The Big Three: Reaction to Encana exit; HBC privatization bid hits snag; Farex misses estimates
The CEO of one of Canada’s most international energy companies is dismissing any fear that a stampede of his peers will follow in Encana’s footsteps and re-domicile in the United States. “It was not really a tremendous surprise,” is how Vermilion Energy CEO Anthony Marino described Encana’s (Ovintiv’s?) move in an interview on BNN Bloomberg, adding Vermilion has its “roots” here and is content having a Canadian home base. “I think it’s just incumbent on us and the rest of the industry to make investors aware that Canada does offer some significant advantages in profitability.” We’ll continue chasing reaction to Encana distancing itself from this country.
Have to point out Marino also told us “it’s our intention to maintain” Vermilion’s dividend, and that he believes it’s sustainable in the current oil-price range. The company’s dividend yield sits at 15.86 per cent.
GOOGLE TO ACQUIRE FITBIT
As speculated earlier this week, Google has reached a deal to acquire wearables-maker Fitbit in a US$2.1-billion cash takeover. Fitbit co-Founder James Park said in a release he believes Google is the “ideal partner” for his company. We’ll look into the deal’s rationale and Greg Bonnell is aiming to explore potential privacy concerns in The Real Economy.
HBC PRIVATIZATION FACES OPPOSITION
Richard Baker’s plan to take Canada’s oldest company private is facing a significant hurdle after Catalyst Capital said it has rallied an opposition bloc holding 28.24 per cent of the retailer’s stock. “The agreement that the company entered into is so fundamentally conflicted, that it shows the amount of leverage Richard Baker has over the board and management,” said Catalyst Partner Gabriel de Alba in a release, going on to dangle the prospect of strategic investors waiting in the wings. We’ll explore what might happen next.
WEAKNESS IN WATSA’S PORTFOLIO
He’s widely revered as Canada’s most influential investor, but Prem Watsa’s portfolio at Fairfax Financial was a drag on profit in the big conglomerate’s latest quarter as net income fell 35% year-over-year amid a $96.7-million loss on investments (thanks to bond holdings). We’ll keep tabs on Watsa’s view of the world in Fairfax’s conference call with investors at 830.
OTHER NOTABLE STORIES
-Pengrowth Energy, a one-time stalwart during the income trust heyday, is being acquired by Cona Resources (which falls under the umbrella of Adam Waterous’s private equity firm) for five cents per share. In a release, Pengrowth’s CEO said it’s the best outcome amid a “severe funding crisis” in the energy sector.
-Sleep Country Canada sank at the start of trading in Toronto after posting a mere 0.5% gain in third-quarter same-store sales late yesterday and an adjusted profit that fell well short of expectations
-We now know what George Cope’s next move will be after he retires as CEO of BCE (our parent company via Bell Media) in January. BMO Financial Group today announced it’s planning to appoint Cope as the bank’s chair in March. Cope has been a director with BMO since 2006.
-TC Energy announced it intends to go ahead with a $1.2-billion expansion of its Canadian natural gas pipeline network (pending regulatory approval). The company formerly known as TransCanada also narrowly beat third-quarter profit estimates today and said it “continues to actively manage legal and regulatory matters” relating to Keystone XL.
-The U.S. labour market delivered an upside surprise this morning with non-farm payrolls rising by 128,000 in October. Economists, on average, expected 85,000 new jobs.
-Lots of talk in Cameco’s third-quarter release about cost management and chipping away at the company’s debt as the uranium producer unexpectedly swung to an adjusted loss in the quarter amid a 38 per cent drop in revenue.
-Notable earnings: Imperial Oil, TC Energy, Pembina Pipeline, Cameco, Fortis, Exxon Mobil, Chevron
-Notable data: U.S. non-farm payrolls, ISM U.S. manufacturing index
-8:30 a.m. ET: Fairfax Financial CEO Prem Watsa leads quarterly conference call
-1:30 p.m. ET: CIBC CEO Victor Dodig delivers speech "The Importance of Canada's Energy Sector" to Economic Club in Calgary
-Apple TV+ launches
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.