A survey of North American equities heading in both directions
On the rise
Shares of Kinaxis Inc. (KXS-T) gained after hedge fund Irenic Capital Management on Tuesday urged it to see who may want to buy the Canadian software company and warned its board against making “reactive decisions” and taking “half measures.”
The board “should initiate a full strategic review including soliciting interest for a sale for the whole company,” Irenic said in a statement, echoing other investors’ private and public calls for the company to put itself up for sale.
Irenic, run by former Elliott Investment Management and Indaba Capital Management executives Adam Katz and Andy Dodge, called Kinaxis a “world-class software asset” that needs to find a new chief executive officer and head of sales and also needs to review interest in the company from potential financial and strategic buyers.
Earlier on Tuesday the supply chain management software supplier said it had hired Goldman Sachs, without disclosing the purpose. But it also said the board “strongly believes that execution of its strategic plan is the best path to maximize shareholder value.”
Irenic said Kinaxis’ new Executive Chairman Robert Courteau said there has been inbound interest from financial sponsors, but the board was currently unwilling to engage them.
“The Board is focused on enhancing value for shareholders, is fully aware of its fiduciary duties, and will continue to act accordingly,” a Kinaxis spokesperson said.
The spokesperson did not directly respond to a request for comment on what interest the company has received and how it is engaging.
Irenic said the board cannot make decisions about the “best path forward without first considering alternative paths,” expressing concern the board is not fully examining potential interest in the company.
Corus Entertainment (CJR-B-T) jumped after announcing two new lifestyle brands following the loss of Canadian content rights for Food Network and HGTV to Rogers Communications Inc (RCI-B-T).
Flavour Network and Home Network will launch Dec. 30, offering a blend of original Canadian programming and international content acquired through new and expanded licensing agreements.
The broadcaster says original shows that were meant for Food Network Canada and HGTV Canada will air on the new networks.
Corus announced in June that it will lose the rights to several key Warner Bros. Discovery brands including HGTV, Food Network, Cooking Channel, Magnolia Network and OWN at the end of the year. Those brands move to Rogers in January.
Corus says Flavour Network and Home Network will replace the current channel positions of Food Network Canada and HGTV Canada next year.
The broadcaster says more programming details and new series will be announced later this year.
U.S. Steel (X-N) was higher on Wednesday after Reuters reported the U.S. national security panel reviewing Nippon Steel’s US$14.9-billion bid let the companies refile their application for approval of the deal, delaying a decision on the politically sensitive merger until after the Nov. 5 presidential election.
The move offers a ray of hope for the companies, whose proposed tie-up appeared set to be blocked when the Committee on Foreign Investment in the United States (CFIUS) alleged on Aug. 31 the transaction posed a risk to national security by threatening the steel supply chain for critical U.S. industries.
CFIUS needs more time to understand the deal’s impact on national security and engage with the parties, the person said on Tuesday. Refiling sets a new 90-day clock to review the proposed tie-up and make a decision.
The review was expected to take close to the full 90 days, another person familiar with the matter said.
Japanese public broadcaster NHK reported on Wednesday that Nippon Steel had refiled an application with the CFIUS for its U.S. Steel acquisition plan by Wednesday, quoting people familiar with the matter.
“Extending the timeline takes some pressure off the parties and, importantly, pushes the decision past the election in November,” said Nick Klein, a CFIUS lawyer with DLA Piper.
The deal has become a political hot potato. This month, Vice President Kamala Harris, the Democratic presidential nominee, said at a rally in Pennsylvania, the swing state where U.S. Steel is headquartered, that she wanted U.S. Steel to remain “American owned and operated,” echoing a view held by President Joe Biden.
BlackRock (BLK-N) rose while Microsoft (MSFT-Q) slid after announcing a plan to launch a more than US$30-billion fund to invest in artificial intelligence infrastructure to build data centres and energy projects.
AI models, especially those used for deep learning and large-scale data processing, require substantial computational power, leading to higher energy consumption.
The computing requirements for AI have dictated that tech companies string together thousands of chips in clusters to achieve the necessary amount of data crunching power, leading to a surge in the demand for these specialized data centers.
The investment vehicle, known as Global AI Infrastructure Investment Partnership, aims to help enhance AI supply chains and energy sourcing, BlackRock and Microsoft said.
MGX, the Abu Dhabi-backed investment company, will be a general partner in the fund, while AI chip firm Nvidia will provide expertise.
The partnership will mobilize up to US$100-billion in total investment potential when including debt financing, the companies said.
The investments will be chiefly in the United States and the remainder in its partner countries, according to the companies.
Intuitive Machines (LUNR-Q) soared after it said late Tuesday it has bagged a navigation and communication services contract of up to US$4.82-billion from NASA for missions in the near space region.
Shares of the space exploration company have already more than doubled so far this year.
As part of the contract, which has a base period of five years with an additional five-year option period, Intuitive will deploy lunar relay satellites and provide communication and navigation services to aid NASA’s Artemis campaign.
The contract would see Intuitive debut its lunar satellite constellations that will enable enhanced data and transmission services as well as autonomous operations.
“We see the win today as significant validation towards Intuitive’s outlook and its ability to continue to win additional contracts,” said Andres Sheppard, senior analyst at Cantor Fitzgerald.
Under NASA’s Artemis program, the space agency aims to send commercial robot landers to the moon on science scouting missions and return astronauts to Earth’s natural satellite this decade.
NASA had paid Intuitive US$118-million to build and fly Odysseus, which in February became the first U.S. spacecraft to land on the moon in half a century. The spacecraft, however, lost power and went dormant after a lopsided landing that hindered operations and scientific output.
Alphabet (GOOGL-Q) rose in volatile trading after it won a legal challenge on Wednesday against a 1.49 billion euro (US$1.7-billion) European Union antitrust fine, while Qualcomm (QCOM-Q) failed to repeal a penalty.
The rulings underscore outgoing EU antitrust chief Margrethe Vestager’s mixed record in defending her crackdown on Big Tech in court. She scored two major wins last week against Google in a separate case and against Apple’s tax deal with Irish authorities.
The European Commission in its 2019 decision said Google had abused its dominance to prevent websites from using brokers other than its AdSense platform that provided search adverts. The practices it said were illegal took place from 2006 to 2016.
The Luxembourg-based General Court mostly agreed with the European Union competition enforcer’s assessments of the case, but annulled the fine, saying that the Commission had failed to take into account all the relevant circumstances.
“The Commission has also not demonstrated that the clauses in question had, first, possibly deterred innovation, next, helped Google to maintain and strengthen its dominant position on the national markets for online search advertising at issue and, last, that they had possibly harmed consumers,” the judges said.
Google said the case was about a narrow subset of text-only search ads placed on a limited number of publishers’ websites.
“We made changes to our contracts in 2016 to remove the relevant provisions, even before the Commission’s decision. We are pleased that the court has recognized errors in the original decision and annulled the fine,” the company said in an email.
In Qualcomm’s case, the U.S. chipmaker only managed to convince the General Court to trim its EU antitrust fine to 238.7 million euros from 242 million euros.
Judges threw out all its arguments. The Commission imposed the fine in 2019, saying that Qualcomm sold its chipsets below cost between 2009 and 2011, in a practice known as predatory pricing, to thwart British phone software maker Icera, which is now part of Nvidia Corp.
Cheerios maker General Mills (GIS-N) posted a smaller-than-expected drop in quarterly sales on Wednesday aided by higher prices for certain snacks, helping combat a consumer demand slowdown.
It reaffirmed its fiscal year 2025 forecast, citing an uncertain economic backdrop for consumers across its core markets.
However, the company expects volume trends to gradually improve in fiscal 2025, although full-year category dollar growth is expected to be below the company’s long-term growth projections.
Shares of the company closed higher as General Mills saw gross margins decline in the quarter. It reported a gross margin of 34.8 per cent owing to higher input costs and an unfavorable inventory mix.
The company’s quarterly sales fell 1 per cent to US$4.85-billion from a year ago. Analysts, on average, expected a drop of 2.11 per cent to US$4.80-billion, according to LSEG data.
On the decline
Rogers Communications (RCI.B-T) was lower after taking control of professional sports in Toronto by acquiring rival BCE Inc.’s (BCE-T) stake in Maple Leaf Sports and Entertainment for $4.7-billion.
Rogers is purchasing Bell Canada parent BCE’s 37.5-per-cent in MLSE, owner of the NHL’s Maple Leafs, NBA’s Raptors, CFL’s Argonauts and MLS’s Toronto FC, after sharing ownership of the platform for the past 12 years.
Montreal-based BCE said it will use the proceeds of the sale to pay down debt and expand its telecom network.
Rogers also holds a 37.5-per-cent of MLSE and has the right to purchase MLSE chairman Larry Tanenbaum’s stake in the company in 2026. Rogers also owns Major League Baseball’s Toronto Blue Jays.
Last year, Mr. Tannenbaum sold 5 per cent of his holding company Kilmer Sports Inc., which owns his MLSE stake, to pension fund manager OMERS for $400-millon.
The deal, subject to league and regulatory approvals, provides Bell with the opportunity to “renew its existing MLSE broadcast and sponsorship rights long-term at fair market value.” This includes access to content rights for 50 per cent of Maple Leafs regional games and 50 per cent of Toronto Raptors games for which MLSE controls the rights.
“MLSE continues to appreciate significantly, and together with our sports and media assets, we plan to surface more value for shareholders long-term,” said Tony Staffieri, chief executive officer of Rogers, in a press release. “This agreement also ensures long-term Canadian ownership and investment of these iconic teams over the last decade,” the company said in a statement.
- Andrew Willis
Barrick Gold (ABX-T) slid after suspending operations at its Porgera gold mine in Papua New Guinea until Thursday after tribal violence in the region killed at least 20.
Papua New Guinea has granted police emergency powers, including the use of lethal force, to contain the violence in Porgera between illegal settlers squatting near the gold mine and local landowners, newspapers Post-Courier and The National reported late on Sunday.
“The Porgera gold mine has suspended the majority of its operations until 19 September for the protection of its employees while the government restores law and order in the surrounding region,” a spokesperson said in a statement late on Tuesday.
Two of its employees were killed in the violence, the spokesperson added.
Home to hundreds of tribes and languages, the Pacific nation to the north of Australia has a long history of tribal warfare.
Violence has increased over the past decade as villagers swapped bows and arrows for military rifles and elections deepened existing tribal divides.
Alaska Airlines (ALK-N) was down after it said Wednesday it has completed its US$1.9-billion acquisition of Hawaiian Airlines after it reached agreement with the U.S. Transportation Department.
The airlines on Tuesday agreed to maintain key Hawaiian routes and adopt consumer protections under an agreement that will last six years. The Justice Department in August opted not to block the deal that was announced in December by Alaska, the fifth-largest domestic U.S. airline, to merge with Hawaiian, the 10th-largest carrier.
Tupperware Brands (TUP-N) dropped after it filed for Chapter 11 bankruptcy protection late on Tuesday, succumbing to mounting losses amid poor demand for its once-iconic food storage containers.
The company’s popularity exploded in the 1950s as women of the post-war generation held “Tupperware parties” at their homes to sell food storage containers as they sought empowerment and independence.
However, it has lost its edge to rivals making cheaper and more environmentally friendly containers.
Last month, Tupperware raised doubts about its ability to remain in business after flagging potential bankruptcy risk several times due to liquidity constraints.
“Over the last several years, the company’s financial position has been severely impacted by the challenging macroeconomic environment,” Chief Executive Officer Laurie Goldman said in a statement.
The company said it intends to obtain court approval to continue selling its products and charting out a sale process for the business.
The company has been trying to turn its business around for years after reporting several quarters of falling sales.
A post-pandemic jump in costs of labor, freight and raw materials such as plastic resin have also pressured its business.
Last year, the company’s stock saw wild swings amid “meme stocks” rallies, where retail investors coordinate on social media and typically focus their speculative bets on companies that are financially struggling or have high short interest.
Tupperware listed US$500-million-$1-billion in estimated assets and US$1 billion-$10 billion in estimated liabilities, according to bankruptcy filings in the U.S. Bankruptcy Court for the District of Delaware. It listed the number of creditors to be between 50,001 and 100,000.
With files from staff and wires