A survey of North American equities heading in both directions
On the rise
BCE Inc. (BCE-T) was higher by 0.4 per cent a day after saying it is selling Northwestel Inc. to Sixty North Unity, a consortium of Indigenous communities from the Northwest Territories, Yukon and Nunavut, for around $1-billion.
It says Northwestel, which provides phone, internet and television services in Canada’s north, will become the largest telecommunications company worldwide with full Indigenous ownership.
Sixty North Unity says it is planning significant capital investment to double fibre internet speeds, expand high-speed availability and bring critical resiliency to safeguard against wildfires and other natural disasters.
The consortium is planning to maintain Northwestel’s leadership team including its president, Curtis Shaw, while increasing Indigenous representation in the workforce.
Earlier on Tuesday, the federal Competition Bureau said BCE must sell nearly 700 advertising displays in Ontario and Quebec as a condition of its $410-million acquisition of outdoor advertising company Outfront Media Inc.’s Canadian operations.
The watchdog’s ruling Monday comes as its Bell Media subsidiary announced the deal’s closure. First announced last October, Bell had agreed to take over 9,325 advertising displays owned by Outfront Media’s Canadian arm, which has since been rebranded Outedge Media Canada.
The bureau said its investigation concluded the merger was “likely to substantially lessen competition” in Quebec City, Trois-Rivieres, Sherbrooke and the Greater Montreal and Toronto areas.
Toronto’s Bitfarms Ltd. (BITF-T) jumped over 7 per cent despite Riot Platforms (RIOT-Q) saying its move to adopt a poison pill to thwart its acquisition by the bitcoin miner was “shareholder unfriendly” and highlighted the lack of solid corporate governance standards.
Riot said on Wednesday it had privately urged Bitfarms to remove its chairman and interim CEO, Nicolas Bonta, and add at least two new independent directors to its board.
The dispute stems from an unsolicited offer Riot made in April to acquire Bitfarms for about US$950-million. Bitfarms rebuffed the offer, saying it significantly undervalued the company, and approved a poison pill plan to prevent any attempts of a hostile takeover.
Under the plan, if an entity takes more than 15-per-cent stake in the company after June 20 and up to Sept. 10, Bitfarms will issue fresh shares to other stockholders, diluting the entity’s stake.
The 15-per-cent trigger “is in direct conflict with established legal and governance standards,” Riot said on Wednesday.
“We will continue to push to address the serious corporate governance issues at Bitfarms and ensure that shareholders have a say on the company’s path forward,” Riot CEO Jason Les said.
Separately, Riot disclosed in a regulatory filing it had raised its stake in Bitfarms to 13.1 per cent from 12 per cent earlier this month. The company is Bitfarms’ largest shareholder, according to LSEG data.
Shares of both Riot and Bitfarms have been hammered so far this year, dropping 35 per cent and 19 per cent, respectively, despite a wave of optimism in the crypto industry due to the approval of exchange-traded funds tied to the spot price of bitcoin.
Vaughan, Ont.-based GFL Environmental (GFL-T) was up 1 per cent as hedge fund ADW Capital Management on Wednesday urged it to sell its environmental solutions (ES) business and position itself as a pure-play waste management firm.
New-York based ADW, which owns 1.7 million shares of GFL, also asked the waste management company to consider all inbound third-party acquisition offers.
“We cannot think of any reason why the company would explore any other path than to sell its ES division. While we would be in favor of an “outright” sale of the entire company, we recognize the scope and scale of such a transaction,” ADW said in a statement.
GFL shares were trading at US$37 on Wednesday. The company has 42 times forward profit estimates, above industry multiple of 14.61. The company was not immediately available for a comment on Wednesday.
In the latest reported quarter, the company reported flat revenue growth and a net loss of US$172.8-million.
Oracle (ORCL-N) shares soared 13.3 per cent on Wednesday as investors cheered a boom in demand for the company’s relatively low-cost cloud infrastructure services from artificial intelligence applications.
Oracle has been ramping up its cloud infrastructure unit, which is expected to drive growth by renting out cloud computing and storage to companies, but will face competition from Alphabet’s Google, Microsoft and Amazon.
Oracle’s cloud infrastructure, pitched as a less-expensive option to its rivals, has attracted business from venture capital-funded generative AI startups, including Elon Musk’s xAI.
Oracle said on Tuesday it had tied-up with ChatGPT-maker OpenAI and Google Cloud to extend its own cloud infrastructure to customers.
“The announcement that OpenAI will now be using OCI (Oracle Cloud Infrastructure) only adds to Oracle’s credibility as an AI platform and the new relationship with Google also broadens the company’s distribution for its database,” Evercore analyst Kirk Materne wrote in a note.
The partnership enables OpenAI to use Microsoft’s Azure platform on Oracle’s infrastructure for some use-cases, while its new language learning models are being trained on a supercomputer built with Microsoft, the ChatGPT-maker said.
Oracle’s stock was trading 19.59 times to its forward earnings estimates, lower than that of Amazon’s 36.35, Microsoft’s 32.60 and Alphabet’s 21.85.
The company’s fourth-quarter results missed estimates on Tuesday, as its legacy database and enterprise resource planning software business faces competition from less-expensive options.
“We suspect there is ample churn off of Oracle software to competing database and ERP software firms due to the eroding switching cost argument amid massive digital transformations,” Morningstar analyst Julie Sharma said.
Caterpillar (CAT-N) increased 0.4 per cent after it has raised its quarterly dividend by 8 per cent and its share repurchase authorization by US$20-billion.
With the expanded authorization, the company may now repurchase up to US$21.8-billion of its common stock.
The company increased its dividend to US$1.41 per common share payable in August.
Caterpillar has paid higher annual dividends to shareholders for 30 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index.
On the decline
Shares of Dollarama (DOL-T) declined 4.1 per cent after it posted an increase in first-quarter sales and profit on Wednesday, as more Canadians shopped at its stores for affordable groceries and essentials.
Canadian consumers have been looking for affordable deals and bargains for a wide range of products such as clothes, groceries and cleaning supplies, as they grapple with higher cost of living.
Constrained household budgets have encouraged more people to visit discount stores such as Dollarama and Dollar Tree , which sell essential products used by consumers at competitive prices.
“We are seeing a progressive normalization in comparable store sales, with growth primarily driven by persistent higher than historical demand for core consumables and other everyday essentials,” CEO Neil Rossy said.
The Montreal-based discount store’s sales rose 8.6 per cent to $1.41-billion in the quarter ended April 28, compared with $1.29-billion a year ago and in line with LSEG estimates.
The company earned 77 cents per share compared with 63 cents a year ago. Analysts on average were expecting a profit of 76 cents.
The retailer reaffirmed its annual comparable sales forecast of growth between 3.5 per cent and 4.5 per cent.
Separately, Dollarama said it had acquired an additional 10-per-cent stake in Latin American value-retailer Dollarcity, increasing its stake to 60.1 per cent.
Dollarama, which is looking to expand its business in Latin American countries and Mexico, said the deal is unlikely to impact its net earnings per share for fiscal 2025.
National Bank of Canada (NA-T) slid 5.9 per cent after announcing it is buying Canadian Western Bank (CWB-T) in a pending deal that extends the reach of the country’s sixth-largest lender into Alberta and British Columbia.
The Montreal bank said Tuesday that it struck a stock-swap deal that values the Edmonton-based Canadian Western Bank at $5-billion.
National Bank has been on a tear in recent years, with its share price surging 89 per cent in the past five years – making it the best performing Big Six bank stock – as it focused on expanding its business beyond Quebec and growing niche areas where it believed it could grow.
“CWB will strengthen our national reach by increasing our presence and branch network, providing us the opportunity to grow our retail segment,” Laurent Ferreira, National Bank’s chief executive officer, said during a conference call.
“Together, our clients will have greater access to banking services across Quebec, Ontario, Alberta and B.C.”
The deal is subject to approval of two-thirds of the votes cast by Canadian Western shareholders at a special meeting expected to be held in September. National Bank expects the transaction to close at the end of next year.
National Bank is set to gain the customer portfolio of Canada’s eighth-largest lender, with $37-billion in loans across 65,000 customers and 39 branches in Western Canada and Ontario. The deal increases National Bank’s Canadian lending portfolio outside of Quebec by 37 per cent.
The Montreal bank has been pushing into the Western provinces as part of its growth strategy. In the past three years, National Bank has grown its commercial loan book outside of Quebec at a compound annual growth rate of 18 per cent.
- Stefanie Marotta
Saskatoon-based Nutrien Ltd. (NTR-T) closed 1.7 per cent lower on Wednesday after it said it was reviewing strategic options for its 50-per-cent ownership in Profertil, an Argentinian fertilizer company, and was no longer pursuing its Geismar clean ammonia project in Louisiana.
The company had in 2023 indefinitely halted work on its clean ammonia project at Geismar, Louisiana.
The company, whose investor call is due later today, said in a release that it intends to reduce controllable costs across its operations by nearly US$200-million by 2026 while maintaining an average capex of US$2.2- to US$2.3-billion through 2026.
It is also aiming for potash and nitrogen sales volume growth of approximately 2-3 million tons by 2026, compared to 2023 levels.
“Our simplified and focused plan prioritizes initiatives that enhance our ability to serve growers in our core markets, maintain the low-cost position and reliability of our assets, and improve the quality of our earnings and free cash flow,” said Ken Seitz, Nutrien’s CEO.
Shares in some of Europe’s biggest automakers also dropped on Wednesday on fears of Chinese retaliation.
The Commission said it would apply provisional duties of up to 38.1 per cent on the Chinese imports - a move European manufacturers have long warned against, fearing it could impact their sales in China, the world’s biggest auto market.
“The tariffs have turned out to be lower than many feared and are initially a plan that can still be revised. The measures are a disaster for European car buyers and for German car manufacturers,” said Frank Schwope, automotive industry lecturer at the University of Applied Sciences FHM Hannover.
“China is by far the most important sales market for all German car manufacturers. However, French car manufacturers, for whom China is an insignificant market, would benefit from measures against Chinese imports to Europe,” Schwope added.
The STOXX carmakers index was last down 0.4 per cent, having earlier fallen as much as 1.6 per cent.
Volkswagen and BMW were among the worst performers on Germany’s blue-chip index. Luxury German manufacturer Porsche Holding was down over 7 per cent as it traded ex-dividend.
Paramount Global (PARA-Q) fell after Shari Redstone, its largest shareholder, ended talks for a potential merger with David Ellison’s Skydance Media.
Ms. Redstone, Paramount’s controlling shareholder, had been expected to sell her family’s controlling stake in Paramount to Mr. Ellison as part of a US$2.25-billion sale of the family’s holding company, National Amusements.
National Amusements issued a statement saying it had been unable to reach mutually acceptable terms with Skydance Media for the acquisition of a controlling stake in NAI. It did not elaborate.
The Wall Street Journal, citing people familiar with the matter, first reported on Tuesday that the deal had fallen apart, and Ms. Redstone will now likely pursue a sale of just National Amusements without trying to merge Paramount into another company.
National Amusements owns movie theaters in the U.S., U.K. and Latin America. It also holds 77 per cent of Paramount’s class A voting stock, representing the Redstone family’s controlling interest in the company. Two parties are interested in this stake: independent Hollywood producer Steven Paul as well as Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital.
One source close to Ns, Redstone said these other prospective buyers have given her options, with the possibility of a lucrative bidding war.
The abrupt end of talks with Skydance came after Mr. Ellison and his bidding partners, RedBird Capital and KKR, revalued its offer for National Amusements to provide more cash for Paramount’s nonvoting shareholders.
GameStop (GME-N) said on Tuesday it had completed an “at-the-market” equity offering of its shares to raise roughly US$2.14-billion in gross proceeds, days after meme stock influencer Keith Gill’s first livestream in three years.
Shares of the videogame retailer, which has been at the center of the meme stock frenzy, fell on Wednesday.
On a livestream on Friday with more than 600,000 viewers, Mr. Gill, the key figure behind an eye-popping rally in the struggling company’s stock in 2021, joked about memes and interspersed his discussion of GameStop with various disclaimers. The stock closed the session down nearly 40 per cent.
GameStop said it sold the maximum amount of 75 million shares registered under the program.
According to Reuters’ calculations, the average sales price of each GameStop share came at around US$28.50. The company’s shares closed at US$30.49 after Tuesday’s trade.
The company said it intends to use the proceeds for general corporate purposes, which may include acquisitions and investments.
On Wednesday before the bell, Citron Research no longer has a short position in retail traders’ favourite GameStop, the short seller said on X.com on Wednesday, days after taking a bearish position in the company.
“It’s not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders,” Citron said in the tweet.
Andrew Left, Citron Research’s founder, had said last week he was again betting against GameStop, although his position was “significantly lower” from 2021 when he was forced to close his position after retail traders banded together in online forums and drove an eye popping rally in the stock, squeezing hedge funds.
With files from staff and wires
David Leeder