The $4.3-billion battle between Suncor Energy and Canadian Oil Sands was initially supposed to have been sewn up by early December.MARK RALSTON/AFP / Getty Images
MERGERS AND ACQUISITIONS
Schulich tells COS investors to reject Suncor bid
Suncor Energy Inc. has reiterated that it has no plans to sweeten its $4.3-billion takeover bid for Canadian Oil Sands Ltd., despite increasing criticism that the offer is unacceptable.
On Tuesday, Canadian Oil Sands investor Seymour Schulich, an outspoken critic of the bid who says he owns a 5-per-cent stake in the company, accused Suncor of trying to "pull a fast one" on shareholders.
"Quite simply, they're offering an unacceptable price for an irreplaceable asset," he said in an open letter published as a full-page ad in national newspapers. "I'm not selling at this price and you shouldn't either." Story
INITIAL PUBLIC OFFERINGS
Dundee flyer on pharma company could solve balance sheet bind
Dundee Corp. had a rough 2015. The Toronto holding company's share price fell by 64 per cent, largely because of heavy exposure to the ragged resource sector.
But 2016 has started off dramatically better, and that's mostly because of a flyer that former chief executive officer and founder Ned Goodman took on a hitherto unknown, privately held pharmaceutical company.
In 2011, Dundee invested $20-million (U.S.) in TauRx Pharmaceuticals Ltd., a Singapore-based developer of Alzheimer's disease treatments. In 2013, Dundee put in another $10.5-million. As of Sept. 30, its then 5-per-cent stake was worth $68-million. However, the TauRx investment may end up being worth a lot more.
On Monday, The Wall Street Journal reported that TauRx is considering an initial public offering (IPO) in 2017 at a possible $15-billion valuation. In that scenario, Dundee's current 4.3-per-cent stake (Dundee has been diluted down a little since Sept. 30) could be worth $645-million. Dundee's class A shares were up 13 per cent on Monday and another 15 per cent on Tuesday.
A lot of ducks need to be put in a row before any TauRx IPO transpires.
As the Journal points out, almost all clinical trials for Alzheimer's treatments have ended in failure. The IPO market is also a notoriously fickle beast. Dundee could, of course, sell its stake privately in the interim – likely at a much lower level than that 2017 blue-sky valuation.
Having the option to sell could prove extremely useful, though. The company has been trying to convince holders of more than $100-million (Canadian) in its retractable preferred shares to exchange their quasi-debt securities for a new series with a higher dividend. Last month, Dundee said that large institutional shareholders had "expressed concerns" over the offer, and "the proposed transaction terms may be amended or withdrawn." Should the offer not get passed in an upcoming vote, Dundee will need to come up with a plan B. Otherwise, holders of the retractable shares can request a full cash payout at par in the summer of 2016. Selling the TauRx stake (or part of it) could get Dundee out of a jam.
STOCK EXCHANGES
Penn West again at risk of losing NYSE listing
Embattled energy producer Penn West Petroleum Ltd. is once again at risk of losing a key exchange listing south of the border.
Early Tuesday, the company disclosed it no longer meets the listing requirements for the New York Stock Exchange, and a failure to address the deficiency over the next six months would result in it losing the listing altogether.
Such action could significantly affect Penn West's trading volumes. In 2015, the company saw an average of 5.3 million shares traded a day in Canada, while an average of 3.9 million shares changed hands each day on the New York Stock Exchange, representing 42 per cent of total trading volume.
To stay listed on the NYSE, the average closing price of a company's shares over a consecutive 30-day trading period must remain above $1 (U.S.). Penn West's shares averaged 97 cents each for the 30 days ending Dec. 30. If the company's shares fail to meet the minimum price requirement for the next six months, "the NYSE will commence suspension and delisting procedures," Penn West said in a statement. Story
STREET MOVES
Onex adds U.S. managing director
Onex Corp. is adding a new managing director to its ranks in New York.
Financial services specialist Todd Clegg is the latest to be promoted to the managing director level. He has been with the Canadian private equity giant for more than a decade, working on some of the firm's larger financial services transactions in recent years, including U.S. insurance businesses York Risk Services Group in 2014 and USI Insurance Services in 2012. Story
McMillan shakes up leadership structure
A leadership shakeup at McMillan LLP has seen chief executive officer Andrew Kent step down and return full time to his insolvency law practice, replaced as CEO by veteran litigator Teresa Dufort, with the law firm now steered by a new four-person executive committee.
The new committee includes Ms. Dufort, a veteran product-liability defence litigator; Tim Murphy, an infrastructure lawyer, Liberal Party insider and former aide to former prime minister Paul Martin; David Dunlop, a corporate lawyer and private equity specialist; and Stephen Wortley, who works out of Vancouver and Hong Kong and chairs the firm's China practice. Story
INSIGHT
SPAC market facing uncertain 2016 after stellar 2015
About 21/2 years ago, Canadian investment banker Patrick Meneley bumped into Jonathan Turnbull, an old buddy from his days at Salomon Brothers. Mr. Turnbull was in the early stages of trying to figure out how to bring a particular corporate structure to Canada, that of a publicly traded shell company.
"He was working hard on it. He came in with a book. 'Here's the concept. What do you think?'" Mr. Meneley, head of global corporate and investment banking with TD Securities Inc., said in an interview.
The pair joined forces with Stikeman Elliott LLP lawyer Simon Romano and slogged away, eventually succeeding in "Canadianizing" the structure.
In April, the trio brought Dundee Acquisition Ltd. public, raising $112-million and kicking off a mini-boom in special-purpose acquisition corporations (SPACs).
"This was years in the making," Mr. Meneley said.
SPACs are blank-cheque shell companies that raise money in public stock offerings and have roughly two years to make an acquisition. If a deal doesn't happen, the SPAC must return its capital, plus interest, to shareholders.
Five Canadian SPACs completed initial public offerings in 2015, raising more than a billion dollars – accounting for about 15 per cent of the entire IPO market. TD Securities was the lead book runner on all but one of the completed IPOs. Story
What Bay Street can expect from China's chill
A new rule for the new year: Enough with our denial. China's economy is struggling and its adjustment to a lower gear has the potential to sideswipe us. Find salvation in acceptance.
The best thing anyone can do is expect the worst. History has taught us that even healthy stock market adjustments are tough to stomach, because such corrections are prone to make us irrational.
Which is why no one should be shocked the year started with such a deep selloff in China, falling 7 per cent before circuit breakers in Shanghai and Shenzhen kicked in. We should wonder instead why it took so long. Investors were all too happy to forget how wild China's markets were in August, naively hoping the underlying picture had improved. The reality: Only heavy government intervention was able to curb the panic. Story
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Niall McGee