Canada Stocks Rise on Hudson’s Bay Deal as Phone Shares RallyKatie Brennan
Canadian stocks rose, snapping a four-day slump in the benchmark index, as Hudson’s Bay Co. rallied after announcing a $2.4 billion acquisition and telephone stocks jumped.
Hudson’s Bay, the operator of Canada’s largest department-store chain, surged 5.8 percent after agreeing to acquire luxury U.S. retailer Saks Inc. Telus Corp. and Rogers Communications Inc. added more than 1.4 percent as the industry minister reportedly met with executives of the country’s largest phone companies. Turquoise Hill Resources Ltd. fell 17 percent after parent Rio Tinto Group delayed work on a $5.1 billion underground expansion of a copper mine in Mongolia.
The Standard & Poor’s/TSX Composite Index added 21.14 points, or 0.2 percent, to 12,669.04 at 4 p.m. in Toronto. The gauge declined 0.3 percent last week. Trading volume was 33 percent lower than the 30-day average.
“The Hudson’s Bay, Saks merger is a decent-sized transaction so it’s getting lots of interest. The real-estate implications will continue to garner additional interest as they spin this thing out,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. He helps manage C$220 million ($210 million). “We expect lots of M&A and we are focused on that.”
Hudson’s Bay, Canada’s oldest company, gained 5.8 percent to C$17.45 after agreeing to pay $16 a share in cash for Saks, in a deal that may spur the creation of a real estate investment trust. The price is a 30 percent premium to New York-based Saks’s closing price on May 20, the day before media reports began, according to a statement today. The transaction, which brings together the Lord & Taylor and Saks Fifth Avenue brands, creates a company that will operate 320 stores.
Seven of the 10 groups in the benchmark index rose, as telephone stocks gained the most with a 0.9 percent advance. Telus added 1.8 percent to C$31.95 and Rogers Communications climbed 1.4 percent to C$41.92.
Canadian Industry Minister James Moore met with senior executives from the country’s mobile-phone companies about their concerns over the possible entry of Verizon Communications Inc. into the market, according to a person familiar with the meetings. Verizon said June 18 that it is interested in acquiring Canadian carriers such as Wind Mobile.
Commodities producers slumped, with energy and raw-materials companies erasing at least 0.1 percent. Health-care companies fell the most, losing 0.6 percent as a group.
Bombardier Inc. added 3.3 percent to C$5.06 after GMP Securities LP analyst Deepak Kaushal rated the world’s largest maker of corporate jets a buy in new coverage, with a target price of C$7. The company also won a contract to provide technology for a new metro line in Riyadh, Saudi Arabia. Bombardier’s share of the contract amounts to $383 million.
Canadian Natural Resources Ltd. slid 0.7 percent to C$31.97 as Macquarie Research analyst Chris Feltin and Toronto-Dominion Bank downgraded their ratings on the stock to the equivalent of hold. The nation’s largest producer of heavy crude fell the most in more than three months Friday on concern that output next year will be affected due to a leak at its Primrose oil-sands project.
Turquoise Hill lost the most in the S&P/TSX, falling 20 percent to C$4.38 after Rio Tinto delayed the expansion of its Oyu Tolgoi copper mine, pending financing approval by Mongolia’s parliament. Rio controls the mine through its 51 percent stake in Turquoise Hill, which in turn owns 66 percent of the operation. The government owns the remaining stake in the mine, which is forecast to account for a third of Mongolia’s economy.