acquisition

EXTENDICARE INC. $9.36 (Toronto symbol EXE; TSINetwork Rating: Extra Risk)(905-470-5534; www.extendicare.com; Shares outstanding: 87.7 million; Market cap: $833.7 million; Dividend yield: 5.1%) owns 57 longand short-term senior-care facilities that can house 8,118 residents. It also manages a further 95 residences that are home to 6,195 seniors.

Extendicare also operates 47 ParaMed Home Health Care branches in six provinces. ParaMed’s 10,900 staff members provide nursing care and other forms of assistance to clients who live at home.

In late 2014, the company sold its 156 U.S. facilities for after-tax proceeds of around $231.1 million U.S. Extendicare is now reporting improved results and has deployed the cash from the sale.

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Hydro One Inc. is an electricity transmission and distribution utility owned by the province of Ontario. It owns and operates 96% of Ontario’s electricity-transmission capacity, serving 1.4 million customers through its 29,000 kilometres of power lines. Transmission refers to the delivery of electricity over high-voltage lines, typically over long distances, from generating stations to local areas and industrial customers. Distribution refers to the delivery of electricity over low-voltage lines to users such as homes, businesses and institutions. Hydro One doesn’t generate electricity. Ontario Power Generation, also owned by the province of Ontario, supplies about 50% of the province’s power. Companies like Northland Power, TransAlta and TransCanada Corp., along with small independent producers, supply the rest....

Developing no drugs of its own, Canada’s Merus Labs is a penny stock that relies exclusively on acquisitions to grow—and that adds risk.

WYNDHAM WORLDWIDE CORP., $81.35, symbol WYN on New York, is one of the world’s largest hospitality companies, with 7,700 franchised hotels worldwide. It also manages vacation resorts, rental properties, luxury clubs and time-shares. The company has 110,000 vacation-rental properties in 100 countries.

In the three months ended September 30, 2015, Wyndham’s revenue rose 3.3%, to $1.56 billion from $1.51 billion a year earlier.

The company continues to buy back its stock, including 2.1 million shares for $170 million in the latest quarter. That’s partly why its per-share earnings rose 6.6% before one-time items, to $1.78 from $1.67, beating the consensus estimate of $1.70.

Wyndham’s shares moved up on both the improved results and reports that at least three big Chinese companies are competing to win Beijing’s approval to bid for Starwood Hotels & Resorts Worldwide (symbol HOT on New York). Starwood controls brands like Westin, Sheraton, W Hotels and St. Regis and has more than 1,200 properties worldwide. The company now has a market cap of $13.6 billion.

Earlier this year, China’s Anbang Insurance Group paid nearly $2 billion for the Waldorf-Astoria Hotel on New York’s Park Avenue, a record price for a U.S. hotel. As well, Sunshine Insurance Group, another Chinese insurer, paid $230 million—or more than $2 million a room—for New York’s Baccarat Hotel. That was an all-time high on a per-room basis.

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Our take on the risks and rewards of growth by acquisition with Element Financial, a rapidly-expanding growth stock whose shares have soared.

AltaGas Ltd., $33.50, symbol ALA on Toronto (Shares outstanding: 144.7 million; Market cap: $4.9 billion; www.altagas.ca), processes, transmits, stores and markets natural gas for producers; generates power from gas-fired, coal-fired, wind, biomass and hydroelectric plants; and operates natural gas utilities. In the three months ended June 30, 2015, AltaGas’s cash flow per share dropped 41.9%, to $0.50 from $0.86 a year earlier. Revenue fell 11.7%, to $416.0 million from $471.0 million. The declines mostly came from increased maintenance costs at its 33%-owned Petrogas liquids-storage business. In September 2015, the company agreed to buy three gas-fired power plants in northern California for $642 million U.S. These facilities have long-term contracts to sell their power to Pacific Gas & Electric, which cuts their risk. The purchase should increase AltaGas’s annual cash flow per share by 5%....

YUM! BRANDS INC., $72.89, New York symbol YUM, plans to spin off its operations in China as a separate firm. The company will hand out shares in Yum China to its own investors, who will not be liable for capital gains taxes until they sell. The company aims to complete the spinoff by the end of 2016. Yum China will operate 6,900 fast-food outlets under the KFC, Pizza Hut and Taco Bell banners. In the three months ended September 5, 2015, this division supplied 57% of Yum’s overall sales....

CHIPOTLE MEXICAN GRILL, $649.72, symbol CMG on New York, is a Denver-based Mexican restaurant chain. It charges slightly higher prices than fast food companies but offers better quality food, including naturally raised meat, and superior decor and service. The stock dropped almost 7% this week after Chipotle reported slowing sales growth and earnings that failed to meet expectations. In the three months ended September 30, 2015, the company’s sales rose 12.2%, to $1.22 billion from $1.08 billion a year earlier. Its restaurants attracted more customers during the quarter, pushing up same-restaurant sales by 2.6%. However, that was below the 4.3% increase in the preceding quarter and well short of a 19.8% jump a year earlier....

ATLANTIC TELE-NETWORK $79.45 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 16.4 million; Market cap: $1.3 billion; Dividend yield: 1.6%) is mainly focused on growing in the U.S., but it has just expanded further in the Caribbean. The company already has operations in Guyana, Bermuda and parts of the Caribbean islands. Atlantic Tele-Network just agreed to pay $145 million for the Innovative group of companies, which operate cable TV, Internet and land-line services, primarily in the U.S. Virgin Islands and St. Maarten. To put the acquisition in perspective, Innovative’s annual revenue is about $110 million. In the three months ended June 30, 2015, Atlantic’s revenue was $90.3 million, up 8.5%, from $83.3 million a year earlier....

ALIMENTATION COUCHE-TARD $61.06 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 567.4 million; Market cap: $34.9 billion; Dividend yield: 0.4%) has agreed to buy all stores operating under the Texas Star brand from Texas Star Investments and its affiliates. Terms were not disclosed. These assets, all in southern Texas, include 18 convenience stores, two free-standing Subway locations and a network for supplying fuel to gas stations. Following the acquisition, Couche-Tard will operate all of the stores under the Circle K brand. This purchase is very small compared to the company’s $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states....