'Thank God for Mach': Air Canada raises Transat offer as Quebec regulator shuts down defiant rival's bid - Financial Post

Air Canada is closer to landing its deal to buy Transat A.T. Inc. after raising its offer price to $720 million to win over its rival’s largest shareholder in face of a competing offer from a Montreal developer, whose bid was subsequently blocked by Quebec’s securities regulator.

Canada’s largest airline and Transat, a budget airline and tour operator also headquartered in Montreal, announced Sunday that Transat’s board unanimously supports Air Canada’s new bid of $18 per share, a 38 per cent increase from its original offer of $13 per share or $520 million.

Critically, Air Canada locked up support from Letko Brosseau & Associates Inc., which owns about 19.3 per cent of Transat’s voting shares. Letko Brosseau didn’t support the initial bid, but signed a lock-up and support agreement under the new terms.

“After extensive consultations with Letko Brosseau and several other large shareholders of Transat, we agreed to materially increase our price to ensure the transaction receives the necessary level of support,” Air Canada chief executive Calin Rovinescu said in a statement.

“We know this achieves the best possible outcome for all stakeholders.”

Transat’s stock price jumped 42 per cent to $16.75 on Monday.

Shareholders are scheduled to vote on the new offer next week. It requires two thirds support, which would have been difficult to cross without Letko Brosseau thanks to a competing proposal from Montreal-based developer Group Mach.

Mach attempted to block the Air Canada deal with an offer to buy nearly one-fifth (19.5 per cent) of Transat’s voting shares for $14 per share. It argued that Transat shareholders had every right to accept a better offer, but Transat called its scheme “abusive” and asked Quebec’s securities regulator to intervene.

On Monday, the Tribunal administratif des marchés financiers concluded that Mach’s offer was abusive and coercive, although one of three panel members dissented. It prohibited Mach from buying shares under its proposal and ordered it to return any shares already deposited.

Mach disagrees with the tribunal’s decision but will follow the orders, executive vice president Alfred Buggé said in an interview Monday.

“If there’s anything to take from all this it’s that thank God Mach was there because we’re the one that extracted the $18 price today,” Buggé said.

“It confirms that the board of directors of Transat didn’t do their job correctly because they were about to have shareholders sell at $13. They were presenting that as the best proposal, which obviously it wasn’t.”

Under the revised terms of the Air Canada deal, Transat will not consider any new unsolicited third party bids lower than $19 per share. But Mach is not counting out the idea of another bid.

“All options are on the table from now until shareholders meeting,” Buggé said. “We have the means.”

If Transat breaks off the Air Canada deal for a better offer, it agreed to pay a break fee of $40 million, up from $15 million. Air Canada’s break fee is also $40 million.

The increased bid is “highly likely” to receive shareholder approval, Altacorp Capital analyst Chris Murray noted to clients Monday.

“We had been anticipating an increase in the bid may be required for shareholder support, while continuing to see consideration paid as reasonable seeing several complementary synergies,” Murray wrote.

Air Canada has enough cash on hand to cover the extra $200 million. The airline had $5.9 billion in cash at the end of its second quarter, with $2.5 billion in “excess cash,” National Bank analyst Cameron Doerksen noted in July.

Air Canada’s stock price dipped about 1 per cent to $44.04 on Monday.

Still, the transaction isn’t a done deal. It requires approval from federal transportation and competition regulators. The competition side could be tricky, as the combined company would have more than 60 per cent of the market share on some routes across the Atlantic. Mach contends that its bid wouldn’t face as much regulatory scrutiny, given its synergies lie on the hotel side of Transat’s business.

Shareholders are scheduled to vote on the Air Canada proposal on Aug. 23.

• Email: ejackson@nationalpost.com | Twitter: theemilyjackson

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August 13, 2019 at 03:17AM

Verizon sells post-porn Tumblr to Wordpress' owner - MobileSyrup

'Great timing' by Jim Pattison — but the 82% premium comes as Canfor treads multi-year lows - Financial Post

As Canada’s forestry industry suffers through a pronounced downturn, Vancouver billionaire Jim Pattison has seized the moment with a proposal to buy out and take private Canfor, one of the country’s largest lumber and forestry product companies.

Pattison’s Great Pacific Capital Corp, which already owns 51 per cent of Canfor, on Sunday offered to pay $16 per share — an 81.8 per cent premium to the closing price last Friday of $8.80.

The company’s price surged 72 per cent to $15.15 on Monday, which many analysts took as a sign that the proposal, although non-binding, had a strong chance of success. If successful, it would mark one of the highest premiums paid for a commodity company in recent years.

But in a testament to the volatility of the forestry sector, it comes after Canfor’s share price hit all-time highs just last summer only to crash to near all-time lows this summer amid a supply and demand imbalance in the lumber market and uncertainty about the U.S. housing market.

“If I were owning a Canfor share I’d be jumping for joy,” said John Tumazos, of Very Independent Research, an analyst who covers the sector. “I think an 80 per cent premium is generous. There’s a lot of things that can go wrong or right.”

Still, the $16 per share offer falls below some analysts’ target price for Canfor; and some believe that the sector is due for a quick recovery, possibly before the end of the year, if the current low-interest rate environment revives the U.S. housing market and lumber prices.

Canfor deals in many forestry products, but lumber contributed between 66 and 76 per cent of its cash flow from 2016 to 2018, according to BMO analyst Ketan Mamtora.

“It looks like great timing from (Pattison’s) standpoint,” Mamtora wrote in a note to investors on Monday. “However, with the offer coming as (Canfor’s) stock price flirts with multi-year lows, we are not convinced this bid is the optimal outcome for (Canfor’s) minority shareholders.”

Last June, the company’s stock price peaked at $31.64, just about 50 per cent of what Pattison’s Great Pacific offered.

A Canfor spokesperson declined to comment, but the company has said it will form a special committee to review the bid. Given Pattison’s large position in the company, analysts said another bid is unlikely.

Ultimately, a simple majority of the minority shareholders would have to approve the deal, which could take months to close.

Pattison, 90, has invested in a diverse range of industries including fisheries and supermarkets and has held his interest in Canfor for years.

The nonagenarian was travelling and not available for comment, but Great Pacific released a statement saying Canfor was better suited as a private company, which would eliminate administrative expenses required for public listing.

“The company is facing important strategic and capital decisions, which Great Pacific believes are best suited to a private company with a long-term focus,” its statement said in part.

Much of the recent news about Canada’s forestry sector has focused on supply cuts in Western Canada, where forests have been decimated by mountain pine beetle, and efforts to diversify outside the U.S.

Earlier this year, for instance, Canfor closed a $580 million deal to purchase a 70 per cent stake in the Swedish company Vida. Now, it derives a little more than half of its lumber from forests in B.C. and Alberta, around 30 per cent from forests in the U.S. and the remainder in Europe, according to analysts.

Mamtora, of BMO, said the recent volatility in the lumber sector is a result of mismatch between supply and demand.

Throughout 2017 and 2018, a series of events triggered a run-up in lumber prices, including catastrophic forest fires, but also weather events during the winter of 2018 that interrupted the supply chain, he said.

Meanwhile, the fundamentals of the U.S. housing market appeared solid, so many forestry companies were anticipating strong demand for lumber. Unfortunately, weather events in 2019 hurt housing starts, and lumber prices have fallen precipitously.

“It’s a classic case of supply rising, and demand falling,” said Mamtora.

Canfor, along with West Fraser, Interfor and other industry peers all suffered precipitous declines in their share prices in recent months.

Although there is currently an excess of supply in Canada that will take several months to work its way out of the system, prices could stabilize by the end of the year, and many forestry companies such as Canfor could see an improvement.

West Fraser Timber Co. Ltd.,  a rival lumber company in which Pattison has an 11.9 per cent stake, also rose 4.2 per cent to $48.11.

RBC Dominion Securities Inc. analyst Paul Quinn said there is a low probability of a Canfor-West Fraser combination due to regulatory hurdles, but that Pattison’s proposal could revive interest in the sector.

“Given the highly negative sentiment in the sector, we believe that the ‘vote of confidence’ provided by a highly respected Canadian investor could spark additional interest in the space,” Quinn wrote.

Canfor Pulp Products Inc., a subsidiary of Canfor, was up 9.3 per cent on the news.

Hamir Patel, an analyst with CIBC, also wrote that he expected the bid by Pattison to awaken investors to the opportunities in the beaten-down forestry sector.

“We expect commodity lumber stocks to rally on Monday as the Pattison Group bid highlights underlying asset values in the lumber space,” Patel wrote in a report.

• Email: gfriedman@postmedia.com | Twitter: GabeFriedz

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August 13, 2019 at 03:51AM

Verizon sells Tumblr just two years after acquiring social network - The Guardian

Air Canada sweetens bid for Transat to $18 under pressure from shareholders - The Globe and Mail

Air Canada has raised its offer to buy Transat A.T. Inc. by 38 per cent, to $720-million, buckling to pressure from some investors and a would-be rival bidder.

Air Canada’s move to hike its price for the Montreal airline and travel company came after weeks of calls and meetings with investors who said they would reject the takeover attempt unless they got more for their shares. Montreal real estate developer Group Mach had also offered a higher price for a portion of the company in hopes of blocking the deal.

Air Canada and Transat said the new offer is worth $18 a share, up from $13 or $520-million, has the support of Transat’s largest shareholder, Letko Brosseau and Associates Inc., the Montreal money manager that controls almost 20 per cent of shares and opposed the first bid.

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The deal would give Air Canada control of a competitor on transatlantic flights as well as Air Transat’s Airbus fleet of planes at a time Air Canada is facing capacity and revenue constraints. The squeeze stems from its Boeing 737 Max passenger jets that are grounded amid a global halt that came after two fatal crashes.

“After extensive consultations with Letko Brosseau and several other large shareholders of Transat, we agreed to materially increase our price to ensure the transaction receives the necessary level of support,” said Calin Rovinescu, Air Canada’s chief executive.

Peter Letko, a partner at Letko Brosseau, had told The Globe and Mail that Transat should not sell itself until it restores margins and profitability in order to fetch a better price.

In an interview on Monday, after the new offer had been announced, Mr. Letko said: “We’re satisfied with the price.

"We thought that Air Canada was very thoughtful and sensitive to the fact that we were not pleased with the original price,” he said of the meetings he held with the company.

Air Canada’s takeover of Canada’s third-largest airline requires support of two-thirds of Transat shareholders by Aug. 23. The deal is expected to close next year and requires approval from legal, regulatory and antitrust bodies in Canada and Europe. The combined companies would control at least 60 per cent of domestic flights over the Atlantic and most of the Montreal travel market, and are expected to face a rigorous review by the Competition Commissioner.

Transat has lost money in two of the past four years, and is expected to post a loss in 2019 as it tries to expand its sun-destination hotel operations. The company’s share price in the past five years has rarely been higher than $9, and sank to less than $5 in March.

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Transat said in April that it was in talks with “more than one” possible suitor, and soon entered exclusive talks with Air Canada. The two sides announced on June 27 that they had an agreement on a takeover at $13 a share.

Christophe Hennebelle, a spokesman for Transat, said the $13 offer the two sides first negotiated was deemed fair by Transat’s outside advisers, National Bank and Bank of Montreal. “It was a good price and obviously now we have an even better price,” Mr. Hennebelle said.

Montreal real estate developer Group Mach had offered – and later dropped – a conditional bid worth $14 a share. Mach recently took a new tack, offering $14 for up to 19.5 per cent of Transat and trying to collect vote proxies to block the Air Canada deal.

Quebec’s Financial Markets Administrative Tribunal, in a ruling issued on Monday, sided with a Transat complaint and blocked the Mach offer.

Still, Alfred Buggé, vice-president of Mach, did not rule out another attempt to buy Transat, and took credit for spurring Air Canada to increase its bid by $200-million. “The shareholders of Transat owe us a great debt of gratitude,” Mr. Buggé said. “If it wasn’t for Mach, the shareholders wouldn’t have this offer.”

Transat shares closed at $16.75 on Monday on the Toronto Stock Exchange, a discount of $1.25 to the revised offer that Mr. Buggé attributed to the deal’s uncertainty.

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PenderFund Capital Management of Vancouver, Transat’s fifth-largest investor, opposed the initial price agreed to by Transat’s board.

Amar Pandya, an analyst and portfolio manager with PenderFund, said other shareholders he spoke to also opposed the price initially agreed to by the Transat board of directors, but that the higher offer and Letko’s support make it “almost a done deal.”

“There was not a lot of support for the $13 offer,” he said. “With Mach instigating as well, that created more disagreement within the shareholder base,” Mr. Pandya said in a telephone interview.

Patrick McQuilken, a spokesman for the Fonds de solidarité FTQ, which owns 12 per cent of Transat, said there were at least three meetings and phone calls between the labour-sponsored investment fund and Air Canada. He said, as is typical for the fund in any investment decision, the Fonds focused on the offer price as well as the employment and economic effects of the takeover.

He said it is too soon to say if the Fonds is supporting the new offer.

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August 13, 2019 at 05:30AM

Lyft formally announces plans to operate rideshare in Metro Vancouver | Urbanized - Daily Hive

One of the world’s rideshare giants formally announced on Monday that it intends to launch their rideshare services in Metro Vancouver.

See also:

Lyft will be applying for their licenses this September when BC’s Passenger Transportation Board (PTB) begins accepting applications, and the company has appointed local tech executive Peter Lukomskyj as its first general manager to lead operations and the hiring of drivers.

“I am thrilled to soon launch Lyft’s world-class ridesharing service in Vancouver, as part of our effort to positively contribute to BC communities and bring spontaneous and reliable transportation to the region,” said Lukomskyj in a statement.

“We appreciate the hard work the BC NDP government has done to allow ridesharing in the province, and also want to recognize and thank the BC Greens and BC Liberals for their continued commitment and support. We look forward to working with all levels of government in the region, including the Ministry of Transportation and Infrastructure, and the Passenger Transportation Board, to be a part of the province’s transportation network and help create a frictionless experience for British Columbians.”

The company, like Uber, has been vocal against the provincial government’s mandated requirement of rideshare drivers meeting the Class 4 commercial license standard, and in today’s release Lyft affirmed that they will only operate in Metro Vancouver areas where it can “on-board enough drivers.”

With that said, although the PTB has yet to release their final regulations, Lyft said it is “confident” that it can begin serving its first passengers this fall.

Earlier this summer, Uber highlighted its obstacle of finding enough Class 4 drivers, expressing concerns that their rideshare services in BC may be limited to only the region.

“We need to conduct further analysis before we can determine the viability of operating outside Metro Vancouver under the BC government’s driver requirements,” Michael van Hemmen, Uber’s head of Western Canada operations and public affairs, told Daily Hive.

Ridesharing services, he furthered, “need a critical mass of eligible drivers in order to deliver the quality of service our customers expect. The Class 4 licence requirement makes that much more difficult.”

In an email to Daily Hive last week, an Uber spokesperson also added that the company needs to ensure it has enough drivers in each service market to ensure it can provide the same level of quality service that is also available across its global enterprise. In essence, it does not want an off-brand supply shortage that results in long waits, just like what is currently happening with the local taxi system.

Both Lyft and Uber are asking individuals interested in becoming a rideshare driver to begin the process of obtaining their Class 4 commercial license ahead of this fall’s launch of rideshare.

Within Canada, Lyft already operates in Toronto and Ottawa. It says its ridesharing app is also available to 95% of the US population.

With files from Eric Zimmer

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August 12, 2019 at 10:58PM

These Were the Worst-Performing Stocks on the TSX Last Week - The Motley Fool Canada

The S&P/TSX Composite Index was up 0.43% last week, while the performance of the S&P 500 wasn’t nearly as good, down 0.29%. Here are three of the worst TSX stocks from last week.

The TSX is now up 14.09% year to date through August 9 — 108 basis points higher than the S&P 500. 

Except for the announcement of existing home sales for July, not much is happening in Canada on a macroeconomic level in the week ahead. Down south, both the Consumer Price Index for July and the University of Michigan Consumer Sentiment Index for August are out.

In the meantime, here are three of the worst-performing stocks on the TSX last week.  

CI Financial 

CI Financial (TSX:CIX) continues to face significant headwinds, as it tries to win over Canadian investors. Last week, it reported net redemptions of $2.47 billion in the second quarter, its seventh consecutive quarter with net redemptions. Since Q4 2017, CI has seen $15.4 billion in assets walk out the door. 

CI stock lost 8.8% on the news. In four days of trading last week, it lost 9.8%. It’s off more than 50% since peaking in May 2014.

To turn around the company, CI announced that it had hired Kurt MacAlpine as its CEO. Starting with the company September 1, MacAlpine was executive vice president of WisdomTree Investments in New York.

Until MacAlpine can come up with a new strategy for the company, investors will have to make do with cost-cutting measures. In its latest quarter, it took a $35 million charge to account for senior staff cuts. 

Linamar

Auto parts company Linamar (TSX:LNR) lost 11% last week after reporting a mixed bag when it comes to its second-quarter results.

On the downside, Linamar reported both a 3.3% drop in sales and a 15.8% decline in normalized earnings. Its industrial segment, which includes its Skyjack and MacDon product lines, saw revenues drop 7.9%, primarily due to weakness in the agricultural sector as a result of the U.S./China trade war. 

Linamar CEO Linda Hasenfratz mentioned in its quarterly conference call that farmers are suffering badly from the dispute between the two countries. The sooner the trade dispute is resolved, the better.

However, on a positive note, despite declines in the global light vehicle market, Linamar’s transportation division’s revenues were flat for the quarter while it managed to generate $179 million in free cash flow, despite the decline in overall earnings.

In the second half of 2019, it expects EBITDA to resume growing. Linamar stock is now down 15.8% year to date and 28.9% over the past year. 

Badger Daylighting 

Badger Daylighting (TSX:BAD) lost 9.7% last week. Although it was down for the week, including dividends, it’s managed to gain 30.2% on the year.  

The primary reason Badger stock lost some momentum last week had everything to do with missing analyst estimates for its Q2 2019 results. 

Analysts were expecting $166 million in revenue from the largest hydrovac excavation fleet in North America; it delivered $161 million. The consensus estimate for adjusted EBITDA was $43 million. Badger came in $4 million below that estimate. 

The good news: the average target price by analysts is $52.75 — 27% higher than where it’s currently trading.   

Free investor brief: Our 3 top SELL recommendations for 2019

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That’s why The Motley Fool Canada’s analyst team has put together this FREE investor brief, including the names and tickers of 3 TSX stocks they believe are set to LOSE you money.

Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).

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Fool contributor Will Ashworth has no position in any stocks mentioned. The Motley Fool owns shares of CI FINANCIAL CORP and has the following options: short October 2019 $21 calls on CI FINANCIAL CORP.

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August 12, 2019 at 09:15PM