Bank of Montreal announced the largest takeover in its history overnight. The lender is buying BNP Paribas’ U.S. unit for US$16.3 billion, giving it a new base to build off of in California (where the business has 70 per cent of its US$89 billion in deposits). It’s an all-cash deal and BMO said it’ll help cover the cost by raising $2.7 billion in a share sale and by holding off on a buyback program. We’ll gather reaction and insight on the opportunities and challenges ahead for BMO as it establishes a new springboard for growth.
MARKETS UNDER PRESSURE
The rapidly spreading Omicron variant of COVID-19 and a major legislative setback in the U.S. are weighing on equities and oil prices this morning. On the pandemic: the Netherlands went into lockdown yesterday; while closer to home, another wave of restrictions came into effect in Ontario. One bit of encouraging news that helped lift U.S. futures off their low: Moderna released preliminary data showing its booster candidate delivered a 37-fold increase in antibody levels against Omicron. Plenty of questions to be asked about how quickly third doses can be rolled out; we’ll address that issue with the president of Moderna’s Canadian unit at 1 p.m.
BIDEN BILL SUFFERS MAJOR SETBACK
It could be back to the drawing board for U.S. President Joe Biden’s nearly US$2-trillion spending and tax-cut package after a key Democrat – Senator Joe Manchin – told Fox News yesterday he can’t support the legislation. White House Press Secretary Jen Psaki said the Biden administration “will find a way to move forward next year.” For now though, the stakes are clear as Goldman Sachs slashed its U.S. growth estimates as a result, including a full percentage point reduction for the first quarter (to two per cent).
OTHER NOTABLE STORIES
- RBC Economics is out with its quarterly look at housing affordability; unsurprisingly, it’s not going well for homebuyers. Affordability deteriorated in the third quarter to the worst level in 31 years, with ownership costs now accounting for 47.5 per cent of household income.
- Statistics Canada reported this morning that job vacancies climbed to an all-time high of 921,600 in the third quarter.
- Oracle has confirmed the deal that The Wall Street Journal reported was in the works. It’s buying health care I.T. and services company Cerner for US$95.00 per share. Cerner’s shares jumped almost 13 per cent to US$89.77 on Friday after the WSJ’s scoop.
- Canada’s outgoing ambassador to China, Dominic Barton, has been named chair of Rio Tinto’s board of directors, effective May 5. Barton’s familiarity with China will serve him well in the role: the country is Rio Tinto’s top market and the miner indicated in its last annual report that it wanted to “bring a better understanding of China into the boardroom.”
- Imperial Oil is one of five energy companies that UBS Asset Management dumped from Climate Aware funds, including one it manages for the GBP20.9-billion ($35.6-billion) Nest pension plan. The divestment was announced this morning.
- Lundin Mining announced it’s buying Josemaria Resources for $625 million to acquire what it’s calling a “world-class” copper and gold project in Argentina.
- Reminder that as of today there will be more energy in the S&P/TSX Composite Index as nine names from that sector join its ranks. Full list of the added and removed names here.
- We’ll watch shares of TSX Venture-listed Elemental Royalties after it became the target of an unsolicited takeover proposal from Gold Royalty Corp. The approach is worth $1.78 per share, representing a 37 per cent premium to its closing price on Friday. In its release, Gold Royalty said it’s been unable to bring Elemental to the table for “constructive engagement.”
NOTABLE RELEASES/EVENTS
- Notable earnings: Nike, Carnival
- 800: BMO conference call on BNP deal
- 930: Agriculture Minister Marie-Claude Bibeau provides update on Prince Edward Island potato wart situation
- Deadline for Rogers and Shaw to file final comments with Canadian Radio-television and Telecommunications Commission re. takeover review
Editor’s note: An earlier version today’s Daily Chase incorrectly stated Elemental Royalties had agreed to a takeover by Gold Royalty. BNN Bloomberg regrets the error.
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