The skyline of Chicago is seen with the steam fog coming off Lake Michigan in Chicago, Illinois, January 28, 2014.JEFF HAYNES/Reuters
DEAL OF THE DAY
Pension fund trio to buy Chicago toll road
Three of Canada's largest pension funds have struck a $2.8-billion (U.S.) deal to acquire a lucrative U.S. toll road.
Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System and Ontario Teachers' Pension Plan will each take a third of Skyway Concession Company LLC, which owns the asset.
Infrastructure investors tend to like toll roads for their ability to generate relatively stable and consistent returns. The 12.5-kilometre toll road, which covers the Chicago Skyway Bridge, was built in 1958. Story
MERGERS AND ACQUISITIONS
Mylan's failed pursuit of Perrigo
Mylan NV has failed in its hostile attempt to swallow fellow drug maker Perrigo Co.
On Friday, the generic drugs manufacturer disclosed that not enough Perrigo shareholders tendered to its offer that was worth approximately $26-billion (U.S.).
Mylan, which is based in the Netherlands, had been trying to take over Perrigo of Ireland since April and ultimately ended up with only 40 per cent of the shares versus the required 50 per cent to get the deal done. Story
EARNINGS
Dundee reports punishing third-quarter loss
Dundee Corp. has unveiled one of its heaviest quarterly losses ever as a publicly traded company. The Toronto-based holding company, which has a vast portfolio of real estate, energy, financial services, mining and agriculture assets, reported a loss of $236-million in the third quarter. The company's year-to-date loss stands in excess of $400-million.
Dundee wrote down the value of its 35-per-cent equity stake in United Hydrocarbon International Corp. (UHIC), a privately held oil exploration company, by $132-million. In a statement, Dundee cited "severely depressed energy prices" as the major factor in the writedown. UHIC, which has operations in Chad, has been beset by difficulties for some time. In early 2015, the company suspended its drilling operations. It was subsequently unable to raise new capital and recently laid off staff.
While the majority of Dundee's precipitous loss was attributable to UHIC, almost every part of Dundee's business is bleeding right now. Dundee marked down the value of its investment in Dream Unlimited Corp., a real estate development asset company, by $57-million and the company's stake in Dundee Precious Metals was devalued by $12.7-million.
Dundee Securities, the firm's investment bank and brokerage, which it fully owns, reported a loss of $10-million in the quarter. Investment banking revenue cratered by 59 per cent, with the firm taking big hits in new issue financings, advisory fees and commissions. As it has with GMP Capital Inc. and Canaccord Genuity Group Inc., the continuing rout in resources has taken a serious toll on Dundee.
Despite travails in its capital markets division, Dundee is responsible for one of the innovations of 2015 in capital markets. Dundee Acquisition Ltd., a special purpose acquisition corporation (SPAC), which came to market in April and raised $112-million, was the first of its kind in Canada. It has since been aped by a slew of copycats.
One of the better-performing parts of Dundee is Blue Goose Capital Corp., a producer and distributor of organic chicken and beef. The loss in the segment attributable to Dundee shareholders (Dundee owns 88 per cent of the business) was only $1.1-million in the quarter. Dundee has been selling parts of Blue Goose in an attempt to make it profitable and expects the asset to break even "within the next two quarters."
Since becoming chief executive officer in mid-2014, David Goodman, son of founder Ned Goodman, has been concentrating on selling assets, rebuilding the firm's wealth management division (Dundee sold its prior wealth management business to Bank of Nova Scotia in 2011) and trying to reduce debt. But Mr. Goodman had the misfortune to take over management of the company just as the price of oil and other commodities started sliding. The company's share price has tanked in the interim and is down by more than half in the past 12 months. Press release
FINANCINGS
AB InBev to fund SABMiller takeover with record-breaking loan
A monster beer deal now has a frighteningly large loan attached to it.
AB InBev says it will fund its roughly $106-billion (U.S.) offer for fellow brewing behemoth SABMiller with a $75-billion syndicated loan, the biggest commercial loan in history.
Banco Santander, Merrill Lynch and Deutsche Bank are among the banks arranging the financing. Story
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