Here are five things you need to know this morning:
McKesson exits Canadian pharmacy biz: After putting the chain up for sale earlier this year, McKesson Corp. has found a buyer for the Rexall pharmacy chain and Well.ca online portal. Private equity group Birch Hill Partners will buy the business for an undisclosed sum, the company said in a release. Rexall, which runs 385 pharmacies across Canada and has more than 8,000 employees, was bought by McKesson for almost $3 billion in 2016, but the Texas-based chain put the business on the block earlier this year. McKesson says it will remain the chain’s wholesale distribution supplier which will “ensure a smooth transition for the business,” the company said in a release.
Couche-Tard misses on earnings: Convenience store chain Alimentation Couche-Tard posted quarterly results after markets closed yesterday; numbers which showed the company missed on a number of financial metrics. The company’s adjusted earnings per share came in at 83 cents, slightly lower than projections. Same-store sales fell by 1.1 per cent in the U.S., by 2.1 per cent in Europe and other regions, and by 3.9 per cent in its home market of Canada. While the financial performance is sure to be a topic of discussion on the company’s conference call with analysts and at its annual general meeting later this morning, much of the discussion is likely to focus on the next item on our agenda.
7-Eleven calls Couche-Tard offer ‘insufficient’: Couche-Tard is a company that was built on gobbling up smaller rivals, but its latest target is proving to be harder to swallow than most. Seven & i Holdings, the Japanese owner of the 7-Eleven chain, is expected to tell Couche-Tard in an official letter tomorrow that its takeover offer is “insufficient,” news service Nikkei is reporting. While a setback, 7-Eleven’s owners seem to leave the door open a crack to accepting an offer if the price was higher than the $31 billion on the table. The deal would be the biggest ever takeover of a Japanese company, so any transaction faces numerous regulatory hurdles in that country. But the move would slingshot Couche-Tard from being among the biggest to the No. 1 global name in the convenience store space. 7-Eleven has 85,000 locations around the world including 13,000 locations in the U.S. and Canada, while Couche-Tard has 16,700 locations globally and more than 9,000 in the U.S. and Canada. In a statement accompanying its earnings release, Couche-Tard said the U.S. market currently offers “significant consolidation opportunities” so whether it’s in Japan or elsewhere, it’s a safe bet that we can expect Couche-Tard to be going shopping very soon.
RBC has little interest in U.S. acquisitions right now, CEO says: Couche-Tard may be in the mood to go cross-border shopping, but Canada’s biggest lender certainly isn’t, as RBC CEO Dave McKay outlined a list of reasons why he isn’t interested in taking over any smaller U.S. lenders right now. At a banking conference in Toronto Wednesday, McKay said he isn’t interested in paying for someone else’s problems by buying up a regional player and its customer base. “The first question I always ask myself on an acquisition is: ‘Why are they selling and what problems am I inheriting, and can I run this business better than the current management team can?’” McKay said, a quote that strikes me as excellent advice for any C-suite exec.
Toronto home sales numbers show inventory still piling up: Toronto’s real estate board put out sales data for August this morning, and as was the case with Vancouver data the day before, the numbers are a bit of a mixed bag. The Toronto Region Real Estate Board says there were 4,974 homes sold across the GTA last month. That’s 5.3 per cent lower than the same month last year (which isn’t typically a booming month for home sales anyway) and a slight increase of 0.6 per cent from July’s level. The average selling price was $1,074,425, down 0.8 per cent from last year while the benchmark index fell by even more; 4.6 per cent. As has been the case for several months, the market is waiting for rate cuts to filter down to buyers and sellers, but the three we’ve seen so far haven’t moved the needle very much in either direction. If there’s one trend to watch it’s that new listings continue to outpace sales by a healthy margin, as there were 12,537 new homes put on the market during the month. That’s more than twice the number of sales, so inventory is building up. The immutable laws of supply and demand suggest that’s unsustainable, so something’s got to give.
