A survey of North American equities heading in both directions
On the rise
Shares of Transat AT Inc. (TRZ-T) increased almost 9 per cent on Tuesday after saying it has named veteran Quebec executive Jean-Francois Pruneau as its next chief financial officer.
Mr. Pruneau will start officially at the travel company on Jan. 9.
He was most recently executive vice-president and chief financial officer at Starpax Biopharma.
Before that, Transat says Mr. Pruneau held various roles at Canadian National Railway, BCE Media and Quebecor, where he was chief financial officer.
He also served as president and chief executive of Videotron from 2019 to 2021.
Mr. Pruneau replaces Patrick Bui who is leaving the parent company of Air Transat to become chief financial officer at retailer Dollarama Inc.
Shares of Rogers Communications Inc. (RCI-B-T) were narrowly higher after announcing it is selling its entire stake in Cogeco Inc. (CGO-T) and subsidiary Cogeco Communications Inc. (CCA-T) for $829-million to the Caisse de dépôt et placement du Québec as the Toronto-based telecom looks to pay down debt after its takeover of Shaw Communications Inc.
The Caisse will then sell some of those shares to the public as well as back to Cogeco Inc. through a complex series of deals, leaving it with a 16.1-per-cent stake in Cogeco Communications.
The sale comes roughly three years after Rogers unsuccessfully attempted to acquire the Quebec-based cable company’s Canadian assets. The proposed takeover would have seen Rogers snap up Cogeco’s Canadian operations while New York-based Altice USA Inc. would have acquired the U.S. cable business, which has since been renamed from Atlantic Broadband to Breezeline.
The unsolicited joint bid, which was sweetened to $11.1-billion, failed to win the support of Cogeco executive chairman Louis Audet and his family, which controls the Cogeco companies through multiple voting shares. Mr. Audet repeatedly stated that the companies were not for sale, drawing support from the Caisse. The Quebec fund owned a 21-per-cent stake in Cogeco’s U.S. cable business, after investing US$315-million in 2017 to help pay for the purchase of a rival U.S. cable company.
Rogers, which first acquired a stake in Cogeco in 2000 as part of a deal that saw it swap cable assets with Calgary-based Shaw, is selling the stake in a private transaction roughly eight months after closing its contested $20-billion takeover of Shaw.
- Alexandra Posadzki
Klaviyo Inc. (KVYO-N) rose 0.1 per cent after Canadian e-commerce giant Shopify Inc. (SHOP-T) disclosed a beneficial ownership of 44.36 per cent of the outstanding Series A shares in the marketing and automation firm.
Shopify, which sells tools to create and manage online store-fronts, had invested in wholesale platform Faire in September. It also has a partnership with Dutch payments firm Adyen.
Klaviyo had in August, as part of its paperwork for an initial public offering, disclosed that Shopify had a 11.2-per-cent stake in the company.
Earlier in the year, Shopify had announced its plans to lay off 20 per cent of its staff.
On the decline
Tracking a decline in oil and natural gas prices, Keyera Corp. (KEY-T) was lower by 1.3 per cent following the premarket release of a business update and adjustments to its 2024 guidance.
Touting “strong execution,” the Calgary-based company said it is “on-track for a record year” and now expects each the upper end of its compound annual growth rate (CAGR) target of 6-7 per cent adjusted EBITDA between 2022 and 2025, exceeding the 3.9-per-cent projection on the Street and assuming a constant marketing assumption of $310-million. It increased its base marketing realized margin guidance range to $310-million to $350-million (previously $250-million to $280-million).
“Keyera continued to deliver against its strategic pillars in 2023 and displayed the strength of its competitive position in the basin,” the company said in a release.
Choice Hotels (CHH-N) slid 1.9 per cent in the wake of launching a hostile takeover offer for Wyndham Hotels & Resorts (WH-N) after repeated attempts to reach a deal with the rival hotel chain were rebuffed.
Choice Hotels said Tuesday that its exchange offer to shareholders of Wyndham remains the same as its last bid, which was US$49.50 in cash and 0.324 shares of Choice common stock per Wyndham share. The exchange offer gives Wyndham shareholders the chance to choose to receive all cash, all shares or a combination of the two.
The offer puts the value of the deal at about US$8-billion.
“While we would have preferred to come to a negotiated agreement, the Wyndham Board’s refusal to explore a transaction has left us with no choice but to take our proposal directly to Wyndham’s shareholders,” Choice CEO Patrick Pacious said in a prepared statement. “Wyndham chose to publicly reject our last proposal without any engagement even after we addressed their concerns, including adding significant regulatory protections for their shareholders.”
Choice has been trying to work out a deal for Wyndham for a while, but has been met with pushback. In October Wyndham rejected an unsolicited US$8-billion buyout offer from Choice. At the time, Wyndham, which runs Days Inn, La Quinta, Ramada and a host of other brands, called the proposal “opportunistic” and said that it undervalued the company’s growth potential. The offer was rejected unanimously by its board.
Shares of Alphabet Inc. (GOOGL-Q) were down 0.6 per cent after a U.S. federal court jury decided that Google’s Android app store has been protected by anticompetitive barriers that have damaged smartphone consumers and software developers, dealing a blow to a major pillar of a technology empire.
The unanimous verdict reached Monday came after just three hours of deliberation following a four-week trial revolving around a lucrative payment system within Google’s Play Store. The store is the main place where hundreds of millions of people around the world download and install apps that work on smartphones powered by Google’s Android software.
Epic Games, the maker of the popular Fortnite video game, filed a lawsuit against Google three years ago, alleging that the internet search giant has been abusing its power to shield its Play Store from competition in order to protect a gold mine that makes billions of dollars annually. Just as Apple does for its iPhone app store, Google collects a commission ranging from 15 per cent to 30 per cent on digital transactions completed within apps.
Apple (AAPL-Q) prevailed in a similar case that Epic brought against the iPhone app store. But that 2021 trial was decided by a federal judge in a ruling that is under appeal at the U.S. Supreme Court.
The nine-person jury in the Play Store case apparently saw things through a different lens, even though Google technically allows Android apps to be downloaded from different stores — an option that Apple prohibits on the iPhone.
Just before the Play Store trial started, Google sought to avoid having a jury determine the outcome, only to have its request rejected by U.S. District Judge James Donato. Now it will be up to Donato to determine what steps Google will have to take to unwind its illegal behavior in the Play Store. The judge indicated he will hold hearings on the issue during the second week of January.
Oracle (ORCL-N) shares plummeted 12.4 per cent on Tuesday as another quarter of below-expectations cloud sales and a bleak forecast amplified concerns over the pace of growth at the business expected to benefit from a boom in generative AI.
Revenue growth at the firm’s cloud infrastructure unit, which competes with industry heavyweights Amazon Web Services and Microsoft Azure, has slowed over the last three quarters.
“The lower OCI (Oracle Cloud Infrastructure) growth will worry investors as this is the main investment story,” analysts at Barclays wrote in a note.
Oracle’s shares have climbed 40 per cent this year as investors bet that the rising adoption of generative AI, the technology behind popular chatbot ChatGPT, will drive growth for companies providing data centre services.
The company, co-founded by billionaire Larry Ellison, has been investing heavily to build data centres as part of its strategy to become a cloud-based company.
Oracle on Monday blamed supply constraints for the weak results, with CEO Safra Catz saying that demand for the company’s generative AI and cloud infrastructure services was increasing at “an astronomical rate.”
Still, analysts raised concerns about the company’s prospects. At least four brokerages cut their price targets on the stock following the results.
“Two consecutive quarters of cloud revenue shortfalls partially erode our confidence that a cloud transition can drive a sustainable top-line growth recovery,” brokerage Piper Sandler said.
Total cloud revenue, which includes software, rose 25 per cent in the second quarter ended Nov. 30, missing the company’s expectations for a 29-per-cent-31-per-cent increase.
Weaker enterprise spending and intense competition from larger players were also a drag on overall results.
Oracle forecast third-quarter revenue growth, including health data software platform Cerner, to be in the range of 6-8 per cent. The mid-point of the forecast is below analysts’ average estimate for growth of about 7.6 per cent, according to LSEG data.
Pfizer (PFE-N) dipped after it said on Tuesday it has agreed to donate the rights of royalties from sales of cancer drug Bavencio to address concerns from U.S. antitrust regulators related to its US$43-billion deal to buy Seagen Inc. (SGEN-Q)
The drugmaker said it had now received all regulatory approvals to close the deal on Thursday, about 9 months after announcing the acquisition.
Pfizer announced the acquisition in March as it braced for a steep fall in sales of its COVID-related products. Lower COVID product sales led the company to launch a program to cut US$3.5-billion worth of job roles and other expenses.
After the deal closes, Pfizer said it would create a separate cancer drugs operation and split the rest of its commercial business into two divisions, one focused on the United States and the other on the rest of the world.
Chief Commercial Officer Angela Hwang would step down, Pfizer said, and Chief Business Innovation Officer Aamir Malik would become the commercial chief for its U.S. unit, while Alexandre de Germay will become commercial chief for the international unit.
The U.S. Federal Trade Commission sent a request for more information on the Seagen deal to the companies in July. The FTC declined to comment on Pfizer’s announcement on Tuesday.
Hasbro (HAS-Q) said late Monday it would cut another 900 jobs globally, nearly a year after the toymaker announced it would reduce 15 per cent of its workforce amid weaker sales.
Hasbro had said in January it would cut about 1,000 full-time positions. On Monday, the company said it had already cut 800 jobs.
At the end of 2022, Hasbro had employed about 6,490 people worldwide, according to a regulatory filing. The job cuts announced on Monday take the total layoffs to 1,900, or 29 per cent of its workforce.
Shares of the company were down in Tuesday trading, while Barbie maker Mattel (MAT-Q) also slipped.
“Market headwinds we anticipated have proven to be stronger and more persistent than planned,” CEO Chris Cocks said in an email to employees on Monday.
Consumers worldwide have struggled to cope with persistently high inflation, forcing them to cut back on discretionary spending including toys and focus more on buying essentials.
Canadian toy stores struggle as bargain-hunting is the name of the game this holiday season
In October, the company joined rival Mattel in warning of a weak holiday season and indicating that consumers were being frugal heading into the most important period for retailers.
“The headwinds we saw through the first nine months of the year have continued into holiday and are likely to persist into 2024,” Mr. Cocks added.
The maker of Transformers action figures and Monopoly on Monday said that majority of its employees would be notified over the next six months, while the balance would occur over the next year.
Lucid Group (LCID-Q) on Monday said Sherry House would be stepping down as its finance chief, effective immediately, to pursue other opportunities.
The luxury electric car maker said Gagan Dhingra, who is vice-president of accounting, would additionally serve as interim CFO while it searches for a replacement.
Mr. Dhingra has been with Lucid for two years and has decades of prior accounting and finance experience, Lucid said.
Ms. House, who served as Lucid’s CFO since 2021, will continue in an advisory role until Dec. 31, the company added.
Shares of Lucid, known for its flagship Air luxury electric sedan, dropped in Tuesday trading.
The news comes days after Nasdaq said it had removed Lucid from its Nasdaq 100 index in an annual shuffle.
In November, Lucid said it expected to produce 8,000–8,500 vehicles this year, down from its earlier projection of more than 10,000 units.
With files from staff and wires
David Leeder