merger

Carnival Corp., $34.16, symbol CCL on New York, and its affiliate, Carnival plc, symbol CCL on the London Stock Exchange (Total shares outstanding: 792.0 million; Market cap: $27.1 billion; www.carnivalcorp.com), operate as single business but have separate exchange listings. The combined company is the world’s largest cruise ship operator, with over 100 ships. It took its current form in 2003 through the merger of Carnival and rival P&O Princess. Major brands include Carnival Cruise Lines, Princes Cruises, Holland America Line, Costa Cruises and Cunard Line. The company also operates ports and hotels....

PROCTER & GAMBLE CO., $63.03, New York symbol PG, is one of the world’s largest makers of household and personal-care products. Some of its top brands include Tide detergent, Crest toothpaste, Head & Shoulders shampoo and Pampers diapers. In April 2011, the company agreed to merge its Pringles potato-chip business with Diamond Foods Inc. (Nasdaq symbol DMND), which makes a variety of snack foods, including potato chips, nuts and popcorn. Pringles accounts for less than 4% of Procter’s revenue and earnings. Under the terms of the deal, Procter will give its investors the option to exchange some or all of their shares for a holding in Diamond. That would give Procter shareholders 57% of the combined company. Diamond investors would own the remaining 43%....

BROOKFIELD RENEWABLE POWER FUND $27.40 (Toronto symbol BRC.UN; Units outstanding: 104.7 million; Market cap: $2.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.7%; www.brpfund.com) plans to merge its assets with the extensive hydroelectric and wind power holdings of Brookfield Asset Management (symbol BAM on Toronto). Brookfield Renewable now owns interests in 42 hydroelectric generating stations on 16 river systems in Quebec, Ontario, B.C. and New England, as well as two wind farms. It has 1,700 megawatts of generating capacity in total. The combined entity, which will be called Brookfield Renewable Energy Partners L.P., will own 179 power plants generating 4,800 megawatts of electricity. Roughly 40% of its generating capacity will be in Canada, with another 40% in the U.S. and 20% in Brazil....

Enghouse Systems, $9.84, symbol ESL on Toronto (Shares outstanding: 25.6 million; Market cap: $251.9 million; www.enghouse.com), operates through two divisions: The interaction management division, which supplies 90% of the company’s revenue, sells software to manage call centres. The asset management business (10% of revenue) provides engineering software that is used by utilities, computer and telecommunications companies. In the three months ended July 31, 2011, revenue at Enghouse rose 22.2%, to $31.8 million from $26.0 million a year earlier. That’s mainly due to the company’s recent acquisitions. These include two firms acquired in April 2011: the Mettoni Group, a maker of call-centre software (purchased for $23 million U.S.), and CosmoCom, a seller of customer interaction management software ($20 million U.S.). Earnings per share rose 38.5%, to $0.18 from $0.13. The company’s balance sheet is strong. It holds cash of $88 million, or $3.49 a share, and has no debt....

THOMSON REUTERS CORP. $29 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 836.8 million; Market cap: $24.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 57% of Thomson Reuters’ 2010 revenue and 48% of its earnings), sells news and information products to banks and other financial institutions. Professional (43%, 52%) sells information to professionals in the legal, taxation, accounting and scientific research fields. Thomson Reuters recently said it plans to sell its healthcare business, which sells data and software that helps hospitals, clinics and health-care professionals cut costs and reduce fraud. In 2010, this division accounted for $450 million, or 3%, of the company’s revenue of $13.1 billion (all amounts except share price and market cap in U.S. dollars). Thomson Reuters may use proceeds from the sale to make more acquisitions, particularly in developing markets, where demand for reliable information is growing quickly....

Media companies continue to face a number of challenges, including the slowing economy, which is hurting advertising revenue, and the explosion of free information available on the Internet. However, we feel high-quality information providers like these three will adapt and thrive. All three are market leaders, and they own some the industry’s best-known brands. What’s more, they are building strong Internet businesses of their own, and doing a good job of controlling their costs. These moves will help them increase their earnings, and give them more cash for dividends. THOMSON REUTERS CORP. $29 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 836.8 million; Market cap: $24.3 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.5%; TSINetwork Rating: Above Average; www.thomsonreuters.com) has two main divisions: Markets (which supplied 57% of Thomson Reuters’ 2010 revenue and 48% of its earnings), sells news and information products to banks and other financial institutions. Professional (43%, 52%) sells information to professionals in the legal, taxation, accounting and scientific research fields....

SUNCOR ENERGY INC. $30 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $48.0 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www.suncor.com) became Canada’s largest integrated oil company in 2009, when it merged with Petro-Canada. Suncor gets 60% of its production from its oil sands projects in Alberta. The remaining 40% comes from conventional oil and natural gas properties. It also operates four refineries and 1,500 gas stations under the Petro-Canada banner.

Hedging delayed merger benefits

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The research we do for members of our Inner Circle service turns up many intriguing stories on growth stocks, often in the ultra-competitive high-tech world. Here’s a question about the prospects of Sirius XM Radio (symbol SIRI on Nasdaq) from our latest weekly Inner Circle Q&A, in which I answer questions from our members. Sirius has a big customer base, but it’s not that easy to outdistance the competition. In our search for growth stocks, we look for a strong market position. And if Sirius can hold its current position, it will fit our profile for growth stocks. But that’s not guaranteed. ...

Sirius XM Radio, $1.71, symbol SIRI on Nasdaq (Shares outstanding: 6.8 billion; Market cap: $7.0 billion; www.siriusxm.com), broadcasts by satellite about 135 satellite radio stations in North America. Around half are commercial-free music stations. The company offers a wide variety of music channels, including rock, pop, heavy metal, hip-hop, country, dance, jazz, Latin and classical. Sirius also has sports, news, talk, entertainment, traffic and weather channels. Subscription fees supply about 86% of the company’s revenue. Right now, almost all of that revenue comes from car-radio listeners. Sirius also provides music and other programming that users can access through mobile phones and the Internet. Advertising fees supply about 2% of Sirius’ total revenue....

MOSAID TECHNOLOGIES INC. $39.66 (Toronto symbol MSD; TSINetwork Rating: Extra Risk) (613-599-9539; www.mosaid.com; Shares outstanding: 12.1 million; Market cap: $479.9 million; Dividend yield: 2.5%) 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 $39.66 a share, or above Wi-LAN’s bid. This indicates that investors are anticipating a higher or rival offer....