings as the sector begins to mature. The early days of the fledgling cannabis industry’s growth were characterized by a flood of IPOs as companies looked to finance their expansion, particularly ahead of the federal government’s legalization of recreational marijuana in October of last year. Story (Alexandra Posadzki and Jeffrey Jones, for subscribers)

Green Growth Brands formally files offer to buy Aphria: Green Growth Brands Inc. has formally filed its unsolicited offer to buy Aphria Inc., one of Canada’s largest cannabis companies. In the takeover bid made public on Tuesday, Green Growth said it would give investors in Aphria 1.5714 shares of the Columbus, Ohio-based company for each Aphria share. Green Growth stock closed Tuesday at $5.98. At that price, the deal would be worth $2.3-billion. Aphria has a market capitalization of $2.35-billion. Story (Christina Pellegrini, for subscribers)

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Tilray snaps up cannabis grower Natura to increase cultivation capacity: Tilray Inc. is buying an upstart Ontario-based cannabis producer in a bid to shore up cultivation space amid a severe supply crunch that has hampered sales. Nanaimo, B.C.-based Tilray said Tuesday it has agreed to pay $35-million in stock-and-cash to acquire Natura Naturals Holdings Inc., a Leamington, Ont.-based firm that’s licensed to grow cannabis but not yet permitted to sell it to consumers. Natura was founded by the late Claudio Mastronardi, a businessman and greenhouse grower. Former Ontario minister of finance Dwight Duncan is a director at the company. Story (Christina Pellegrini, for subscribers)

Anbang holds preliminary talks with investors about sale of Bentall Centre: Anbang Insurance Group’s broker has held preliminary talks with more than a dozen institutional investors about the sale of the Bentall Centre in downtown Vancouver, according to people familiar with the matter. The broker, commercial realtor CBRE, is running the sale of the four office towers, as Anbang restructures after being seized by the Chinese government last year. Story (Rachelle Younglai, for subscribers)

How some Canadian ETF investors got clipped last year by using hedging: The book on protecting your U.S.-stock returns against currency fluctuations is that a hands-off approach is best if you plan to stay invested for 10 or more years. But as the past year has shown, the short-term differences between owning a hedged U.S. equity ETF and an unhedged fund can be large. The S&P 500 index had a weak year in 2018, losing 4.4 per cent on a total-return basis. That’s by and large your result if you own an exchange-traded fund that tracks the S&P 500 and uses hedging to limit the impact of currency fluctuations on returns to investors. An unhedged U.S. equity ETF, with returns translated into Canadian dollars, made 4.2 per cent last year. Quite the difference, right? Story (Rob Carrick, for subscribers)


Credit cards: The European Commission has fined Mastercard €571-million, or around US$866-million, for breaching antitrust rules by raising payment-processing fees artificially, leading to higher prices for retailers and consumers. Story (for subscribers)

Outlook: UBS warned of a tough start to 2019 after fourth-quarter earnings fell short of expectations in conditions Chief Executive Sergio Ermotti described as “historically tough”. Story (for subscribers)


Loan: The Alberta government is providing a $440-million loan guarantee to help a Calgary-based company build a bitumen upgrader east of Edmonton. Story (for subscribers)

Financing: U.S. power producer PG&E Corp’s shares surged as much as 16 percent on Tuesday after it said it had secured US$5.5 billion in debtor-in-possession (DIP) financing from four banks as it prepares to file for Chapter 11 bankruptcy protection. Story (for subscribers)

Activism: Hedge funds Elliott Management and Starboard Value have taken stakes in ebay Inc. and urged changes at the e-commerce platform including the sale of some of its businesses, which could release billions of dollars in capital. Story (for subscribers)


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The Streetwise newsletter covers financial services, capital markets, mergers, acquisitions, financings and Bay Street moves in one convenient package. It is sent Tuesday to Saturday. Visit Streetwise.

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