Jan 14, 2019
The Daily Chase: Newmont and Goldcorp strike a deal; China trade data disappoints
By Noah Zivitz
Newmont Mining has agreed to buy Goldcorp in an all-stock deal valued at US$10 billion. The takeover was announced in a press release that was barely three pages in length, which seems stunning for M&A of this magnitude. It comes after years of underperformance by the Vancouver-based miner and lands just a few weeks after Barrick and Randgold closed their deal.
Couple of key aspects of the deal:
-Goldcorp shareholders to receive 0.328 Newmont shares (plus two cents) for each share held. Will own 35 per cent of combined company.
-Combined company will be renamed Newmont Goldcorp, with listings on the NYSE and TSX anticipated.
-There’s no indication of what role awaits Goldcorp CEO David Garofalo (Goldcorp Chair Ian Telfer will be deputy chair of Newmont Goldcorp).
-The company’s North American regional office will be in Vancouver. Corporate HQ will be in Colorado.
-Break fees allow for US$350 to flow to Newmont, and US$650 to Goldcorp, in certain circumstances.
Two big questions: What pushed Goldcorp into Newmont’s embrace? And who’s next?
TSX WINNING STREAK
The S&P/TSX Composite Index enters a new week riding a six-session winning streak that’s seen Canadian stocks rally five per cent. The TSX closed on Friday 61 points shy of 15,000 -- a big round number it hasn’t seen since Dec. 7.
CHINA TRADE SLUMP
China’s imports and exports unexpectedly fell in December, underscoring the urgency of reaching a lasting tariff truce with the U.S. before their standstill agreement expires on March 1.
POT LOTTERY
25 lucky winners of the right to apply to open a recreational cannabis store in Ontario have been selected, and there isn’t a single recognized major industry player on the list. Same thing for the waiting lists, which includes entities with names like TBD and Best Insulation GTA inc. So at this point, there’s more questions than answers about who’s going to be operating pot stores in Canada’s most populous province. We’ve got reaction coming up on The Open and Commodities.
DETROIT AUTO SHOW
Ontario Premier Doug Ford is taking his “open for business” mantra to the North American International Auto Show against the backdrop of the looming closure of GM’s Oshawa plant. Economic Development Minister Navdeep Bains will also attempt to drum up interest in Canada at the auto show. Would be good to hear about technology attracting the most attention and whether the industry will buy into what Ontario and the feds are pitching.
OTHER NOTABLE STORIES
-Shaw Communications added 86,000 net postpaid wireless subscribers in its fiscal first quarter. Meanwhile, the company lost almost 53,000 wireline customers in the quarter.
-Lululemon has raised its fourth-quarter profit, revenue and same-store sales forecasts.
-It’s Brexit vote eve. In the words of one unnamed Tory lawmaker quoted by the Daily Telegraph, “We’re heading towards a brick wall at 100mph and are going to be smashed to smithereens.”
-Stuart Olson has rejected a call from a pair of activist shareholders to initiate a sale process. Shares of the Calgary-based construction services company shot up 11 per cent on Friday after Jamarant Capital and Crescendo Partners went public with their plan to launch a proxy fight.
-There are multiple reports that Indigenous Services Minister Jane Philpott will be moved into the role of Treasury Board president in a small cabinet shuffle this morning as a result of Scott Brison’s recently-announced resignation.
-PG&E disclosed it intends to file for Chapter 11 bankruptcy protection later this month amid “extraordinary challenges” stemming from wildfires in California.
-The partial U.S. government shutdown is now into a 24th day.
NOTABLE RELEASES/EVENTS
-Notable earnings: Shaw Communications, Citigroup
-8:45 a.m. ET: Governor General Julie Payette presides over swearing-in ceremony at Rideau Hall
-9:00 a.m. ET: Prime Minister Justin Trudeau holds media avail at Rideau Hall in Ottawa
-11:30 a.m. ET: Economic Development Minister Navdeep Bains makes announcement in Windsor re. auto sector (plus media avail)
-12:40 p.m. ET: U.S. President Donald Trump delivers remarks at American Farm Bureau Federation annual convention in New Orleans
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.
