A survey of North American equities heading in both directions
On the rise
Osisko Mining Inc. (OSK-T) surged after agreeing to be acquired by Gold Fields Ltd (GFI-N) for $2.16-billion, barely two years after the Johannesburg-based gold producer’s attempt to buy another Canadian miner was scuppered by a rival offer.
Gold Fields will pay $4.90 per share, a 55-per-cent premium to Osisko’s Aug. 9 trading price, it said in a statement. The deal will help the South African producer expand its presence in the Americas region, where it already has mines in Chile and Peru.
CEO Mike Fraser told Reuters that making a cash offer had helped Gold Fields move quickly, and also avoided a share dilution.
“We understand some of the competitors were attempting to...compete on a share based transaction. They would have probably had to compete at a higher price.”
Gold Fields’ $6.7-billion all-share offer to buy Yamana Gold in 2022 failed after the Canadian miner backed a $4.8-billion cash and share bid from Agnico Eagle and Pan American Silver Corp.
Founded by Cecil John Rhodes in 1887, Gold Fields has shifted its focus to lucrative deposits in Ghana, Australia and the Americas given the geological challenges of digging in some of the world’s deepest mines in its home country.
It said Osisko’s projects in Quebec would help Gold Fields “firmly solidify” its footprint in one of the largest gold deposits in Canada.
Fraser said in an earlier statement that the deal would help Gold Fields take full control of the Windfall Project that it is already developing with Osisko in the province, with production is expected to start in 2026.
Osisko, which has recommended the deal to its shareholders, said Gold Fields was well suited to take the Windfall project into production.
The premium offered by the South African miner represents an early payout for Osisko investors and also reflects the potential of the Windfall project, Chairman and CEO John Burzynski said.
Still, advancing the Windfall project to production could add further execution and funding risk for Gold Fields, as it has been struggling to ramp up output at its new Salares Norte in Chile, said Arnold Van Graan, analyst at Nedbank Group.
“We question whether a deal done when the gold price is pushing all-time highs would be value accretive in the long run,” Van Graan said in a note. “Windfall has all the hallmarks of a quality long-life asset, but the mine still needs to be funded and built.”
The deal will be funded from Gold Fields’ cash, and un-drawn bank facilities with additional financing from a group of lenders.
Fraser said Gold Fields may consider selling assets such as Damang in Ghana and Cerro Corona in Peru, that are running out of commercially viable ore, though no final decision has been made yet.
Tourmaline Oil Corp. (TOU-T) was higher on its premarket announcement of a deal to acquire Crew Energy Inc. (CR-T) in a $1.3 billion all-stock deal, which includes debt, to boost its presence in the Montney shale play in Alberta.
The shale formation, which spans northern Alberta and British Columbia, accounts for roughly half of Canada’s gas production, and is one of the country’s most attractive energy-producing regions due to its strong economics.
Crew Energy shareholders will receive 0.114802 Tourmaline shares for every share of Crew Energy held, valuing the deal at about $6.69 per Crew share, representing a premium of around 72 per cent over Friday’s closing prices.
The company said the acquisition, which is expected to close in early October, will add over $200-million to Tourmaline’s projected 2025 free cash flow.
The Crew assets are immediately adjacent to Tourmaline’s existing South Montney-operated complex.
The deal includes existing low decline average base production of 29,000-30,000 barrels of oil equivalent per day (boepd), and proved and probable reserves of 473.2 million barrels of oil, Tourmaline said.
The company said it has raised its average production outlook for the current year to 582,500-592,500 boepd from 575,000- 585,000 boepd if the deal closes as expected.
The Calgary-based company also authorized an increase in the quarterly dividend to 35 cents per share in the third quarter, from 33 cents per share.
Barrick Gold (ABX-T) edged past Wall Street estimates for second-quarter profit, as the company benefited from higher prices and robust production.
Barrick’s shares were up in Monday trading.
Hopes of a U.S. interest rate cut this year and uncertainty around elections, along with global geopolitical risks have lifted the bullion’s safe-haven appeal, pushing it to a record high level.
The company’s average realized gold prices jumped 19 per cent to US$2,344 per ounce and copper prices rose 22 per cent to US$4.53 per pound.
The company also benefited from higher production at its mines in Nevada and Papua New Guinea, with gold output of 948,000 ounces in the quarter ended June 30, compared to estimates of 905,800 ounces, according to LSEG data.
Last month, rival Newmont (NGT-T) also beat second-quarter profit estimates, benefiting from the rally in bullion prices and robust production at its mines.
Barrick said its free cash flow surged more than 400 per cent to US$340-million from a year earlier, adding that the “strong cash flow from operations” sets it up to execute various mine expansion projects across the globe.
The Toronto-based company reaffirmed its annual gold production outlook of 3.9 million ounces to 4.3 million ounces. This compares to analysts expectations of 4 million ounces of gold in 2024.
Barrick added that it has not received any response from the United Nations Human Rights Council, after the company addressed allegations of human rights violations at its North Mara Gold Mine in June.
On an adjusted basis, the world’s second-largest gold miner posted a profit of 32 US cents per share in the April-June quarter, compared with estimates of 28 US cents per share.
Starbucks (SBUX-Q) climbed on reports that activist investor Elliott Investment Management is seeking to add Jesse Cohn, an equity and managing partner in the firm, to its board.
The coffee house chain and the hedge fund have held talks over the last weeks, but the current status of settlement discussions could not be learned.
Elliott, which owns a sizable stake in the company and has been pushing it to improve its performance and stock price, has proposed expanding the size of the board and making a seat available for Mr. Cohn.
Starbucks has not yet agreed to the idea and there is no certainty on the timing of a possible settlement or what the agreement may look like.
Television station CNBC first reported that Elliott and Starbucks have talked about adding Mr. Cohn as a Starbucks director. CNBC also reported that the activist proposed governance improvement as part of a possible settlement that would allow CEO Laxman Narasimhan to keep his position.
Mr. Cohn joined Elliott in 2004, and has been at the forefront of Elliott’s activist investments including in Salesforce and Twitter.
In July Starbucks missed expectations for third-quarter global same-store sales, as demand weakened in the United States and China.
On the decline
Bank of Nova Scotia (BNS-T) dipped in response to the news it is buying a 14.9-per-cent stake in American regional lender KeyCorp (KEY-N) for US$2.8-billion, as the Canadian bank taps into the stressed U.S. banking sector for growth outside its saturated home market.
KeyCorp shares jumped as Scotiabank priced the offer at US$17.17 per share, a nearly 17.5-per-cent premium to KeyCorp’s last closing stock price. It will also be able to appoint two directors to KeyCorp’s board.
Smaller U.S. regional lenders have been struggling with higher cost of holding deposits and weak loan demand due to elevated borrowing costs.
Canadian lenders, meanwhile, have been looking for lucrative deals outside the country as growth slows in the domestic banking industry where the top six lenders control more than 90 per cent of the market.
Last year, Scotiabank’s rival Bank of Montreal (BMO-T) closed the deal to buy BNP Paribas’ U.S. unit - Bank of the West - for US$16.3-billion, while TD (TD-T) acquired New York-based boutique investment bank Cowen for US$1.3-billion.
“Leveraging Scotiabank’s significant potential across Canada, Mexico and Central America and ours in the U.S., we will explore opportunities to work across investment banking, wealth and payments,” KeyCorp CEO Chris Gorman said.
The deal will take place in two stages, with an initial investment for 4.9-per-cent stake, followed by an additional 10 per cent. After the closure of the deal in fiscal 2025, Scotiabank will become KeyCorp’s largest investor, according to LSEG data.
KeyCorp said it would also look to reposition its available-for-sale securities portfolio to speed up its push for profitability, liquidity and capital improvements.
The U.S. banking industry is staring at the chances of tougher capital norms as regulators finalize the roll out of the so-called Basel III Endgame proposal.
The Cleveland, Ohio-based lender in July reported second-quarter profit that fell 5 per cent and forecast a bigger drop in average loans in 2024. It had total assets of about US$187-billion as of June 30.
Shares of Walt Disney (DIS-N) edged lower after Walt Disney Experiences Chairman Josh D’Amaro laid out an ambitious growth plan for the company’s theme parks on Saturday at the D23 fan convention, announcing plans for four new cruise ships and details about six new themed lands.
Forthcoming plans include a new Disney villains land at Walt Disney World’s Magic Kingdom in Orlando, Florida, a doubling of the size of the Avengers Campus at the Disney California Adventure Park in Anaheim, California, and details about its partnership with Fortnite creator Epic Games.
“This, for us, is an unprecedented era of growth,” Mr. D’Amaro said.
The two new attractions at its Marvel-themed Avengers Campus at California Adventure will be Avengers: Infinity Defense and the Stark Flight Lab, the company said.
California Adventure will also add a new ‘Avatar’ experience at the California Adventure, based on the second film in the science fiction franchise, Avatar: The Way of Water, it said.
To commemorate the 70th anniversary next year of the Disneyland park in Anaheim, a show based on the life of Walt Disney featuring an audio-animatronic figure of the company’s founder will be opened.
JetBlue Airways (JBLU-Q) was down after it said on Monday it plans to raise about US$3.15-billion in capital through separate debt offerings, the majority backed by its loyalty program, TrueBlue, as it tries to improve its liquidity.
The New York-based airline intends to raise US$1.5-billion through a private offering of senior secured notes and an additional US$1.25-billion via a term loan, secured by TrueBlue.
Leveraging loyalty programs as collateral has become a popular strategy for airlines to boost liquidity, a practice that gained traction during the COVID-19 pandemic.
Major carriers like Delta Air and United Airlines previously leveraged their loyalty programs to enhance cash reserves during challenging times.
JetBlue has been trying to control costs, including deferring deliveries of 44 new jets from Airbus, reducing its planned capital expenditure by about US$3-billion between 2025 and 2029.
The airline’s operations have also been impacted by a powder metal issue with Pratt & Whitney’s Geared Turbofan (GTF) engines, forcing JetBlue to ground several aircraft.
In a separate statement, the New York-based carrier also said it would raise US$400-million through a convertible notes offering, most of which would be used to refinance the carrier’s existing debt.
With files from staff and wires