Here are the top reads on deals and financial services over the last week. Have a great weekend!
| Canada’s airline industry is being remade, which is good for business travellers, and bad for the rest of us: Porter, the Toronto-based regional carrier with the raccoon logo, is in the enviable position of being a perfect complement to the country’s second-largest player, WestJet Airlines Ltd., which agreed to a friendly $3.5-billion buyout from private-equity firm Onex Corp. last Monday. The case for consolidation grew stronger on Thursday, when market leader Air Canada announced it’s in exclusive talks to acquire charter company Transat A.T. Inc. for $520-million. Story (Andrew Willis, for subscribers)
| Lights are dimming at the trillion-dollar private-equity party: The private-equity industry has been a wonder, a massive growth and profit machine that has made the rich richer, flattered the returns of pension and sovereign funds and thrust star tech companies onto the stock market. Their fuel is cheap debt and lots of it, and the returns have been awe-inspiring. But the private-equity party may be coming to an end. Opinion (Eric Reguly, for subscribers)
| A major bank just announced the lowest 10-year fixed mortgage rate ever: Decade-long mortgages have always been a really bad idea for almost everyone. One big reason: The best 10-year fixed rates have never outperformed the best five-year fixed rates over any 10-year period in modern history. Story (Robert McLister)
| | | | Story continues below advertisement | | | SNC’s Highway 407 sale hits snag as partners fight over stake: SNC-Lavalin Group Inc.’s planned sale of a minority stake in Ontario’s Highway 407 has hit a snag as the toll road’s current shareholders fight for the right to buy the engineering firm’s 10-per-cent share. The dispute is now headed to court with an expedited hearing scheduled for June 21 and a ruling expected shortly after, SNC-Lavalin said in a statement Friday. Story (Nicolas Van Praet)
| Bank of Montreal cuts about 100 jobs across its capital markets division: Bank of Montreal is trimming the ranks of its capital markets arm, eliminating approximately 100 jobs as the bank continues to hunt for ways to control its costs. The job cuts were announced internally over the course of a few days this week, according to sources familiar with the matter who were not authorized to discuss the changes. They span a range of divisions and seniority levels in Canada and the U.S., as well as other countries where BMO does business. Story (James Bradshaw and Andrew Willis, for subscribers)
| Recession worries, spike in risky borrowing threaten Canadian financial system: The rising probability of a recession and a spike in riskier borrowing by Canadian companies are among the emerging threats buffeting the country’s financial system, the Bank of Canada says. Story (Barrie McKenna, for subscribers)
| Air Canada in exclusive talks to buy Transat in $520-million deal: Air Canada says it has entered exclusive talks to buy Montreal-based airline and tour operator Transat A.T. Inc for $13 a share in a transaction worth $520-million. Air Canada, the country’s largest airline, said on Thursday morning the deal offers a “made-in-Quebec” path to better job security for employees of both companies and will provide travellers a greater array of routes and holiday packages. Story (Eric Atkins and Nicolas Van Praet)
| Travellers worried about higher ticket prices if Transat-Air Canada merge: Transat A.T.’s decision to enter into exclusive talks to be taken over by Air Canada is raising worries that travellers will pay higher ticket prices if the rivals merge. A Montreal deal-maker mounting a competing effort to buy Transat says an Air Canada takeover would be the "worst scenario.” Story (Nicolas Van Praet, for subscribers)
| Rob Djurfeldt leaves ScotiaMcLeod: The head of ScotiaMcLeod is no longer with the firm, according to sources familiar with the matter. Story (Clare O’Hara, for subscribers)
| Vancouver software firm PDFTron raises $71-million to fund growth: A Vancouver software company that has quietly emerged as one of Adobe Systems’ top rivals in the digital document creation business has raised US$71-million from Boston private equity firm Silversmith Capital Markets to fund its growth. PDFTron Systems Inc., with just 46 employees and between US$10-million and US$20-million in annual revenues, is little-known even in its home town. Story (Sean Silcoff, for subscribers)
| Canada is about to get its first e-sports ETF: Video game enthusiasts looking to take their investments to the next level may soon be able to with Canada’s first global e-sports exchange-traded fund. Evolve Funds Group Inc. filed a preliminary prospectus Thursday for the Evolve E-Gaming Index ETF. Story (Clare O’Hara)
| WeWork raises $1-billion from Ivanhoé Cambridge in shift into property acquisition and management: WeWork is expanding into property acquisition and management, raising US$1-billion from Canada’s Ivanhoé Cambridge to buy real estate in major cities around the world. The U.S. company’s new commercial real-estate unit, called Ark, will use the US$1-billion investment from Ivanhoé along with roughly US$1.9-billion from other investors to buy and develop commercial property in big urban centres such as Toronto, London and Paris. Story (Rachelle Younglai, for subscribers)
| Former Facebook executive, Toronto venture capitalists ordered to pay nearly $16-million in suit over Tinder stake: An Ontario judge has ordered a former Facebook executive and two Toronto venture capitalists to pay almost US$16-million in damages in a case that included claims of a hidden interest in the popular dating app Tinder. The complex case involved former business associates in the Toronto technology fund Extreme Venture Partners and one of the central issues was the 2012 sale of Xtreme Labs, a software company that held a 13-per-cent interest in Hatch Labs, the developer of Tinder. Story (Christine Dobby, for subscribers)
| Fortress seeks large payouts for financing negotiation work: Fortress Real Developments Inc. is seeking large fee payments for work it has done negotiating new financing for some of its troubled real estate developments, even as syndicated mortgage investors are facing significant losses on some of the projects. Story (Janet McFarland, for subscribers)
| CPP investment fund shifts focus, adds $32-billion to assets: Canada Pension Plan Investment Board shifted away from stocks that trade on the world’s exchanges and moved more deeply into private companies and projects such as power plants and toll roads – helping it add $32-billion to its assets in its most recent fiscal year. The results, released Wednesday, show CPPIB posting a return of 8.9 per cent for the 12 months ended March 31. Story (David Milstead, for subscribers)
| Corus shares sink after Shaw sells its stake: Investors gave a cold reception to the $548-million sale of Corus Entertainment Inc. stock, knocking back the stock price by 17 per cent on Wednesday, a day after Shaw Communications Inc. cut ties with the Toronto-based broadcaster. Shaw announced late on Tuesday it sold its entire 36.8-per-cent stake in Corus to a syndicate of 13 investment banks led by TD Securities Inc., which in turn offered the stock to investors for $6.80 a share. Story (Andrew Willis, for subscribers)
| Smartphone repair shop Mobile Klinik raises $27.5-million in financing round to fund expansion: Mobile Klinik has raised $27.5-million in a financing round meant to fund the company’s bid to expand to 200 stores across Canada within the next three years. Toronto-based Mobile Klinik was co-founded in 2015 by a pair of veteran Canadian telecom executives. Story (Christine Dobby, for subscribers)
| Toronto fintech company Koho Financial raises $42-million in growth capital: Koho Financial Inc., the Toronto-based company behind a mobile-banking service that has helped more than 120,000 Canadians track their spending, has raised $42-million in growth capital. The service, which acts as a fee-free account for consumers that lets them spend with a prepaid Visa, makes its revenue from interchange fees that credit-card companies earn from retailers. Story (Josh O’Kane)
| Australia’s St. Barbara to acquire Canada’s Atlantic Gold in $722-million deal: Australia’s St. Barbara Ltd. is buying Canada’s Atlantic Gold Corp. in a friendly transaction worth $722-million – more evidence of a resurgence in deal-making in the global gold sector. Vancouver-based Atlantic owns and operates a small but very profitable gold mine in Nova Scotia. Story (Niall McGee, for subscribers)
| Power Corp. faces shareholder dissatisfaction with company governance: The Desmarais family’s Power Corp. of Canada is facing increasing shareholder dissatisfaction with its governance, with a large minority of public shareholders voting against reappointing co-CEOs Paul Desmarais Jr. and André Desmarais to the board. Story (David Milstead, for subscribers)
| Power Corp. eyes U.S. retirement investment companies in expansion plan: Power Corp. executives are keeping a close eye on the U.S retirement-savings business as they look to expand their presence south of the border through acquisitions. Already the second-largest U.S. provider of defined-contribution plans – often called 401(k)s – Power Corp. is looking to boost its U.S.-based Empower Retirement division. Story (Clare O’Hara, for subscribers)
| Shaw unloads entire stake in Corus to raise $548-million: Shaw Communications Inc. is unloading its 38.6 per cent stake in Corus Entertainment Inc. in a $548-million share sale. The offering is priced at $6.80 per share, representing a 15.6 per cent discount to the closing price of Corus’s shares on Tuesday. Typically, discounts on share sales range between 2 and 4 per cent. Story (Tim Kiladze, for subscribers)
| Blockchain entrepreneur Alex Tapscott pays penalty as part of settlement with U.S. securities regulators: Blockchain entrepreneur Alex Tapscott will pay a US$25,000 penalty as part of a settlement with the U.S. Securities and Exchange Commission over allegations that his venture-capital fund raised money using untrue statements. The settlement comes a day after the Ontario Securities Commission approved its own settlement with Mr. Tapscott and NextBlock Global Ltd., the fund that the 33-year-old Toronto resident co-founded and ran. Story (Alexandra Posadzki, for subscribers)
| ‘Cash crunch’ leaves Stornaway Diamond Corp. racing to stave off insolvency: Stornoway Diamond Corp. is racing to stave off insolvency as it deals with a decline in gem prices that has prevented the Canadian miner from generating positive free cash flow this year. Longueuil, Que.-based Stornoway said Tuesday it is in talks with backers to secure its long-term financial viability. At the same time, the company launched a major cost-cutting effort and strategic review, which could mean putting itself up for sale. Story (Nicolas Van Praet, for subscribers)
| How a hot trend in electronic banking is making life easier for seniors: Can we all agree that paying for stuff with a tap of your debit or credit card is perhaps the greatest innovation in banking since the ATM? There may not be a technology that is more friendly to all generations, from young people to seniors. This helps explain why tap, as accessed via Interac Flash and both Visa and Mastercard, is taking off like nobody’s business in Canada. Story (Rob Carrick)
| Credit raters warn of downgrades of WestJet in wake of Onex deal: Credit rating agencies have placed WestJet Airlines Ltd.’s debt under review for possible downgrades after Onex Corp.’s friendly $3.5-billion bid to take the Calgary-based carrier private. Story (Jeffrey Jones and Eric Atkins, for subscribers)
| WestJet assures employees about jobs, financial security following Onex takeover: WestJet Airlines Ltd. is taking steps to assure its 14,000 employees their jobs and financial security are safe in a $3.5-billion takeover by Toronto-based private equity investor Onex Corp. But there are questions about the employees’ share-purchase plan and profit-sharing, key parts of the airline’s ownership culture. Story (Eric Atkins and Jeffrey Jones, for subscribers)
| With WestJet deal, Onex’s Schwartz again goes to battle with Air Canada’s Rovinescu: The last time Gerry Schwartz sought to become a top gun in Canada’s airline industry, the country’s two main carriers were the opposite of high flyers. Air Canada and Canadian Airlines, which Mr. Schwartz’s Onex Corp. unsuccessfully tried to buy and merge in 1999, were both teetering on the brink. The domestic airline industry is in a much better place today. Opinion (Konrad Yakabuski)
| Onex deal for WestJet is a Buffett bet on aviation: What the deal to acquire WestJet says about the new generation running Onex, and Gerry Schwartz’s second move to buy an airline. Story (Andrew Willis, for subscribers)
| Why WestJet needs Onex – and why its transformation won’t be easy: Staring down a multi-year turnaround, all while under intense scrutiny from public investors, WestJet Airlines Ltd. is selling itself to Onex Corp. to buy itself the ultimate luxury: Time. Story (Tim Kiladze and Jeffrey Jones, for subscribers)
| Vancouver software success ACL changing name to Galvanize, preparing for IPO: Canada has sat out this year’s tech IPO boom save for Montreal-based Lightspeed POS Inc.’s public offering in March. Tech-sector watchers don’t foresee an imminent slew of Canadian offerings but rhyme off names of potential domestic candidates for initial public offerings in years to come, including Ritual Technologies Inc., TouchBistro Inc., Wave Financial Inc. and Vena Solutions Inc. Now, another Canadian company is adding itself to the IPO watchlist: Galvanize Inc., which just changed its name from ACL Services Ltd. Story (Sean Silcoff, for subscribers)
| Invesco Canada loses top executive Christopher Doll: Invesco Canada Ltd. lost a top executive in its exchange-traded-funds business last week. Christopher Doll, vice-president of ETF sales and strategy, departed from the investment manager on May 7, according to sources that were granted anonymity by The Globe and Mail because they were not authorized to speak on the matter. Story (Clare O’Hara, for subscribers)
| MORE FINANCIAL SERVICES NEWS AND DEALS NEWS FROM FRIDAY
| Air Canada’s $520-million bid for Transat unlikely to harm travellers, observers say: Consumers will likely see little change in their travel choices or ticket prices if Air Canada buys Transat AT Inc., industry observers said Friday. Story (Canadian Press)
| Australia’s St Barbara acquires Atlantic Gold, owner of Moose River mines: A large, open-pit gold operation located in the historic Nova Scotia mining district of Moose River has been sold to an Australian firm. Story (Canadian Press)
| Brookfield CEO wants Oaktree veteran Howard Marks to ‘keep doing what he does’: Brookfield Asset Management’s chief executive wants Howard Marks, the veteran distressed debt guru and co-founder of Oaktree Capital, to continue his investment work, including his letters to clients, for years to come. Story (Reuters, for subscribers)
| IIROC gains ability to enforce fines in Saskatchewan through the courts: The Saskatchewan government has passed legislation that gives the Investment Industry Regulatory Organization of Canada (IIROC) the ability enforce its fines through the courts. Story (Canadian Press)
| Luckin Coffee, China’s aspiring Starbucks rival, serves up a hot U.S. IPO: Shares of Luckin Coffee Inc. surged as much as 52.7 per cent in their market debut on Friday, indicating strong investor demand for the self-declared challenger to Starbucks Corp. in China. Story (Reuters)
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/arc-anglerfish-tgam-prod-tgam.s3.amazonaws.com/public/LPIOUXY6P5EG3CXIIZZSAXGLQU.jpg "Streetwise newsletter: Best reads of the week")
Streetwise newsletter: Best reads of the week
