acquisition strategy

AT&T INC., $27.41, New York symbol T, is facing strong opposition from regulators over its planned purchase of rival wireless carrier T-Mobile from Germany’s Deutsche Telekom AG. Adding T-Mobile would make AT&T the largest wireless carrier in the U.S., with 132 million subscribers. The Federal Communications Commission feels the combination of AT&T and T-Mobile would hurt competition in the wireless market. As well, the Department of Justice has launched a court challenge to block the deal. The trial should begin in February 2012. Due to the growing uncertainty over this deal, AT&T said that it will record a $4-billion charge against its earnings for the fourth quarter of 2011. That represents the break-up fee ($3 billion in cash plus $1 billion in wireless spectrum) that AT&T agreed to pay Deutsche Telekom if it can’t complete the purchase....

TransForce Inc., $12.87, symbol TFI on Toronto (Shares outstanding: 96.5 million; Market cap: $1.2 billion; www.transforcecompany.com), is a leading Canadian trucking company. Its fleet is the largest in the country, with 10,500 trucks and 11,300 trailers. The company also has exclusive partnerships that extend its reach into the U.S. Montreal-based TransForce was an income trust from September 2002 to May 2008. It has four main divisions:...

DUNDEE REIT $32.70 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 58.9 million; Market cap: $1.9 billion; Dividend yield: 6.7%) owns and manages 18.9 million square feet of office, industrial and retail space. The trust has a 95.8% occupancy rate. In the three months ended September 30, 2011, Dundee’s revenue rose 75.4%, to $110.9 million from $63.2 million a year earlier. Most of the increase came from properties the trust recently purchased. Dundee’s cash flow rose 69.4% in the latest quarter, to $36.6 million from $21.6 million. Cash flow per unit rose just 11.5%, to $0.58 from $0.52, due to more units outstanding (the trust issued new units to pay for the acquired properties)....

DUNDEE REIT, $32.92, symbol D.UN on Toronto, owns and manages 18.9 million square feet of office, industrial and retail space. The real estate investment trust’s occupancy rate is 95.8%. In the three months ended September 30, 2011, Dundee’s revenue rose 75.4%, to $110.9 million from $63.2 million a year earlier. Most of the increase came from properties the trust recently purchased. The best way to assess a real estate investment trust’s operating performance is to look at its cash flow, and Dundee’s cash flow rose 69.4% in the latest quarter, to $36.6 million from $21.6 million. Cash flow per unit rose just 11.5%, to $0.58 from $0.52, due to more units outstanding (the trust issued new units to pay for the acquired properties)....

CML Healthcare Inc., $9.43, symbol CLC on Toronto (Shares outstanding: 89.8 million; Market cap: $846.8 million; www.cmlhealthcare.com), was called CML Healthcare Income Fund before it converted from an income trust to a corporation on January 4, 2011. CML (or Canadian Medical Laboratories) is one of Canada’s largest health-care diagnostic services providers. It has two main business segments: Laboratory Services and Imaging Services. Laboratory Services, which provides 45% of CML’s revenue, performs a wide range of medical tests through its Ontario laboratory network, which consists of 117 specimen collection centres and the company’s central laboratory in Mississauga. CML’s large network of labs lets it take advantage of economies of scale that are not available to smaller labs. About 85% of the company’s lab revenues are fixed by an agreement with the Ontario Ministry of Health (more on that below)....

MOSAID TECHNOLOGIES, $39.22, symbol MSD on Toronto, is now the subject of a takeover bid from Wi-LAN Inc. (symbol WIN on Toronto). The offer is for $38 a share in cash for all of Mosaid’s shares. Mosaid mainly licenses patented computer chip and telecommunications technology, including patents for technology used in smartphones and laptops. Mosaid is now trading at $39.22 a share, or 3.2% above Wi-LAN’s bid. This indicates that investors are anticipating a higher or rival offer....

DUNDEE REIT $30.90 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 58.9 million; Market cap: $2.0 billion; Dividend yield: 7.1%) will buy 29 office buildings in Ontario and Alberta for $831.8 million. The sellers are U.S.-based Blackstone Real Estate Advisors LP and Canadian firm Slate Properties. As part of the agreement, Dundee will sell off five of these properties for $142 million. The 24 properties it will keep are worth $689.8 million, and cover 2.7 million square feet. Eleven of these buildings are in Toronto’s financial district, two are outside the city’s downtown, two are in Ottawa, five are in Calgary and four are in Edmonton. The deal should close on August 15, 2011. Dundee has now spent $1.6 billion on acquisitions in 2011. That follows $900 million of acquisitions in 2010....

ACI WORLDWIDE, $36.17, symbol ACIW on Nasdaq, makes software used to process transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. In March 2011, ACI bought ICD Corp. for an undisclosed amount. ICD has over 140 customers who use its software to authorize credit- and debit-card transactions through over 70 different payment processors, including banks and credit-card companies. ACI’s revenue rose 22.7% in the three months ended June 30, 2011, to $113.4 million from $92.4 million a year earlier. The company earned $9.8 million, or $0.29 a share, compared to a loss of $150,000, or nil per share, a year earlier. The company holds cash of $170.8 million, or $4.98 a share....

Otter Tail Corp., $21.62, symbol OTTR on Nasdaq (Shares outstanding: 35.8 million; Market cap: $784.6 million; www.ottertail.com), is the parent of Otter Tail Power Company, which supplies electricity to 129,000 customers. These customers are in a 50,000-square-mile area that covers parts of Minnesota, North Dakota and South Dakota. Otter Tail gets 49% of its electrical revenue from Minnesota, followed by North Dakota (41%) and South Dakota (10%). Commercial and farm clients account for 36% of Otter Tail’s electrical revenue, followed by residential (31%), industrial (23%) and other (10%). The company also makes and transports wind-turbine towers, and has operations in the manufacturing, health services, food-ingredient processing, plastics and construction industries....

DUNDEE REIT $32.85 (Toronto symbol D.UN; TSINetwork Rating: Speculative) (416-365-3535; www.dundeereit.com; Shares outstanding: 38.9 million; Market cap: $2.0 billion; Dividend yield: 6.7%) owns and manages 14.7 million square feet of office, industrial and retail space. The trust has a high 96.1% occupancy rate. In the three months ended March 31, 2011, Dundee’s revenue rose 57.4%, to $91.0 million from $57.8 million a year earlier. That’s mainly because the trust bought about $475 million of new properties in the quarter, mostly in Ontario. Dundee’s cash flow rose 72.9% in the quarter, to $28.8 million from $16.6 million. Cash flow per unit rose just 1.9%, to $0.55 from $0.54, on more units outstanding. (The trust issued units to pay for the acquired properties.)...