acquisition
MITEL NETWORKS CORP., $12.24, symbol MNW on Toronto, has agreed to buy Mavenir Systems (symbol MVNR on New York) for $560 million U.S. in cash and stock. Right now, Mitel mainly offers communication services to businesses over land-line phones. Mavenir will help Mitel move into the market for voice-over long-term evolution, or VoLTE. This technology repackages voice calls as data and transmits them over wireless networks. It’s quickly becoming the standard for high-speed wireless communications. Users of Mavenir’s networking software include T-Mobile and Verizon Communications. In all, the company serves 130 telecom firms, including 15 of the world’s 20 largest mobile carriers....
ENCANA CORP., $14.66, Toronto symbol ECA, fell 10% this week after the company issued 85.6 million common shares to a group of underwriters for $14.60 each. The company plans to use the $1.25 billion of proceeds to redeem $1.6 billion worth of notes. As of December 31, 2014, Encana’s long-term debt was $7.3 billion U.S., or a high 84% of its $10.9 billion (Canadian) market cap. If the underwriters exercise their option to buy an additional 12.8 million shares, Encana would receive $1.44 billion. Including this option, the extra shares would increase the total outstanding by roughly 13%....
Every Thursday we bring you one of our best U.S. stock picks. You get our specific recommendation on the stocks we profile, with a full explanation of how we arrived at our opinion. You will read about stocks making moves you should know about, most often from coverage in our newsletter on U.S. investing, Wall Street Stock Forecaster.
AT&T INC. (New York symbol T; www.att.com) is the largest wireless provider in the U.S., with 120.6 million subscribers. Wireless accounts for 55% of AT&T’s revenue and 75% of its earnings.
The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 34.4 million customers.
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AT&T INC. (New York symbol T; www.att.com) is the largest wireless provider in the U.S., with 120.6 million subscribers. Wireless accounts for 55% of AT&T’s revenue and 75% of its earnings.
The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 34.4 million customers.
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CHEMTRADE LOGISTICS INCOME FUND $21.38 (Toronto symbol CHE.UN; TSINetwork Rating: Speculative) (416-496-5856; www.chemtradelogistics .com; Units outstanding: 68.5 million; Market cap: $1.5 billion; Dividend yield: 5.6%) is one of North America’s largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products. Chemtrade converts these substances into useful chemicals, like sulphuric acid.
The company’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier.
That’s largely due to General Chemical, which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.
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The company’s revenue rose 55.4% in the three months ended December 31, 2014, to $313.3 million from $201.6 million a year earlier.
That’s largely due to General Chemical, which Chemtrade bought for $900 million U.S. in January 2014. General makes a range of chemicals, including aluminum sulphate, aluminum chlorohydrate and ferric sulphate (all of which are used in water treatment), as well as ingredients for prescription drugs, nutritional supplements and veterinary products.
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ACI WORLDWIDE $21.09 (Nasdaq symbol ACIW; TSINetwork Rating: Speculative)(402-334-5101; www.tsainc.com; Shares outstanding: 114.9 million; Market cap: $2.4 billion; No dividends paid) makes software for processing transactions involving credit cards, debit cards, automated teller machines, point-of-sale terminals and interbank payments. The company’s products also help cut fraud. Clients include leading global retailers, plus two-thirds of the world’s 100 largest banks.
ACI’s industry-leading products continue to attract prominent clients. For example, the company provides the technology behind Apple Inc.’s new mobile payment system, called Apple Pay.
ACI’s revenue rose 17.5% in 2014 to $1.02 billion from $864.9 million in 2013. That was mainly due to contributions from acquisitions, including the purchase in August 2014 of Retail Decisions (ReD) for $205 million.
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ACI’s industry-leading products continue to attract prominent clients. For example, the company provides the technology behind Apple Inc.’s new mobile payment system, called Apple Pay.
ACI’s revenue rose 17.5% in 2014 to $1.02 billion from $864.9 million in 2013. That was mainly due to contributions from acquisitions, including the purchase in August 2014 of Retail Decisions (ReD) for $205 million.
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AMERIGO RESOURCES, $0.32, symbol ARG on Toronto, processes copper and molybdenum from waste rock at Chile’s El Teniente, the world’s largest underground copper mine. This includes rock from the mine’s current production and tailings from the nearby Colihues deposit. This contract runs at least through 2037. The company gets 94% of its revenue by processing copper. The remaining 6% comes from molybdenum. In the quarter ended December 31, 2014, Amerigo’s copper output fell 7.4%, to 11.35 million pounds from 12.25 million a year earlier. Molybdenum production declined 11.8%, to 160,107 pounds from 181,464....
Low interest rates have spurred strong investor interest in these two high-yielding master limited partnerships (MLPs). Both have strong businesses that give them lots of cash flow for distributions. However, we feel Cedar Fair (see box) is the better choice, because Buckeye’s aggressive growth-by-acquisition strategy adds risk. Still, there are a few things Canadian investors should keep in mind: for one, you must pay a 35% U.S. withholding tax on income from MLPs, though you can usually claim a non-refundable Canadian tax credit to offset that. As well, MLPs are not suitable for RRSPs or RRIFs....
AT&T INC. $34 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.2 billion; Market cap: $176.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 5.5%; TSINetwork Rating: Average; www.att.com) is the largest wireless provider in the U.S., with 120.6 million subscribers. Wireless accounts for 55% of AT&T’s revenue and 75% of its earnings. The remaining 45% of revenue and 25% of earnings comes from its wireline division, which sells phone services, television packages and high-speed Internet access to 34.4 million customers.
Shift to wireless fuelled sales
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Concordia Healthcare, $64.13, symbol CXR on Toronto (Shares outstanding: 28.9 million; Market cap: $1.9 billion; www.concordiarx.com), is an Oakville, Ontario-based drug company that acquires and sells established drugs, mainly in the U.S. The company aims to acquire the rights to relatively small, mature products as opposed to the newer treatments larger pharmaceutical firms target. Concordia recently bought the North American rights to the epilepsy drug Zonegran from Eisai Inc. for $91.4 million (all figures except share price and market cap in U.S. dollars)....
LOBLAW COMPANIES LTD. $48 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 412.7 million; Market cap: $19.8 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer, with roughly 1,200 stores. Its banners include Loblaws, Provigo, Fortinos, Real Canadian Superstore and No Frills.
The company recently acquired the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion, consisting of $6.6 billion in cash and $5.7 billion in Loblaw common shares. Shoppers shareholders now own 29% of the combined company.
Loblaw’s parent company, George Weston Ltd. (Toronto symbol WN), agreed to help it pay for this acquisition by purchasing $500 million worth of new shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% prior to the purchase.
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The company recently acquired the 1,250-store Shoppers Drug Mart chain. Loblaw paid $12.3 billion, consisting of $6.6 billion in cash and $5.7 billion in Loblaw common shares. Shoppers shareholders now own 29% of the combined company.
Loblaw’s parent company, George Weston Ltd. (Toronto symbol WN), agreed to help it pay for this acquisition by purchasing $500 million worth of new shares. Due to the extra shares outstanding, Weston now owns 46% of Loblaw, down from 63% prior to the purchase.
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