A look at North American equities heading in both directions
On the rise
Shares of Toronto-based Freshii Inc. (FRII-T) on the premarket announcement that Foodtastic Inc. has signed a deal to buy the healthy fast food restaurant chain for $74.4-million.
Foodtastic CEO Peter Mammas says Freshii will help Foodtastic expand into a new category.
The Montreal-based restaurant franchisor behind brands like Second Cup, Pita Pit and Milestones also recently announced plans to acquire Quesada Burritos & Tacos.
Freshii says the deal will see Foodtastic pay $2.30 per share in cash, representing a total of $74.4-million on a fully diluted basis.
The company says the amount represents a 148-per-cent premium on its 20-day volume-weighted average share price for the period ending Friday and a 142-per-cent premium to its closing price Friday.
Stephen Smith, chair of a special committee of independent directors that oversaw the negotiation for Freshii, says the all-cash deal delivers immediate and certain liquidity to Freshii shareholders at a price that represents a significant premium to the market price of shares.
Freshii CEO Daniel Haroun says the transaction “recognizes the tremendous value of the Freshii brand.”
“We believe that Freshii’s brand, franchise network and talent will benefit from Foodtastic’s greater scale,” he said.
The company says it operates 343 locations in North America and internationally.
Dye and Durham Ltd. (DND-T) soared after announcing a “significant expansion of its software product offering in Canada with the addition of a comprehensive suite of litigation workflow solutions.”
“Effective immediately, Dye & Durham customers can access an automated document generation platform, known as ACL, that lets lawyers quickly and easily generate court forms and documents in civil litigation and small claim matters, saving time and minimizing the risk of error,” it said.
Separately, the Toronto-based firm said it expects to purchase for cancellation 10.3 million common shares through its substantial issuer bud for aggregate consideration of approximately $150-million.
On the decline
Markham, Ont.-based Enghouse Systems Ltd. (ENGH-T) was lower on news it has signed a deal to buy Qumu Corp. (QUMU-Q), a provider of cloud-based enterprise video technology, for US$18-million.
Under the agreement, Enghouse will pay 90 US cents per share in cash for the company.
Qumu shares closed at 44 US cents on Friday.
Enghouse chairman and CEO Steve Sadler says the combination of Qumu’s video creation, management and delivery offerings with Enghouse’s video collaboration and streaming products strengthens the position of both companies.
The Qumu board of directors, executive officers and certain shareholders, have signed support agreements with Enghouse committing to tender all of their Qumu shares to the offer.
The deal, which is subject to customary and other closing conditions, is expected to be close in February 2023.
Whitecap Resources Inc. (WCP-T) dipped following the premarket announcement of three definitive agreements to dispose of certain non-strategic assets for aggregate consideration of $419-million, consisting of $394-million in cash and producing assets that consolidate working interest in our operated Butte, Saskatchewan core area.
It said current production from the disposed assets is approximately 11,000 barrels of oil equivalent per day and is expected to average approximately 10,000 boe/d in 2023
It also raised its monthly base dividend by 32 per cent to 4.83 cents per share .
“Overall, we view the event as positive,” said ATB Capital Markets analyst Patrick O’Rourke. “Further to the formally announced dividend policy change, the disposition also accelerates the projected $1.3-billion net debt milestone by and estimated five months (ATB had previously forecast achievement in November, 2023), at which point the business will shift to a further acceleration of returns to shareholder that will see 75 per cent of FCF returned, largely underpinned b a projected 73 cents per share base dividend, while the disposed assets were unlikely to see any material capital deployment in the near or medium term (2023 capital guidance unchanged at $900-$950-million with the release.”
Twitter users voted in a poll for Elon Musk to step down as chief executive of the social media platform, in a backlash against the billionaire less than two months after he took over.
About 57.5% votes were for “Yes”, while 42.5% were against the idea of Musk stepping down as the head of Twitter, according to the poll the billionaire launched on Sunday evening. Over 17.5 million people voted.
Musk said on Sunday he would abide by the results of the poll, but did not give details on when he would step down if results said he should.
Shares of Tesla Inc (TSLA-Q), the electric-car maker Musk heads, closed lower in Monday trading.
The poll is the latest twist in Musk’s chaotic reign as Twitter CEO since October, which includes rapid firings of top management and thousands of employees, seesawing on how much to charge for Twitter’s subscription service Twitter Blue, and reinstating banned accounts, including that of former U.S. President Donald Trump.
In a research note, Wedbush analyst Dan Ives said: “From the botched verification subscription plan to banning journalists to political firestorms caused on a daily basis its been the perfect storm as advertisers have run for the hills and left Twitter squarely in the red ink potentially on track to lose roughly $4 billion per year we estimate. More red ink means funding gaps causing Musk to sell more Tesla stock which has been used as his own personal ATM machine since this saga began in April. As such, this has been a black eye moment for Musk and been a major overhang on Tesla’s stock which continues to suffer in a brutal way since the Twitter soap opera began with brand deterioration related to Musk a real issue. Musk is Tesla and Tesla is Musk. Attention focused on Twitter instead of golden child Tesla has been another big issue for investors and likely is behind this poll results with many Musk loyalists wanting him to leave as CEO of Twitter. With the poll closing this morning, it appears Musk’s reign as CEO of Twitter will come to end and thus be a major positive for Tesla’s stock starting to slowly remove this albatross from the story. We maintain our OUTPERFORM rating and ultimately view this as a major step forward with Musk finally reading the room that has been growing frustration around this Twitter nightmare that grows worse by the day.”
U.S. defence contractor L3Harris Technologies Inc. (LHX-N) declined after it said on Sunday it would buy Aerojet Rocketdyne Holdings Inc. (AJRD-N) in a US$4.7-billion all-cash transaction, as it looks to tap into rising demand for missiles amid the Ukraine conflict.
The offer price of US$58 per share represents a premium of 6.5 per cent to Aerojet’s close on Friday.
The deal, which is expected to be completed in 2023, would add on to L3Harris’ Space & Airborne Systems unit, which makes electronic warfare equipment and avionics sensors.
Reuters had reported last month that L3Harris, formed by the merger of L3 Technologies and Harris Corp in 2019, was among the companies vying to buy Aerojet, which put itself up for sale after antitrust regulators blocked a merger with Lockheed Martin Corp earlier this year.
The United States has assisted Ukraine with billions of dollars in military aid, including missiles and air defense systems, driving up demand for missiles as allies also seek to boost their defenses.
Aerojet develops and manufactures liquid and solid rocket propulsion and hypersonic engines for space, defense, civil and commercial applications.
The market for rockets has also received a leg up from the National Aeronautics and Space Administration (NASA), one of Aerojet’s main customers, which is pursuing moon and deep space missions with renewed vigor.
With files from staff and wires
David Leeder