A roundup of some of the North American equities making moves in both directions today
On the rise
Transat AT Inc. (TRZ-T) rose on Friday after announcing an agreement to co-operate with WestJet on a codeshare agreement for transatlantic travel.
The deal will allow travellers to book flights to Europe involving both airlines on a single ticket with through-checked bags.
Under the arrangement, WestJet’s code will be placed on Air Transat flights to select cities in Europe, while Air Transat’s code will be placed on select WestJet flights in North America.
The agreement is expected to be implemented early next year, subject to regulatory approvals.
The arrangement comes as the airlines look to rebuild after the pandemic devastated the travel industry.
Earlier this year, a deal that would have seen Air Canada acquire Air Transat parent company Transat AT was cancelled after the European Commission indicated its unwillingness to approve the transaction.
Sportscene Group Inc. (SPS-A-X) soared after it announced a privatization agreement carried out by its president and CEO, Jean Bédard, and a consortium of Quebec investors, led by Champlain Financial Corp., for a cash consideration of $7.25 per share or about $51.25-million.
Boucherville, Que.-based Sportscene owns or franchises several entertainment-oriented family restaurants, including La Cage – Brasserie Sportive and P.F. Chang’s.
The value excludes the value of certain shares and the options held by Mr. Bédard and his affiliated entity, the company stated.
The $7.25 per share offer is about an 84-per-cent premium to the company’s closing price on Nov. 18.
Domtar Corp. (UFS-T) gained after its takeover by B.C.-based Paper Excellence cleared its final hurdle with Canadian Competition Act approval.
The companies say Domtar’s pulp mill in Kamloops, B.C., will be sold to resolve the Commissioner’s concerns about the implication on the purchase of wood fibre from the Thompson/Okanagan region in British Columbia.
The deal slated to close in the fourth quarter will see Karta Halten B.V., an affiliate of Paper Excellence, acquire Domtar shares for US$55.50 per share in cash as presented in an agreement dated May 10 that implies an enterprise value of about US$3-billion.
In July, Domtar shareholders overwhelmingly approved the takeover with more than 81 per cent of outstanding shares were voted in favour of the merger at a special meeting.
Paper Excellence, a global diversified manufacturer of pulp and specialty, printing, writing and packaging papers, operates seven mills in Canada producing and shipping over 2.8 million tonnes of product annually with a workforce of more than 2,800.
Montreal and South Carolina-based Domtar is an integrated manufacturer and marketer of uncoated freesheet paper in North America and one of the largest manufacturers of pulp in the world. It has 13 pulp and paper mills and 10 manufacturing and converting facilities in Canada and the United States.
On the decline
Air Canada (AC-T) declined despite saying on Friday it would not need further financial support from the Canadian government, citing the airline’s recovery from the COVID-19 pandemic and improved financial position.
The Canadian government in April had announced a support package that provided the carrier access to interest bearing loans of $5.38-billion.
Air Canada said about $3.98-billion worth of loans from the facility were “were never accessed and remain unused.”
The company said it completed a series of financing deals that generated cash of about $7.1-billion in the third quarter, further prompting it to exit Canada’s aid package.
Vaughan, Ont.-based GFL Environmental Inc. (GIL-T) dipped after announcing late Thursday a secondary offering of 12.7 million subordinate voting shares.
GFL will not receive any proceeds from the sale.
A day after dropping 9 per cent, Canopy Growth Corp. (WEED-T) declined further on the same day as a premarket announcement of “strategic” changes to its executive management committee.
Effective immediately, Mike Lee, Executive Vice President and Chief Financial Officer, and Rade Kovacevic, President and Chief Product Officer will be stepping down and depart from the company on Dec. 31.
“These decisions reflect Management and the Board’s vision for building a best-in-class organization that is well-positioned to deliver long-term growth and shareholder value,” said CEO David Klein.
Toronto-based cannabis company Flora Growth Corp. (FLGC-Q) plummeted after announcing the pricing of an underwritten public offering of 10 million units.
The units, which consists of one common share and one-half warrant, are being sold at a public offering price of US$3, below the US$3.69 close on Thursday.
On Monday, Flora Growth announced the close of its US$30-million acquisition of California-based Vessel Brand Inc.
Applied Materials Inc. (AMAT-Q) was down after it forecast first-quarter sales and profit below market estimates on Thursday, as chip shortages slowed the supply chain of the world’s biggest maker of tools for making chips.
Applied, which makes machines used to manufacture semiconductors and other high-tech components, expects current-quarter net sales of US$6.16-billion, plus or minus US$250-million, compared with analysts’ estimates of US$6.50-billion, according to Refinitiv IBES data.
On a conference call with investors, Chief Executive Gary Dickerson said demand remained strong and that Applied’s fourth-quarter sales would have been US$300-million higher without supply constraints, which he said will persist into the company’s fiscal 2022.
“I’m engaged with a number of these tech CEOs resolving the supply chain issues, which I’ve never done in my entire career, not anywhere near to this degree,” Dickerson told Reuters in an interview.
Chief Financial Officer Bob Halliday said about 10 components out of the thousands used in Applied’s machines had caused its supply chain problems and the company expects supply issues to get better each quarter through its fiscal 2022.
“It is one of the main suppliers that enables you to build more chips, so it’s kind of a Catch 22,” D.A. Davidson & Company analyst Thomas Diffely said. “They need chips to put in their systems to build more chips.”
Chipmakers are ramping up output and buying new tools as the world shifts to 5G and consumers upgrade their phones, laptops and gaming consoles. The broader shift to remote work and learning during the pandemic has also powered demand for chips.
Applied, which counts top chipmakers such as Intel Corp and Taiwan Semiconductor Manufacturing Co Ltd as its customers, also forecast adjusted earnings between US$1.78 and US$1.92 per share, compared with estimates of US$2.01 per share.
For the fourth quarter, the company’s sales rose 31 per cent to US$6.12-billion, below estimates of US$6.35-billion. On an adjusted basis, the company earned US$1.94 per share, a cent short of expectations, according to Refinitiv data.
Shares of luxury retailer Farfetch Ltd (FTCH-N) plunged on Friday after it cut a key growth forecast, blaming cooling demand for high-end fashion.
Farfetch, which sells everything from Fendi belts to Versace shirts, said it had overestimated how strong demand would be during the third quarter.
“Our results fell short of our forecast as the extraordinary full price growth rates we had seen through the first part of the quarter shifted to what were still very high levels, but lower than what we had seen exiting Q2 and during the first part of Q3,” Chief Executive Officer Jose Neves said.
Most luxury goods companies have reported big jumps in quarterly sales over the last few weeks helped by a rebound in demand after coronavirus-led restrictions were eased.
Farfetch reported gross merchandise value (GMV) growth, an e-commerce measure of transaction volumes, of about 23 per cent, below its earlier forecast for a 30-per-cent growth.
It lowered its full-year GMV growth forecast to about 33 per cent, from 35 per cent to 40 per cent earlier.
With files from Brenda Bouw, staff and wires
David Leeder