Burj Khalifa, the world's tallest building, seen at centre, in Dubai.Kamran Jebreili
Stories Report on Business is following today :
Energy sector in deal-making mode
The energy sector is kicking off the new year as it ended the old one, with deals. French oil giant Total SA this morning announced a $2.25-billion (U.S.) push into the U.S. natural gas market in a deal with Chesapeake Energy Corp. of Oklahoma. Total is is taking a 25-per-cent stake in Chesapeake's Barnett shale assets and helping to fund part of its drilling expenses, a deal Total's chief executive officer described as a "strategically important move" into the U.S. natural gas shale market. Separately this morning, PetroBakken Energy Ltd. said it would acquire Berens Energy Ltd.
The energy sector was a hive of activity last year, with some big takeovers and the breakup of EnCana Corp.
In a research note this morning, UBS Securities Canada said it expects another "robust year," though it probably won't match last year's pace. In the oil sands, UBS expects ConocoPhillips to shed its 9.03-per-cent stake in Syncrude for about $4-billion. Canadian Oil Sands Trust is among the most likely buyers, UBS said in a report this morning, though it expects "stiff competition" from state-owned oil companies. UBS also noted that OPTI Canada announced late last year it is looking at so-called strategic alternatives, which it expects will stretch through to mid-year.
On the other side, UBS also expects some companies to follow EnCana's move to break apart. Husky Energy "appears to be the most likely to pursue some type of corporate split or asset IPO," the report said. "The company has mused publicly that it would contemplate spinning off its international assets into a separate company, possibly through an IPO."
UBS also said Talisman Energy remains "an attractive split candidate" beyond 2010 depending on how the market values the company. "If the market gives Talisman the credit through its unconventional gas portfolio, a split would not be necessary," UBS said. "However, if the market fails to reflect adequate value in [Talisman]over the next 12 months, we believe a split would emerge as a likely alternative. We believe Talisman is attractive from a split perspective as it now has a very strategic and sustainable North American natural gas business … and a large free cash-generating international business that could pay a substantial dividend while delivering moderate growth."
Markets start 2010 on optimistic note
World markets kicked off 2010 this morning with gains driven by higher commodities prices and brighter economic news. New York is also poised to open higher. "Investors are right to be optimistic about the outlook for equities," Henk Potts, a strategist at Barclays Wealth, told the Reuters news agency. "We certainly believe that it's going to be the best performing asset class during the course of this year."
Where we left off: The TSX closed out 2009 at 11,746.11, up 30.7 per cent on the year for the best yearly showing since 1979. The Canadian dollar , which surged this morning, ended the year at 95.2 cents, up almost 16 per cent.
Manufacturing on rebound
The ever-important manufacturing sector continues to recover from the global recession, purchasing managers indexes show. In China, the HSBC Purchasing Managers Index rose in December to 56.1, its best level since the index was launched in mid-2004. Comparable indexes rose to 54.1 in Britain and 51.6 in the euro zone, the best showing since March 2008 for the 16 countries that share the common currency. The 50-mark in a purchasing managers index is the point that separates expansion and contraction. "It is encouraging and it supports other evidence that the economy is continuing to expand but the recovery is going to be relatively slow and we are not going to see anything particularly dramatic," Ben May of Capital Economics in London told the Reuters news agency.
In the United States, the Institute for Supply Management's widely watched index rose to 55.9 in December, more than expected, its fifth consecutive gain and its best level in more than three years. "After staring over the edge of the abyss a year ago, U.S. factories ended 2009 on an upswing, with growing new orders flagging a durable recovery ahead," said BMO Nesbitt Burns economist Sal Guatieri.
Where Canadians are putting their cash
Uncertainty continues to dog Canadian investors, a new Scotiabank study shows, driving money into registered savings plans. More than 40 per cent of investors polled are keeping their investments entirely in such vehicles, up from 29 per cent last year, the survey indicated. "Considering the sharp portfolio losses many Canadians experienced in 2008-09, it's not surprising to see a shift towards registered investments such as RRSPs and TFSAs," ScotiaMcLeod wealth adviser Andrew Pyle said in a statement. "To help restore their nest eggs, many investors are opting to take advantage of the tax benefits offered by registered plans."
Related:
The top 10 financial resolutions for 2010
World's biggest skyscraper opens
Dubai may be mired in a debt crisis, but it isn't stopping the opening of the world's tallest tower. The skyscraper, which boasts luxury apartments, offices, swimming pools and a hotel, is a symbol of the Dubai that was, a small city-state that boomed as property prices soared. The tower's developer sees the opening today as moving ahead despite the debt troubles in the emirate that began late last year. "Crises come and go," Mohammed Alabbar, chairman of Emaar Properties, told reporters before the celebration officially opening the building. "And cities move on. You have to move on. Because if you stop taking decisions, you stop growing." Read the story
Novartis to buy all of Alcon
Switzerland's Novartis AG is poised to create one of the world's biggest eye care products companies. Novartis, whose products include the Ciba Vision brand, plans to buy the 77 per cent of Alcon Inc. it doesn't already own for $38.5-billion (U.S.). The proposed deal, said Novartis chief executive officer Daniel Vasella, will "allow us to strengthen innovation power by combining R&D efforts and grow our global market presence thanks to our complementary product portfolios."
There may be another side to this story. Part of the deal involves Nestle selling its 52-per-cent stake in Alcon, which sparked speculation it may be preparing to bid for Britain's Cadbury PLC, already the target of a hostile $16-billion (U.S.) offer from Kraft Foods Inc. Read the story
From today's Report on Business