Feb 6, 2019
The Daily Chase: Aphria rejects Green Growth Brands’ takeover offer; Suncor hit by oil discount
By Noah Zivitz
Aphria has formally rejected Green Growth Brands’ unsolicited takeover offer, and there was no mincing words in the recommendation to shareholders. “GGB offers shares in an illiquid company with limited operating history, minimal assets and no track record in the cannabis industry,” Aphria Chair Irwin Simon said in a release that goes on to question whether Green Growth would be able to fund a combined entity.
CRUDE DISCOUNT DENTS SUNCOR
Suncor Energy swung to a loss in the fourth quarter, and operating earnings trailed estimates by a wide margin, as the discount on Canadian crude took a toll on the country's largest oil producer even as its integrated model absorbed some of the shock. Despite the profit setback, Suncor is raising its dividend and ramping up its share buyback strategy. We'll keep an ear on what (soon-to-be retired) CEO Steve Williams has to say on the conference call later this morning.
B-20 DEBATE RAGES ON
Just yesterday, a top OSFI official swatted down many of the criticisms about the mortgage stress tests that took effect at the start of last year. Today, it's clear Carolyn Rogers' speech hasn't silenced the skeptics. "We have to have an honest discussion on whether or not today's home buyers are being stress tested against rates that are realistic," Toronto Real Estate Board CEO John DiMichele said in a release accompanying TREB's 2019 outlook that calls for sales and average prices to rise this year.
STATE OF THE UNION
U.S. President Donald Trump talked up his border plan (“walls work, and walls save lives”), repeated key talking points on trade with China (“I don’t blame China for taking advantage of us”), and blurred the lines between politics and the economy (“An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics, or ridiculous partisan investigations” – prompting a poignant crowd shot of Adam Schiff). We’ll recap the highlights with our Bloomberg partners.
OTHER NOTABLE STORIES
-The European Commission has blocked Alstom and Siemens proposed rail unit merger, while noting the companies’ proposed remedies to salvage the deal weren’t sufficient. We’ll consider the spillover effect for Bombardier.
-Indigo Books & Music is blaming fallout from the Canada Post strike, the impact of store renovations, and a "non-cash gift card breakage revenue adjustment" for a dip in third-quarter sales. Net profit fell sharply to $21.5 million in the quarter.
-Intact Financial is raising its dividend on the back of a 19% surge in fourth-quarter operating profit. CEO Charles Brindamour joins us on The Close this afternoon.
NOTABLE RELEASES/EVENTS
-Notable earnings: Nutrien, Gluskin Sheff + Associates, General Motors
-Notable data: Canadian building permits, U.S. trade balance
-8:50 a.m. ET: Bank of Canada Deputy Governor Timothy Lane delivers speech in Washington, D.C. (prepared remarks on bank website at 0835)
-9:00 a.m. ET: Senate Energy, Environment, Natural Resources committee holds hearing on Bill C-69 (details here: https://sencanada.ca/en/Committees/enev/MeetingSchedule/42-1)
-9:30 a.m. ET: Suncor conference call to discuss fourth-quarter results
-1:30 p.m. ET: U.S. President Donald Trump announces candidate for World Bank presidency
-Toronto Real Estate Board releases 2019 outlook
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
