A survey of North American equities heading in both directions
On the rise
Veren Inc. (VRN-T) surged 16 per cent and Whitecap Resources Inc. (WCP-T) dropped 14.6 per cent with the premarket announcement of an all-stock deal valued at $15-billion including debt, to form an energy giant with a larger footprint in the country’s lucrative shale plays.
The combined company will be the largest landholder in Alberta Montney and Duvernay - regions that hold some of the biggest shale resources in Canada and have seen significant investment in recent years.
The North America energy sector has seen a wave of deals in the past two years, and the sector’s focus on consolidation of core growth areas and improvement in operational efficiency is expected to continue in 2025.
The combined company will have “one of the deepest inventory growth sets of both liquids-rich Montney and Duvernay opportunities, along with conventional light oil opportunities in some of the most profitable plays in the Western Canadian basin,” said Whitecap CEO Grant Fagerheim.
Veren, formerly Crescent Point Energy, has had a presence in the Kaybob Duvernay play since 2021, and expanded its footprint in 2023 with the roughly $2.55-billion acquisition of Hammerhead Energy.
The combined company is estimated to have production of 370,000 barrels of oil equivalent per day (boepd), of which 63 per cent will be liquids.
Veren shareholders will receive 1.05 shares of Whitecap for each share held, or $9.82 based on the last close, which implies a deal value of about $6-billion, as per Reuters calculation. It represents a 39-per-cent premium to Veren’s close on Friday.
Whitecap shareholders will own about 48 per cent of the combined company, while Veren’s will own the rest following closure of the deal, expected before May 30.
The combined company would be led by Whitecap’s existing management team under the Whitecap name. Four Veren directors would join the company’s board, which would include Craig Bryksa, the current CEO of Veren,
Franco-Nevada Corp. (FNV-T) gained 0.7 per cent on Monday after it reported betted--than-expected fourth-quarter results, including net income of US$175.4-million.
The Toronto-based company said it had profit of 91 US cents per share. Earnings, adjusted for non-recurring costs, came to 95 US cents per share.
The results surpassed Wall Street expectations. The average estimate was for earnings of 89 US cents per share.
The precious metals streaming and royalty company posted revenue of US $321-million in the period.
For the year, the company reported profit of US$552.1-million, or US$2.87 per share. Revenue was reported as US$1.11-billion.
Beacon Roofing Supply (BECN-Q) is negotiating a potential US$11-billion buyout from billionaire Brad Jacobs-run QXO (QXO-N), in a complete reversal after it rebuffed an earlier offer and adopted a poison pill to stave off a hostile takeover attempt.
The companies confirmed they are in discussions about a combination in which QXO would acquire Beacon for $124.35 per share in cash. That is an increase of 10 cents from QXO’s previous proposal, which Beacon had rejected saying it significantly undervalued the company.
Shares of Beacon rose on Monday. The company is postponing its investor day scheduled for March 13.
QXO, a new entrant in the building products distribution industry and which counts U.S. President Donald Trump’s son-in-law Jared Kushner as a board member, in January made public its bid to buy Beacon’s outstanding shares for US$124.25 apiece.
Virginia-based Beacon rejected the offer, which prompted QXO CEO Brad Jacobs to approach Beacon’s shareholders directly in a hostile takeover attempt.
Following this, Beacon had asked shareholders to reject QXO’s offer. The company said its shareholders were “underwhelmed by the first and only offer.”
Mr. Jacobs retaliated arguing Beacon’s chairman, Stuart Randle, and CEO Julian Francis last year sold about 21 per cent and 10 per cent of their shares, respectively, at lower values than QXO’s offer.
Last week, QXO extended the deadline for its US$124.25-per-share takeover offer for a second time, which was set to expire on March 10.
On the decline
Shares of Alimentation Couche-Tard Inc. (ATD-T) was lower by 1.8 per cent after Japan’s Seven & i Holdings said on Monday that talks have begun over a store sale plan that would set the stage for the latter’s $47-billion takeover bid.
Last week, the 7-Eleven convenience store operator named Stephen Dacus as its new CEO to lead a recovery and respond to the takeover offer from Couche-Tard.
Seven & i has said U.S. antitrust law would be a barrier to any deal. The companies are the top two players in the U.S. convenience store market, with about 20,000 locations between them.
In a letter to shareholders on Monday, Seven & i said it proposed that the two companies could map out the viability of a divestiture process and identify potential buyers.
Couche-Tard “recently agreed” to the proposal that would allow for an assessment of the Canadian company’s buyout offer, Seven & i said.
Separately, Seven & i said Joseph Michael DePinto stepped down as a director of the holding company while remaining the chief executive of 7-Eleven Inc.
Top executives from Couche-Tard are due to visit Tokyo this week to speak with media about their takeover bid.
Constellation Software Inc. (CSU-T) was down 3 per cent despite the late Friday release of better-than-anticipated fourth-quarter earnings.
Reaction from the Street: Monday's analyst upgrades and downgrades
After the bell, the Toronto-based company reported quarterly revenue of $2.7-billion, up 16 per cent year-over-year and matching the expectations of Street. Adjusted earnings per share of $24.93 topped the consensus estimate of $22.98.
“Constellation reported Q4 revenue and adj. EBITDA effectively in line with RBC/consensus estimates. The surprise was M&A, which was well above our M&A tracker. Additionally, Q1 to date capital deployed is solid. The strong pace of M&A, combined with healthy organic growth and margin expansion, raise investor visibility to continued compounding of capital,” said RBC’s Paul Treiber.
Endeavour Silver Corp. (EDR-T) and gold miner G Mining Ventures Corp. (GMIN-T) declined even though S&P Dow Jones Indices announced late Friday their addition to the S&P/TSX Composite Index, the broadest measure of the Canadian market.
S&P said it will delete forestry company Interfor Corp. (IFP-T);; energy-equipment seller Mattr Corp. (MATR-T); restaurant owner MTY Food Group Inc. (MTY-T) and real estate company Storagevault Canada Inc. (SVI-T).
The changes will be effective at the open of markets on March 24.
S&P Dow Jones uses “float” – the value of shares that aren’t held by insiders and that therefore trade frequently and are easily available to the public – to judge whether a company should be included in its indexes. The index provider does not release its proprietary float calculations.
The stocks S&P Dow Jones removed aren’t the worst performers of the year – they just have fallen enough since the last quarterly rebalancing in December, to make them too small to stay in.
Mattr shares have fallen 19.7 per cent since the end of November, according to S&P Global Market Intelligence. Interfor has fallen 16.0 per cent, MTY is down 6.2 per cent, and StorageVault is down 1.0 per cent.
No changes are being made to the S&P/TSX 60, a selection of most of the largest companies in the composite.
- David Milstead
Tesla (TSLA-Q) plummeted 15.4 per cent after UBS cut its forecast for the automaker’s first-quarter deliveries and lowered its price target on the stock.
Tesla’s stock defied gravity for years. Is Elon Musk’s EV party over?
The brokerage now sees deliveries of 367,000 units , down from 437,000 based on low delivery times for Model 3 and Model Y in key markets, indicating softer demand
It retained its “sell” rating for the EV maker’s shares and dropped its target to US$225 from US$259, a 14-per-cent downside to Friday’s close. The average target on the Street is US$337.74, according to LSEG data.
“We believe the current “run-rate” may be slower, but are counting on an end-of-quarter push, potentially driven by more promotional activity,” it said.
Novo Nordisk (NVO-N) on Monday revealed data from a second late-stage trial of its obesity drug candidate CagriSema, knocking shares and stoking worries that rival Eli Lilly (LLY-N) may be gaining an edge over Novo in the weight-loss drugs market.
Investors and analysts have awaited the readout of Novo’s REDEFINE 2 late-stage trial, hoping it would show that the next-generation CagriSema was a more potent successor to Novo’s blockbuster Wegovy for obesity and that its weight-loss potential was greater than that of Mounjaro, Lilly’s rival to Wegovy.
Monday’s data demonstrated that CagriSema does deliver better weight-loss than Wegovy. “However, the market wants Novo to have the best weight loss agent, which is clearly not the case,” Novo shareholder Markus Manns told Reuters. “Novo’s main mistake was to set expectations for CagriSema too high.”
The market is punishing Novo because its successor to Wegovy is on par with Mounjaro, he added.
Weight loss in the trial on CagriSema was 13.7 per cent after 68 weeks, regardless of adherence in the trial.
Jefferies analysts said in a note that 13.7-per-cent fell short of the 15 per cent or higher they believed was needed to show the drug was better than Mounjaro. The data “likely further dents belief” in the sales potential of CagriSema, they wrote.
German COVID-19 vaccine maker BioNTech (BNTX-Q) Monday said that its 2025 revenues would likely fall to between 1.7 billion euros (US$1.85-billion) and 2.2 billion euros, prompting a decline in its U.S.-listed shares.
The guidance compares with revenues of 2.75 billion euros reported for last year and with an average analyst estimate of about 2.5 billion for 2025, according to LSEG data.
BioNTech said vaccination rates would likely be relatively stable this year but added that expected inventory write-downs at its collaboration partner Pfizer would have a negative effect on revenues.
Giving an outlook on a shift in staffing, the company also said that it intends to reduce between 950 to 1,350 full-time positions until 2027, including in its late-stage mRNA manufacturing site in Marburg and in research operations in Europe and North America.
At the same time, BioNTech plans to add between 800 and 1,200 full-time positions, including at its new large-scale mRNA immunotherapy manufacturing facility in Mainz, Germany, and through the completion of the acquisition of Biotheus.
BioNTech said that it expects overall headcount to remain “relatively stable” over the next three years.
With files from staff and wires