Monday, July 24, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): The markets were buoyed across most sectors today by profit news
from Merck and merger news from AMD/ATI and HCA from the U.S., and good
news from Falconbridge and a large number of mergers in Canada. The
minerals sector in particular edged up on news of major M&A's, while retail
sales slipped more than expected.
* The S&P/TSX Stock Exchange Composite Index rallied 206.83 points, or 1.81%.
* The big buzz on Bay Street today was about California-based Advanced
Micro Devices takeover bid for ATI Technologies, the leading Canadian maker
of graphics chips. AMD is offering US$5.4 billion in cash and stock for the
company, and the deal has been approved by both boards of directors. No
layoffs are expected, and AMD believes that the deal will reduce operating
expenses for the new conglomerate by US$75 million by the end of 2007 and
US$125 million in 2008. ATI shares soared.
* Turning to U.S. earnings, drug-making giant Merck, shrugging off its
Vioxx- related legal problems, released its second-quarter earnings,
posting a doubling of profits and a rise in its 2006 profit forecast.
Excluding special items, Merck earned US$0.73 per share, beating forecasts
of US$0.65 per share. It also raised its 2006 profit forecast to US$2.40 to
US$2.48 per share.
* The avidly courted Falconbridge posted a soaring second-quarter
profit of US$728 million, up from US$202 million in the first quarter; the
nickel miner saw its earnings per diluted share hit US$1.91 compared to
US$0.61 per share last year. However, this did not meet expectations of
US$1.93 per share. Falconbridge trumpeted a near-doubling of sales to
US$3.9 billion for the first half of the year, citing record prices for
nickel, zinc, copper, and by- product molybdenum.
* Falconbridge's favored suitor, Inco, increased its price targets for
2006 to US$1.42 billion or US$6.17 per share, betting nickel, which hit a
19-year-high on the London exchanges last week, will stay up. The estimate
is much more optimistic than most analysts' predictions and is expected to
help Inco in its offer to acquire Falconbridge; its current and last offer
expires this Thursday.
* The minerals and precious metals markets, despite a downturn in gold
prices, climbed today as a flurry of M&A activity was announced. Stornoway
Diamond Corp. is trying to acquire Ashton Mining and Contact Diamonds to
create a Canadian diamond mining exploration giant, using a complex series
of stock swaps. Separately, Barrick Gold, after reaching an impasse with
NovaGold on the development of Alaska's Donlin Creek, decided to make an
offer of C$1.53 billion for the entire company. Barrick also beat out
NovaGold's bid of C$0.57 per share for competitor Pioneer Metals, acquiring
the company for C$1.00 per share. Last week, Quadra Mining offered to buy
Australian copper producer Equatorial Mining for US$337 million in cash,
part of a strategy to seek out and snap up small copper companies with
profitable mines to cash in on burgeoning copper prices.
* Bell Globemedia, a subsidiary of BCE Inc., received a favorable
broadcast regulator ruling allowing its new owners to reshuffle ownership
levels. BCE has now reduced its holdings to 20%, leaving 40% for the
Woodbridge Company and 20% for a combination of Torstar and the Ontario
Teachers Pension Plan. Bell Globemedia's recent C$1.7 billion bid for CHUM
Ltd. should not be affected.
* Oil had another dramatic day, dropping in the morning as U.S.
Secretary of State Condoleeza Rice arrived in Beirut to try to broker a
ceasefire and OPEC announced it would calm the market. Prices turned around
in the afternoon as worries arose about refineries throughout the Americas,
with problems ranging from a storm in the Gulf, a Venezuelan fire, and
pumping problems for Phillips Conoco in Illinois. Oil prices closed up
US$0.63 at US$75.05.
* As oil prices stabilized, investors continued to take profits from
the safe haven of gold into other opportunities, sending the yellow metal
down US$7 to close at US$613.20.
* Retail sales slipped by 0.6% in May, according to Statistics Canada.
Following a revised rise of 1.9% in April, the dip led to a figure of
C$32.63 billion; the markets had predicted a rise of 0.1%. A decline in the
auto sector was said to lead the decrease.
-- Carolyn.Crapo@contractor.Thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Canadian Commentary, which
is updated twice daily. The information herein is believed to be true and
accurate, we take no responsibility for inaccurate information and reserve
the right to update our reports. For more financial information at your
fingertips, please visit http://www.irchannel.com. If you have any questions
please e-mail James Sang at james.sang@tfn.com or call 646.822.6233. For
more information about Thomson Financial visit us on-line at
http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
back to top
