Canada Stocks Rise on Wireless Carrier Rally, BlackBerry Deal
Canadian stocks rose, halting a two-day slide, as phone stocks gained after foreign competitors signaled no intention to join a wireless-spectrum auction and BlackBerry Ltd. pared declines after agreeing to a buyout.
BlackBerry was unchanged, erasing earlier losses of as much as 8.2 percent, after saying it has a deal to sell itself for $4.7 billion to a group led by Fairfax Financial Holdings Ltd. Rogers Communications Inc. rose 1.2 percent as Canada’s three largest phone carriers placed deposits to bid in a spectrum auction that is not expected to attract a foreign competitor. National Bank of Canada climbed 0.9 percent to pace gains among the nation’s lenders. Catamaran Corp. dropped 3.5 percent after Morgan Stanley cut its rating on the stock.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 4.71 points, or less than 0.1 percent, to 12,811.18 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has surged 5.6 percent this quarter and is up 3 percent in 2013. Trading volume was 3.3 percent above the 30-day average.
“The big news event today was BlackBerry (BB),” said John O’Connell, chief executive officer with Davis Rea Ltd. in Toronto. The firm manages about C$600 million. The gains among phone stocks show “the markets were overreacting to the threat of an entrance from foreign telecoms,” he said.
The S&P/TSX traded little changed for most of the morning session before the BlackBerry announcement sent the index up by as much as 0.2 percent. The company’s shares erased an earlier drop to turn as high as 4.1 percent before finishing the day unchanged at C$9.08.
That’s roughly in line with the $9 a share offered by a group led by Fairfax, its largest shareholder, in a tentative deal. The deal values BlackBerry at a 3.1 percent premium over its closing price last week.
The stock plunged 16 percent Sept. 20 after the company released second-quarter earnings on that fell short of analysts’ estimates. The Waterloo, Ontario-based company also said it’s cutting 4,500 jobs and taking a writedown of as much as $960 million for unsold inventory of its Z10 phone -- a touch-screen device unveiled in January as its answer to the iPhone.
The acquirers will have six weeks to scrutinize BlackBerry’s books, a span in which the smartphone maker can seek other takeover offers. Fairfax, a financial services holding company, added 1.1 percent to C$420.45.
Rogers Communications, Canada’s largest wireless carrier, increased 1.2 percent to C$45.36 and BCE Inc. (BCE) added 1.3 percent to C$44.51. Telus Corp. jumped 2.5 percent to C$35.44.
The roster of applicants doesn’t appear to include major foreign players. Verizon Communications Inc. said Sept. 3 it wouldn’t enter the Canadian market after saying earlier in the summer it was exploring the idea.
It’s “good for incumbents,” Greg MacDonald, an analyst in Toronto at Macquarie Capital Markets, said in an e-mail, referring to the three largest companies.
Financial firms advanced. National Bank rose 0.9 percent to C$85.78 and Canadian Imperial Bank of Commerce gained 0.8 percent to C$83.47. Royal Bank of Canada, the nation’s largest lender, added 0.5 percent to C$66.26.
Materials producers declined as prices for metals from gold to copper slumped amid speculation the U.S. Federal Reserve will reduce fiscal stimulus, outweighing data from China showing a preliminary manufacturing index gauge climbed more than expected in September.
Iamgold Corp. retreated 4.2 percent to C$4.99 and Osisko Mining Corp. tumbled 5.6 percent to C$5.11. Silver Standard Resources Inc. dropped 7.5 percent to C$6.57.
Catamaran (CCT), a pharmacy benefits management company, slumped 3.5 percent to C$49.29, the lowest close since May. The stock has lost 14 percent since customer Walgreen Co. said on Sept. 17 it is moving staff into a private health exchange. Analysts with Morgan Stanley today lowered Catamaran’s rating to equal weight, the equivalent of a hold.
Agrium Inc., North America’s third-largest fertilizer producer, lost 3.1 percent to C$89.49, the biggest drop since July 30. The company said earnings will fall in its wholesale unit this quarter because of declines in sales volumes of as much as 30 percent compared with a year earlier.
Prices for potash, a major fertilizer used to strengthen crops, have declined since OAO Uralkali, the world’s biggest producer, pulled out of a trading venture with Belarus in July and said it would sell its product at a lower price.
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