Wednesday, June 28, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Bay Street moved higher on the day with relatively little market
activity, as the Street waits for major US economic data to be released on
Thursday. The energy sector saw possible legal problems ahead in the Phelps
Dodge Inco mega-deal announced early this week, and a Compton Petroleum
asset re-allocation decision. Energy and technology stocks powered higher,
while mining, material and gold shares receded.
* The S&P/TSX Stock Exchange Composite Index rose 39.08 points, or
0.35%.
* Yesterday's US $40 billion mining merger may be in jeopardy, as
Phelps Dodge's shareholders have not yet approved its announced takeover of
Inco/Falconbridge. Investors contend they are worried about the offer's
dilutive nature and the massive US $22 billion in debt that will help
finance it. The United Steelworkers union is calling for an overview of the
deal by Investment Canada, although Phelps Dodge is trying to placate such
concerns by leaving the nickel-mining management structure in Toronto,
while the copper mining portion remains in Phoenix. Shareholders have until
the fall to approve the deal, which will have the largest nickel-mining
operation in the world join the largest publicly-traded copper miners.
* Further complicating the situation, frustrated suitor Xstrata has not
given up its quest for Falconbridge; it already owns 20% of the nickel
company's shares and has made a C $20 billion takeover bid which will
expire on July 7th. However, the Ontario Securities Commission is now
supporting Falconbridge's poison pill option, blocking Xstrata from buying
enough shares to stop its takeover by Inco.
* In other energy news, Compton Petroleum slashed its 2006 capital
spending budget and plans to sell C $100 million in assets. Uncertainty
about the prices of natural gas, the lack of personnel and inflation in
western Canada, global energy market uneasiness, and regulatory issues were
cited. Compton is still predicting growth of 15% to 19% this year, and the
stock rose.
* A Canadian icon will undergo a major change as Wendy's sheds its
82.75% stake in Tim Hortons and offers it to its shareholders around
October 1. The shedding of the remaining stake is being performed at the
recommendation of Trian Partners, one of Wendy's major shareholders, and
will coincide with a slashing of US $100 million in overhead costs this
fiscal year for the U.S. food chain.
* Gold and other precious metals remained quiet, waiting for the
Federal Reserve news tomorrow; after rising to nearly US $590, the yellow
metal settled at US $581.00, down US $3.40. Market watchers expect much
more activity beginning tomorrow as the market takes direction from the new
data.
* Oil prices, meanwhile, moved higher on the day, aided by bullish
weekly inventory data released by the U.S. Energy Department. Crude oil
finished at US $72.19 a barrel.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services Canadian Commentary, which
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accurate, we take no responsibility for inaccurate information and reserve
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SOURCE Thomson Financial Corporate Group
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