A roundup of some of the North American equities making moves in both directions
On the rise
Apple Inc. (AAPL-Q) was flat on Monday after it increased a U.S. spending target to US$430-billion by 2026, up from a five-year goal of US$350-billio set in 2018, and said it was on track to exceed.
The tech giant also said it will establish a new campus in North Carolina that will house up to 3,000 employees, expand its operations in several other U.S. states and increase its spending targets with U.S. suppliers.
Apple plans to spend US$1-billion as it builds a new campus and engineering hub in the Research Triangle area of North Carolina, with most of the jobs expected to focus on machine learning, artificial intelligence, software engineering and other technology fields. It joins a US$1-billion Austin, Texas campus announced in 2019.
Apple also said it expanded hiring targets at other U.S. locations to hit a goal 20,000 additional jobs by 2026, setting new goals for facilities in Colorado, Massachusetts and Washington state.
In its home state of California, the company said it will aim to hire 5,000 people in San Diego and 3,000 people in Culver City in the Los Angeles area.
See also: Retail trading appetite robust even as stock-buying frenzy cools
Mississauga-based Bird Construction Inc. (BDT-T) rose after announcing before the bell it has been awarded a fixed price construction services contract with Concert Properties for the Sherbourne Project in Toronto worth approximately $172-million.
The Project features a 53-floor residential tower with construction scheduled to begin in early May.
AltaGas Ltd. (ALA-T) gained ground after announcing the US$275-million sale of its U.S. Transportation and Storage business after the bell on Friday.
“Overall, the transaction should be viewed positively given its accretive nature and as the Company has taken another strategic step towards reducing leverage through the divesture of non-core assets,” said ATB Capital Markets analyst Nate Heywood. “We remain confident in the business being able to continue to reduce its current leverage levels and expect the company may look to additional non-core asset sales to accelerate the Company’s deleveraging efforts towards the targeted range.”
See also: Monday’s analyst upgrades and downgrades
New York Community Bancorp Inc. (NYCB-N) was up on news it has agreed to buy Flagstar Bancorp Inc. (FBC-N) for US$2.6-billion in an all-stock deal, as U.S. regional banks look to consolidate to compete better against larger lenders in a low interest rate environment.
The banks said on Monday Flagstar shareholders would receive around 4.02 shares of New York Community for each share they own. That implies an offer price of US$48.14 per share, which represents a premium of about 6 per cent to Flagstar’s last close, per Reuters calculations.
The ultra-low interest rate environment hurts regional banks more as they rely on interest income from loans and do not have big investment banking and trading arms like large Wall Street lenders.
Last year, regional lender First Citizens BancShares Inc said it would acquire peer CIT Group Inc for US$2.2-billion, while PNC Financial Services agreed to buy the U.S. business of Spain’s BBVA for US$11.6-billion.
As part of the deal, New York Community shareholders will own about 68 per cent of the combined company after the transaction closes, while Flagstar shareholders will own the rest, the banks said.
California-based cyber security firm Proofpoint Inc. (PFPT-Q) soared with news it’s set to be acquired by private equity firm Thoma Bravo in an all-cash deal valued at about US$12.3-billion, at a time when remote working has boosted demand for network security.
Proofpoint shareholders will receive US$176 per share held, indicating a premium of about 34 per cent to the stock’s last close.
The transaction is expected to close in the third quarter, the company said.
In a research report, Wedbush analyst Dan Ives said: “This was a smart move for Proofpoint to take this very attractive offer and premium as the investment community continued to undervalue this core asset in the market and thus PFPT finally hit the bid. In this cyber security arms race and with $500 billion of dry powder among PE/financial buyers and strategic players we expect a massive M&A spree in the software and cyber security space over the next 12 to 18 months. While the Street has been worried about rotation fears and a 30 bps move on the 10-year, tech stocks have languished so far this year and created golden opportunities for M&A by strategic and financial buyers. We view the Microsoft/Nuance marriage and now the Proofpoint deal as just the tip of the iceberg around a broader M&A spree in the tech landscape for the remainder of 2021. We do not see another bidder on Proofpoint and expect no regulatory hurdles.”
On the decline
Kansas City Southern (KSU-N) said on the weekend it will hold takeover talks with Canadian National Railway Co. (CNR-T), which trumped the bid for the U.S. carrier by rival Canadian Pacific Railway Ltd. (CP-T).
On Monday, CN shares were narrowly lower.
The Missouri-based railway, the target of a bidding war between the two Canadian rail carriers, said Saturday it will negotiate with CN to determine if CN’s higher offer is a “superior proposal” to that of CP.
CP and KCS said in March they had agreed to a cash-and-stock takeover by the Calgary-based railway worth US$25.2-billion or US$266 a share. But those plans were thrown in question in April when CN made an unsolicited bid for KCS that was worth about 20 per more, at US$29.9-billion or US$325 a share.
Both proposals require approvals by KCS shareholders and the U.S. regulator, the Surface Transportation Board.
KCS said it will provide CN with “non-public” information in negotiations, but there is no assurance it will reach an agreement. “KCS remains bound by the terms of the CP merger agreement, and KCS’s board has not determined that CN’s proposal in fact constitutes a … superior proposal as defined in the merger agreement with CP,” KCS said.
- Eric Atkins
BCE Inc. (BCE-T) was down after the Globe and Mail reported it made an offer to buy Shaw Communications Inc. (SJR-B-T) but was unwilling to take on as much regulatory risk as Rogers Communications Inc. (RCI-A-T), which struck a deal to buy the Calgary-based telecom for $26-billion including debt, according to sources.
Although BCE, which owns Bell Canada, initially made a higher offer, Rogers went further by agreeing to a “hell or high water” clause that means it will accept any conditions set out by regulators in order to gain approval, according to four sources familiar with the negotiations.
Those conditions could include being forced to sell off not only Shaw’s wireless assets, such as customer accounts or wireless airwaves, but also some of its own. That was a risk Bell was not prepared to take, according to two of the sources. The Globe and Mail is not identifying the sources because they are not authorized to speak publicly about the matter.
If regulators flat-out reject the deal, Rogers has agreed to pay Shaw a $1.2-billion break fee. Bell offered a smaller break fee, two of the sources said.
- Alexandra Posadzki and Tim Kiladze
Vancouver-based Fortuna Silver Mines Inc. (FVI-T) dropped after it said on Monday it would buy Roxgold Inc. (ROXG-T) in a cash-and-stock deal valued at about $1-billion, marking its foray into the lucrative precious-metal mining region of West Africa.
Fortuna, which operates in Peru, Mexico, and Argentina, would acquire Roxgold’s projects in Burkina Faso and Côte d’Ivoire with an expected annual gold equivalent combined production of 450,000 ounces.
Despite the security risks of operating in Burkina Faso, the country is attractive for gold miners as the cost of producing the metal is much lower compared with the rest of the world. At a time of high gold prices, that translates into hefty margins for miners.
Fortuna’s deal comes more than five months after rival Endeavour Mining agreed to buy West Africa-focused Teranga Gold in a nearly $2-billion deal to become the region’s biggest gold miner.
Roxgold’s high-grade Yaramoko gold mine in Burkina Faso has a 2021 production outlook of 120,000-130,000 ounces, while its Séguéla mine in Côte d’Ivoire is projected to produce more than 130,000 ounces annually for the first six years, pending its construction decision in mid-2021.
Roxgold shareholders will receive 0.283 common shares of Fortuna and $0.001 for each Roxgold common share held.
The exchange ratio implies a consideration of about $2.73 per Roxgold share, a 42.1-per-cent premium to its last closing price.
After the merger, existing Fortuna and Roxgold shareholders will own about 64.3 per cent and 35.7 per cent, respectively, of the combined company
With files from staff and wires