A survey of North American equities heading in both directions
On the rise
Shares of Canadian Imperial Bank of Commerce (CM-T) were higher by 1.4 per cent after it announced it is revamping its top executive team for the second time this year as a key lieutenant to chief executive officer Victor Dodig steps back from day-to-day operations, further defining the roster of potential contenders to be the bank’s next CEO.
Jon Hountalas will become CIBC’s vice chair of North American banking, handing off his daily duties as group head of Canadian banking – a sprawling role in which he has overseen retail and commercial banking as well as wealth management. A banking veteran with nearly 40 years of experience, he will stay on the bank’s Executive Committee, reporting to Mr. Dodig.
Susan Rimmer will be named group head of commercial banking and wealth, joining the top executive team under Mr. Dodig after two years as global head of corporate and investment banking. Harry Culham keeps his current job as head of capital markets and adds oversight of the bank’s asset management arm, which manages about $300-billion of assets and has a mandate to get bigger. And Christian Exshaw, the bank’s head of global markets, will be named deputy head of capital markets, taking over the corporate and investment banking role vacated by Ms. Rimmer.
“The logic is continual, natural evolution of strengthening our talent bench and making sure the best leaders are in the best jobs,” Mr. Dodig said in an interview. “Everybody gets a little more to do or something new to do to drive the strategic agenda of the bank going forward.”
The changes take effect on Nov. 1, the start of CIBC’s next fiscal year. And they come as CIBC has performed well, with its share price up nearly 25 per cent since the start of 2024, and analysts praising the bank for its consistent performance.
CIBC is also breaking up its Direct Financial Services (DFS) unit, an amalgamation of three digitally focused initiatives that was led by Mr. Exshaw. The bank’s low-cost Simplii Financial subsidiary will report to Hratch Panossian, who has led personal and business banking since CIBC last shuffled its senior leaders in April. The bank’s digital brokerage, Investor’s Edge, will report to Ms. Rimmer in wealth management, while the unit focused on digital foreign exchange and payments – called the Alternative Solutions Group – will stay within capital markets.
- James Bradshaw
First Majestic Silver Corp. (FR-T) increased 1.3 per cent on news it has signed a deal to buy Gatos Silver Inc. (GATO-T) in a transaction valued at US$970 million.
Under the agreement, Gatos shareholders will receive 2.55 shares of First Majestic for each Gatos share held.
Gatos holds a 70 per cent interest in the Los Gatos joint venture, which owns the Cerro Los Gatos underground silver mine in Chihuahua, Mexico.
Once the deal is completed, existing Gatos shareholders will own about 38 per cent of the combined company on a fully diluted basis.
The transaction is expected to close in early 2025, subject to the satisfaction of closing conditions, including shareholder and regulatory approvals.
First Majestic owns and operates silver mines in Mexico as well as a portfolio of development and exploration assets, including the Jerritt Canyon Gold project in Nevada.
Alimentation Couche-Tard (ATD-T) finished 1.3 per cent higher after saying it is “confident” that it can complete a takeover of 7-Eleven parent Seven & i Holdings Co. Ltd in the months ahead, even as questions mount about how much it’s willing to pay.
Alex Miller, who replaces Brian Hannasch as Couche-Tard’s chief executive this week, sketched out the company’s high-level perspective on a possible deal Thursday, saying the company has a deep respect for Seven & i and the business they’ve built around the world. That includes the Japanese company’s operating model, franchisee network, and brand, he said.
“We are confident in our ability to finance and complete this combination, and we look forward to engaging with Seven & i constructively,” Mr. Miller told analysts on the company’s first quarter earnings call. “We see a strong opportunity to grow together, enhance our offerings to customers, and deliver a compelling outcome for the shareholders, employees, and key constituencies of both companies.”
Montreal-based Couche-Tard, which owns the Circle-K chain, revealed last month that it made a takeover approach for Seven & i in a friendly deal potentially worth US$50-billion. A transaction would be the biggest foreign takeover of a Japanese company and the developments are being closely watched by investors and other market participants as test of Japan’s new government guidelines that urge corporations to take offers for their businesses seriously.
The combined corporation would be the fourth biggest retailer in the world after Walmart, Amazon and Costco, with about US$100-billion in annual revenue and more than 100,000 stores.
The companies have said almost nothing since on a potential transaction and Mr. Miller said he would not offer any further details on Thursday. Seven & i, which has a market capitalization of about 5.6 trillion yen (US$39-billion), has said it set up a special committee to analyze the proposal. Couche-Tard’s stock value is about US$52-billion.
Media reports out of Japan Thursday said the board of Seven & i Holdings will send Couche-Tard a letter Friday saying that its offer price is too low and that U.S. antitrust rules are a concern in any potential deal. The board believes that the suitor’s offer, which hasn’t been made public, doesn’t reflect the value of the business and growth prospects, the reports said. The business daily Nikkei was first to report the development.
- Nicolas Van Praet
Shares of Vancouver’s Canfor Corp. (CFP-T) turned higher and added 1.8 per cent after it announced it is shutting two northern British Columbia sawmills in a move it says will affect about 500 workers, partly blaming “punitive” U.S. tariffs imposed last month.
It said in a statement Wednesday that shutting the Plateau mill in Vanderhoof and its Fort St. John operation would also remove 670 million board feet of annual production capacity.
The company blamed the closures on the challenge of accessing economically viable timber, as well as ongoing financial losses and weak lumber markets, but said the final blow was the big increase in U.S. tariffs.
President and CEO Don Kayne said in a statement that Canfor’s B.C. operations had lost “hundreds of millions of dollars” in recent years, something he also connected to “increasing regulatory complexity.”
But the company’s challenges were exacerbated by the “punitive U.S. tariffs” announced on Aug. 14, he said.
He said that delaying the closures of the Vanderhoof and Fort St. John mills would “prolong the punishing anti-dumping duties and put additional operations at risk.”
On Aug. 14, the U.S. nearly doubled duties on softwood lumber, in a move the Canadian government called unfair and unwarranted.
The duties increased from 8.05 per cent to 14.54 per cent.
Mr. Kayne said the wind down of operations at the mills was expected to be completed this year, calling it “an incredibly difficult decision.”
“We are devastated by the decline in our province’s foundational forest industry, and we recognize the impact these closures will have on our employees and their families, as well as our First Nation partners, contractors, suppliers, communities and customers,” Mr. Kayne said.
Tesla (TSLA-Q) shares gained 4.9 per cent on Thursday after the electric automaker stuck to its plans to roll out the Full Self-Driving (FSD) advanced driver assistance software in China and Europe pending approval from regulators in the regions.
This comes about a month ahead of the company’s unveiling of its robotaxi product, “Cybercab,” underpinned by the technology that helps drivers accelerate, brake and steer in cities and highways with human supervision.
CEO Elon Musk said in July Tesla was likely to get regulatory approval for FSD in both the regions by the end of the year. The billionaire said on Thursday FSD could be launched in right-hand drive markets in late first quarter or early in the April-June period.
Mr. Musk’s tendency to set aggressive deadlines has led to doubts among investors and analysts, especially after missing several optimistic targets for FSD, Semi and Cybertruck.
It also announced other features like Actually Smart Summon, FSD for the Cybertruck electric pick up truck this month and version 13 of the software requiring fewer interventions next month.
Shanghai, which houses one of Tesla’s gigafactories, allowed 10 vehicles to carry out tests of FSD in June, paving the path for its roll out in China.
Brokerage Piper Sandler said while recent data from a community tracker on HW3 (hardware 3) FSD performance might worry some car owners, it is not a major concern for Tesla investors.
Tesla’s stronger focus on products such as its humanoid robot, the robotaxi and FSD comes as EV sales continue to be under pressure from higher borrowing costs, consumer concerns around fast-charging facilities and driving range on a single charge.
Wall Street remains cautious about companies developing self-driving technologies due to tough regulatory oversight. Investors, however, anticipate that a potential Trump administration could expedite the regulatory process.
U.S. Steel (X-N) was higher by 2 per cent a day after reports that the White House was close to announcing that U.S. President Joe Biden will block Nippon Steel’s US$15-billion acquisition bid on national security risks.
The deal is facing growing bipartisan political opposition amid upcoming presidential elections in the U.S., and a powerful labor union is against the takeover of Pennsylvania-headquartered U.S. Steel, a swing state key to both Democrats and Republicans.
Governments should not intervene in deals in an arbitrary manner as a matter of principle, Taro Kono, a Japanese minister and prime ministerial candidate, said when asked about news that the U.S. is preparing to block the takeover.
“There are times when the free market is outweighed by national security, environment and labor rights issues, but I am not sure if the acquisition of U.S. Steel is comparable to that,” Mr. Kono, Japan’s digital minister who is running in the ruling Liberal Democratic Party (LDP) leadership election this month to replace Prime Minister Fumio Kishida, said on Thursday.
Buyouts can benefit companies and regions, he said. The LDP’s parliamentary control means its leader becomes the prime minister of Japan.
“Perhaps it is the presidential election and everyone wants the labor union vote, but I would hope that the market will not be distorted by such a situation.”
The deal, which both companies hope to close by the end of this year, is particularly sensitive as the U.S. is Japan’s closest ally and Japan, in turn, is the biggest foreign investor into the U.S.
“The U.S.-Japan relationship is deeper, richer, and stronger than any single commercial transaction,” the U.S. Ambassador to Japan, Rahm Emanuel, told reporters separately on Thursday.
Nippon Steel shares closed down 0.4 per cent in Tokyo after climbing on the news earlier in the day, still outperforming the wider Nikkei index which was down 1 per cent.
JetBlue Airways (JBLU-Q) raised its third-quarter revenue forecast on Thursday, citing improved operational performance and strong summer travel demand, sending its shares higher.
The airline said the improved outlook was due to stronger bookings in Latin America, one of its major markets, and on gains from previously announced cost cuts and canceling routes that were less profitable.
Bookings from travelers, who were affected by the global cyber outage in July that forced multiple airlines to halt flights, also helped, the airline added.
JetBlue was not one of the primary carriers affected by that outage, which stranded thousands of passengers across the nation.
The carrier now expects revenue in the range of a 2.5-per-cent decline to 1-per-cent growth year-on-year in the July-September quarter. The company had earlier forecast revenue to drop somewhere between 1.5 per cent to 5.5 per cent for the quarter.
Since the termination of its proposed US$3.8-billion merger with ultra-low-cost carrier Spirit Airlines in March, Jetblue has taken several measures to improve its financial performance.
It deferred deliveries of 44 new jets from Airbus, reducing planned capital expenditures by about $3 billion between 2025 and 2029. The company also decided to exit some routes that were not living up to its financial expectations.
JetBlue now expects current quarter unit costs excluding fuel to grow between 5 per cent and 7 per cent, compared with a previous forecast for a 6-8-per-cent rise.
The airline also expects fuel costs to fall as jet fuel prices moderated in the quarter.
On the decline
Calgary-based Secure Energy Services Inc. (SES-T) gave back early gains and finished 0.8 per cent lower after it announced its intention to change its name to Secure Waste Infrastructure Corp. It will seek shareholder approval for the change at a special meeting of shareholders on Oct. 29 and expects adoption at the turn of the new year.
“The Secure brand has always embodied safety, reliability, and entrepreneurship,” said president and CEO Allen Gransch in a statement. “While these core values remain at the heart of our company, our new name reflects the evolution of our business and strategic focus. Over the past five years, SECURE has transitioned from a full-service energy services company to a specialized waste management and energy infrastructure provider. The name SECURE Waste Infrastructure Corp. better captures our core business activities, which are centered on the processing, recovery, recycling, and disposal of diverse waste streams, and the efficient operation of our critical infrastructure network.”
McKesson Corp. (MCK-N) dropped with the premarket announcement it is selling the Rexal pharmacy chain to Canadian private equity firm Birch Hill Equity Partners.
Texas-based McKesson announced the deal on Thursday, which includes the brand’s brick-and-mortar pharmacies as well as the Well.ca e-commerce site. Financial terms of the deal were not disclosed.
The Globe and Mail first reported that McKesson, a distribution giant in the pharmaceutical industry, was seeking a buyer for Rexall earlier this year.
McKesson began building its retail presence in Canada in 2008, when it bought 270 independently owned pharmacies in Quebec that operated under he Proxim and ProxiMed brands. It then spent $920-million to acquire pharmacies operating under brands such as IDA and Guardian Drugs from the Katz Group Canada Ltd. in 2012. In 2016, McKesson bough Rexall from the Katz Group for $2.9-billion.
Eight years later, McKesson is prioritizing investments in the oncology and biopharma services side of the business, which are growing, chief executive officer Brian Tyler said in a statement on Thursday.
- Susan Krashinsky Robertson
Verizon (VZ-N) was narrowly lower after it said on Thursday it would buy Frontier Communications (FYBR-Q) in an all-cash deal worth US$20-billion, as the U.S. wireless carrier looks to expand its fiber network.
Verizon has offered US$38.50 per share, a premium of 37.3 per cent to Frontier’s closing price on Sept. 3, a day before reports of a potential acquisition emerged. As of June 30, Frontier had a total debt of US$11.25-billion.
The acquisition, which is expected to close in about 18 months, will help Verizon better compete against AT&T and others by enabling it to deliver premium broadband services.
Frontier has 2.2 million fiber subscribers in 25 states, which will combine with Verizon’s roughly 7.4 million FiOS connections in nine states and Washington, D.C.
Verizon had in 2016 sold its TV and internet business in California, Texas, and Florida to Frontier in a US$10.54-billion deal. This included a portion of its FiOS fiber networks and customers.
Verizon’s fiber network is now largely in the North East and mid-Atlantic regions, while Frontier’s coverage spans multiple states in the Mid West, Texas, California and others.
“The acquisition of Frontier is a strategic fit. It will build on Verizon’s two decades of leadership...and is an opportunity to become more competitive in more markets throughout the U.S.,” Verizon CEO Hans Vestberg said.
Hewlett Packard Enterprise (HPE-N) raised its annual profit forecast on Wednesday, as demand for artificial intelligence servers continues to pick up owing to higher investments in AI infrastructure by businesses.
However, shares of HPE fell. Michael Ashley Schulman, chief investment officer at Running Point Capital, attributed the share fall to a drop in quarterly revenue in the company’s data analysis and traditional cloud segments.
The company leaving its full-year revenue forecast unchanged has also weighed on shares, he added, as expectations for AI-linked companies remain high.
HPE’s AI server business, however, continues to outperform as computers powered by Nvidia are capable of processing and executing complex commands quickly and efficiently, making them attractive to tech firms investing in generative AI and machine learning.
HPE reported third-quarter server revenue of US$4.3-billion, a rise of 35 per cent from the prior year.
The company, however, does face tough competition from server makers like Dell Technologies, which raised its annual profit and revenue forecasts last month on the back of server demand.
HPE raised its forecast for annual adjusted earnings per share to a range of US$1.92 and US$1.97, from US$1.85 and US$1.95.
For the fourth quarter, the company forecast revenue to be between US$8.1-billion and US$8.4-billion, while analysts were expecting US$8.18-billion.
The company said it expects fourth-quarter adjusted EPS of between 52 US cents to 57 US cents per share, compared with estimates of 55 cents, according to LSEG data.
Revenue for the quarter ended July 31 came in at US$7.71-billion, beating estimates of US$7.67-billion.
On an adjusted basis, the company earned 50 US cents per share, compared with estimates of 47 US cents.
Walt Disney (DIS-N) declined after the Wall Street Journal report data that was leaked online this summer included financial and strategy information, as well as personally identifiable information of some staff and customers.
The company had said in August that it was investigating an unauthorized release of over a terabyte of data from one of its communication systems.
Some of the data contained passport numbers, visa details, addresses and place of birth of staff on its cruises, while another spreadsheet had names, addresses and phone numbers of some Disney Cruise Line passengers, the report said.
The leaked files included granular details on revenue generated by products such as Disney+ and ESPN+, park pricing offers and what appears to be login credentials for some of Disney’s cloud infrastructure, the report said.
Hacking group NullBulge published data from thousands of Slack channels at the entertainment giant, including computer code and details about unreleased projects, WSJ reported in July.
The data spans more than 44 million messages from Disney’s Slack workplace communications tool, WSJ reported on Thursday.
Jeep’s parent company Stellantis’ (STLA-N) U.S.-listed shares dipped after it said late Wednesday that it will resume production at certain U.S. assembly plants after making “production adjustments” and will assess if further action is required.
The Wall Street Journal first reported that Stellantis had paused making its Jeep Wrangler and Grand Cherokee SUVs in the past week.
Stellantis said in an emailed statement to Reuters that it continues to take the necessary actions to improve operations in the U.S. market, including making production adjustments at the Toledo North, Jefferson and Mack plants.
The production at these plants will resume on Thursday, it added.
On Tuesday, the automaker named Bob Broderdorf, who was its Ram brand operation’s senior vice president and head of sales operations at Dodge, as the head of Jeep North America.
In July, the U.S. auto safety regulator opened a recall query into 94,275 Jeep Wrangler 4xe hybrid SUVs manufactured from 2021 through 2024.
Shares of C3.ai (AI-N), which makes software for enterprise artificial intelligence, slumped on Thursday, as subscription revenue was squeezed by slow conversions of pilot customers.
High interest rates and an uncertain economy have led to cautious spending by enterprises, which have kept a tight leash on costs.
The company reported subscription revenue of US$73.5-million for the first quarter, missing LSEG estimates of US$79.1-million.
For the company, subscription revenue is comprised primarily of software licenses, Software-as-a-Service offerings, pilots and trials of C3.ai applications or generative AI, and consumption-based pricing for which revenue is recognized over time.
“C3.ai had weakness in subscription revenue which decreased by ~$6.5 million quarter-on-quarter compared with adding ~$9.5 million last quarter and ~$5 million in the same period last year,” D.A. Davidson analysts wrote in a note.
Management said it continues to expect pressure on gross margins “due to higher mix of pilots, which carry a greater cost of revenue during the pilot phase of the customer life cycle.”
“We also expect short-term pressure on our operating margin due to additional investments we are making in our business, including in our salesforce, research and development, and marketing spend,” finance chief Hitesh Lath said in a post-earnings call.
The company, whose shares more than doubled last year, is set to lose more than $600 million from its market valuation of US$2.97-billion, if losses hold.
For the reported quarter, the company posted total revenue of US$87.2-million, an increase of 21 per cent, beating estimates of US$86.9-million.
With files from staff and wires