AIMIA INC. $18.30 - Toronto symbol AIM

AIMIA INC. $18.30 (Toronto symbol AIM; TSINetwork Rating: Extra Risk) (514-205-7315; www.aimia.com; Shares outstanding: 172.6 million; Market cap: $3.2 billion; Dividend yield: 3.7%) has reached an agreement with TD Bank and CIBC to share its Aeroplan loyalty program.

TD Bank is now the primary credit card issuer for Aeroplan. However, the deal will let CIBC, the former main card issuer, hang on to Aeroplan accounts held by customers who also bank at CIBC. That’s about half the Aeroplan portfolio.

CIBC will receive an upfront payment of $200 million from TD and Aimia. As well, TD will pay CIBC $37.5 million annually for the next three years.

The deal is good for Aimia. It removes the uncertainty that surrounded the company’s shares as the December 2013 expiry of the CIBC-Aeroplan contract approached.

Aimia’s shares are trading at all-time highs. They are also up over 22% since we first recommend the stock a year ago. However, while a slow economic recovery could hinder the company’s growth, its long-term outlook remains very positive.

Aimia is a buy.

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