A survey of North American equities heading in both directions
On the rise
Pembina Pipeline Corp. (PPL-T) was higher by 1.1 per cent after it said on Monday it will buy some infrastructure assets in Alberta Montney from oil producer Veren Inc. (VRN-T) for about $400-million to strengthen its midstream operations.
Pembina Gas Infrastructure, which is jointly owned by KKR, will acquire four oil battery sites in the Gold Creek and Karr areas, which have a natural gas handling capacity of 320 million cubic feet per day and liquids handling capacity of 53,000 barrels per day.
Veren, formerly known as Crescent Point Energy, would retain operatorship of the Gold Creek and Karr sites and assume operatorship of the existing Pembina-owned batteries in the area.
Additionally, Veren would enter into a 15-year “take-or-pay” agreement for capacity at the acquired batteries.
Consolidation in the pipeline and storage sector has been on the rise since last year as North American production grows, and as hurdles in getting new energy infrastructure approved and built have made existing operators more valuable.
Canada’s Alimentation Couche-Tard Inc. (ATD-T) was up 1.4 per cent after saying is not abandoning its quest to acquire 7-Eleven’s Japanese parent company as it seeks to become the world’s largest convenience store operator.
Despite Seven & i Holdings Co. rejecting Couche-Tard’s initial offer on Friday, the Laval, Que.-based Circle K parent released a statement on Sunday evening urging the Japanese company to continue discussions.
“Given the mutual benefits of a combination, we are disappointed in 7&i’s refusal to engage in friendly discussions,” Couche-Tard said. “We remain highly focused on consummating a transaction with 7&i that is in the best interests of all constituencies.”
The Canadian company offered to continue discussions indirectly through each side’s external advisers and also offered to enter into a nondisclosure agreement, but both of those offers were rejected, Couche-Tard said.
Responding Monday, Seven & i repeated that it feels Couche-Tard’s initial takeover proposal is not enough for the company to start substantive talks on a potential deal. That’s why Seven & i has not asked its advisors to engage with Couche-Tard advisors or signed non-disclosure agreements, the company said in a statement.
“We remain open to engaging in sincere discussions should Couche-Tard put forth a proposal that fully recognizes Seven & i’s standalone intrinsic value” and addresses regulatory concerns, Seven & i said in the statement.
While Couche-Tard did not reference the roughly US$39-billion offer price, which Seven & i said last week “grossly undervalues” the company, its statement said it had “sufficient capacity to finance the transaction in cash.”
“We are a sophisticated and disciplined user of the capital markets and have well established relationships with major financial institutions and investors who are willing to support us in this transaction and that financing would not be a condition to closing,” the statement said.
- Jameson Berkow
Kinaxis Inc. (KXS-T) saw gains of almost 4 per cent after New York-based investment firm Daventry Group has urged it to put itself up for sale, calling the Canadian software company a high quality asset that many buyers would pay a “healthy premium” to own.
Daventry, which has been an investor in Kinaxis since March 2021, told the board of directors that years of errors have caused the supply chain management software maker to be undervalued but that new owners could repair the damage quickly.
Kinaxis’ problems are not related to its products nor the market, Daventry wrote in a letter seen by Reuters, noting that it sells some of the “stickiest software in the world.”
Rather the issues are “self-inflicted and execution-related,” the letter said laying out how Kinaxis’ share price has dropped nearly 20 per cent since the end of 2020 while its rivals, including Manhattan Associates, have seen their share price climb.
“The Board should immediately initiate a sale process and allow another organization, whether a strategic or financial sponsor, that understands how to scale a software business to finally unlock Kinaxis’s value and capitalize on its strong competitive positioning,” the letter said.
Daventry Group LP, which together with its affiliates, beneficially owns or controls approximately 1.4 per cent of the outstanding stock of Kinaxis Inc.
The investment firm is making its recommendation just weeks after the company said long-time CEO John Sicard will leave by year’s end. It worries the current board and its chair Bob Courteau may bungle finding Sicard’s replacement.
Shares of server maker Dell Technologies (DELL-N), data analytics firm Palantir Technologies (PLTR-N) and property and casualty insurer Erie Indemnity (ERIE-Q) rose after the S&P Dow Jones Indices said on Friday they will join the benchmark S&P 500 before the market opens on Sept. 23.
The three companies will replace American Airlines Group (AAL-Q), online marketplace Etsy (ETSY-Q) and diagnostics company Bio-Rad Laboratories (BIO-N) in the index.
Boeing’s (BA-N) shares jumped on Monday after the planemaker reached a tentative deal with a union representing more than 32,000 workers in the U.S. Pacific Northwest that could avoid a possible strike later this week.
The proposed four-year contract was hailed by the union as the best it had ever negotiated. It is also an early win for new Boeing CEO Kelly Ortberg, who is tasked with turning around the struggling planemaker.
As part of the agreement, Boeing has committed to building a replacement for its workhorse 737 at its Pacific Northwest facilities, if the project is started during the four-year period of the labor contract, though the planemaker has not yet announced the new jet.
The terms include a general wage increase of 25 per cent over four years, below the 40-per-cent wage hike demanded by the International Association of Machinists and Aerospace Workers (IAM) union, signaling its recognition of Boeing’s difficult financial position.
The wage hikes are tiered with the new and senior workers getting the largest share to boost retention, TD Cowen analysts said.
The financial terms of the labor deal seem acceptable to Boeing, J.P.Morgan analyst Seth Seifman said in a note.
However, Mr. Seifman noted workers could still vote down the deal. There will be two votes on Thursday - one on the contract, which requires 50 per cent to pass, and the second on whether to strike, which requires two-thirds approval.
“Workers have leverage and a highly unscientific sample of views on social media suggests dissatisfaction with the contract terms among some union members,” Mr. Seifman added.
Shares of cannabis companies, including Canopy Growth Corp. (WEED-T) and Green Thumb Industries Inc. (GTII-CN), soared after U.S. Republican presidential candidate Donald Trump said he supports a ballot initiative in Florida that would legalize the recreational use of marijuana for adults 21 years and older.
The statement, made on social media platform Truth Social late on Sunday, comes after a separate comment in late August in which he implied he was open to legalizing recreational marijuana use in the state.
Mr. Trump’s support of the ballot initiative, known as Amendment 3, comes even as some fellow Republicans, including Florida Governor Ron DeSantis, have come out against the measure.
The former president will face off against Vice President Kamala Harris, the Democratic nominee, in the Nov. 5 presidential election. Polls indicate that the race is essentially tied.
“As I have previously stated, I believe it is time to end needless arrests and incarcerations of adults for small amounts of marijuana for personal use,” Mr. Trump wrote.
“As a Floridian, I will be voting YES in Amendment 3 this November.”
In his Sunday social media post, Trump also appeared to throw his weight behind legislative efforts, ongoing in some form since his 2017-2021 term, to make it easier for banks to serve cannabis businesses that operate in accordance with state laws.
“As President, we will continue to focus on research to unlock the medical uses of marijuana to a Schedule 3 drug, and work with Congress to pass common sense laws, including safe banking for state authorized companies,” Mr. Trump wrote.
On the decline
Air Canada (AC-T) slipped 1.2 per cent after saying early Monday it is finalizing contingency plans to suspend most of its operations as talks with the pilot union are near an impasse.
A complete shutdown of the carrier’s operations could leave thousands of passengers stranded across the nation. Air Canada and its subsidiary Air Canada Rouge operate close to 670 flights daily.
Talks between Air Canada and the Air Line Pilots Association (ALPA), which represents more than 5,200 pilots at Canada’s largest carrier, are continuing, but both parties remain far apart, the company added.
Unless they reach a settlement, the three-day suspension plan is likely to affect 110,000 passengers daily once the total shutdown is in place, according to the airline’s projections, with the suspension likely to begin as early as Sept. 15.
Air Canada’s pilots have been advocating for unprecedented wage increases to close the salary disparity with their higher-earning U.S. peers, who achieved record contracts in 2023 amid pilot shortages and robust travel demand.
The union and the airline had entered into a three-week cooling-off period, mandated by Canadian law, on Aug. 27.
“Air Canada believes there is still time to reach an agreement with our pilot group, provided ALPA moderates its wage demands which far exceed average Canadian wage increases,” CEO Michael Rousseau said on Monday.
ALPA did not immediately respond to a Reuters request for comment.
Air Canada also anticipates it would take 7 to 10 days for normal operations to resume once the complete shutdown is in place.
The airline’s shares have lost more than 18 per cent of their value this year.
Canada Goose Holdings Ltd. (GOOS-T) dropped 1.5 per cent after the S&P Dow Jones Indices announced late Friday that it is deleting once-highflying parka maker from the S&P/TSX Composite Index, the broadest measure of the Canadian market.
S&P said it will also delete Ballard Power Systems Inc. (BLDP-T), Africa Oil Corp. (AOI-T), forestry company Canfor Corp. (CFP-T) and coal-storage company Westshore Terminals Investment Corp. (WTE-T).
It will add Bird Construction Inc. (BDT-T) and Triple Flag Precious Metals Corp. (TFPM-T).
The changes will be effective at the open of markets on Sept. 23.
No changes are being made to the S&P/TSX 60, a selection of most of the largest companies in the composite.
Toronto-based Canada Goose, which has a $1.4-billion market capitalization, listed on both the Toronto and New York stock exchanges when it went public in 2017. Chief executive officer Dani Reiss built the brand around a “Made in Canada” mantra, with marketing campaigns based on preserving the country’s polar bears and sponsorships that outfitted Canadian mountain climbers.
However, the majority of trading in the company’s shares now takes place on the NYSE. S&P Dow Jones uses “float” – the value of shares that aren’t held by insiders and that therefore trade frequently and are easily available to the public – to judge whether a company should be included in its indexes. The index provider does not release its proprietary float calculations, but only about half the company’s market capitalization is part of its float, according to S&P Global Market Intelligence, a separate arm of the company.
The changes largely track predictions made by analyst Jean-Michel Gauthier of Scotia Capital Inc. Mr. Gauthier also thought S&P might choose to drop Algonquin Power & Utilities Corp. (AQN-T) from the S&P/TSX 60 index, a selection of most of the largest companies in the composite. That did not occur Friday
- David Milstead
Canadian methanol producer Methanex Corp. (MX-T) fell almost 8 per cent after it said on Sunday it will acquire Dutch green fuel-maker OCI Global’s methanol business in a US$2.05-billion deal.
The deal includes US$1.15-billion in cash, the issuance of 9.9 million shares of Methanex valued at US$450-million, the methanol producer said, adding that it is taking on about $450 million in debt and leases.
OCI will become the second-largest shareholder of Methanex, with about 13 per cent of the company, OCI said in a separate statement, adding that the deal is expected to close in the first half of 2025.
The divestment of OCI’s stake in the methanol business will increase the gross proceeds of its assets to US$11.6-billion, it added.
The Dutch-listed company has been selling assets as it seeks to reduce debt, unlock more cash for shareholders and focus on greener chemicals such as lower-carbon ammonia.
OCI sold its clean ammonia project in Texas to Australia’s Woodside Energy for US$2.35-billion earlier last month. Last year, it also agreed to sell its stake in Iowa Fertilizer Company (IFCO) to Koch Ag & Energy Solutions for $3.6 billion.
After sliding 4.5 per cent on Friday after it cut its profit forecast for the year, shares of BRP Inc. (DOO-T) sustained further losses after three equity analysts on the Street downgraded its shares, seeing limited near-term catalysts for the Valcourt, Que.-based manufacturer in a weakening powersports vehicle market.
“Given the non-constructive consumer, irrational competitor actions and obstacles to BRP protecting its share price with buybacks, we believe the stock could face more downward pressure. We suggest investors wait for a more attractive entry point or signs of an inflection in retail sales” said Desjardins Securities’ Benoit Poirier, who moved his recommendation to “hold” from “buy” previously.
Apple (AAPL-Q) was narrowly lower after it unveiled updated Watches and AirPods at an event on Monday focused on its AI-enhanced iPhone 16, although Apple’s product showcase risks being overshadowed by Chinese rival Huawei’s tri-fold phone, unofficially announced earlier in the day.
The Chinese company’s website showed on Monday that it had garnered more than 3 million pre-orders for its Z-shaped tri-fold phone. This underscores Huawei’s ability to navigate U.S. sanctions and solidifies its position against Apple in China, where consumers are hankering for more AI features and are willing to pay for them.
The new Series 10 Watch starts at US$399, is thinner than its predecessor and has an up to 30 per cent larger screen than previous generations. Apple highlighted the Watch’s ability to help with sports and health issues, including finding longer-term conditions such as sleep apnea as well as detecting and responding to emergencies such as a fall.
Apple also launched a new version of the more rugged Watch Ultra 2, starting at US$799. The new AirPods 4 have a new design for more comfortable wearing and improved acoustics.
Apple fans globally are waiting to see the new phones with AI, which CEO Tim Cook hinted at as he began the show. “We are thrilled to introduce the first iPhones designed from the ground up for Apple Intelligence and its breakthrough capabilities,” Cook said in opening remarks.
“The Chinese market is hungrier for AI features than the U.S. market,” said Ben Bajarin, CEO and principal analyst at Creative Strategies. For Apple, “it will be very difficult to bring it to China immediately, so they’ll be going off the merits of the hardware.”
Apple unveiled Apple Intelligence at its developer conference in June, its take on generative AI that can conjure text, images and other content on command.
But these upgrades will take time to reach consumers.
With files from staff and wires