Referring to a story by Reuters last week, Canadian miner Kirkland Lake Gold have confirmed that a shareholders meeting last week resulted in a unanimous vote in favour of a takeover of Australian firm Newmarket Gold.
In a joint statement, the two firms revealed that 99 percent of Newmarket shareholders and 83 percent of Kirkland shareholders were in favour of the deal. In order for the agreement to be finalized the board needed 70 percent of Kirkland support and over half of Newmarket support. The deal is thought to be worth around $800 million and should be finalized by the end of the month.
Newmarket shares dropped 0.4 percent to C$3.43 in response to the news and Kirkland Lake fell 1.7 percent to C$7.19 on the Toronto Stock Exchange.
This deal comes hot on the heels of a tie-up involving Kirkland and St Andrew Goldfields in February in an all-stock transaction valued at C$182 million. The agreement created an entity with four Ontario-based mines and three mills.
Kirkland Lake's largest shareholder, Van Eck Associates, said to Reuters that it supported the deal but declined to give details on how it eventually voted. Many other shareholders were vocal in their opposition to the deal as they saw minimal expansion opportunities and efficiency saving with both companies having their main assets in different countries. Newmarket has most of theirs in Australia.
“There’s a feeling with a small minority of the Kirkland shareholders that the board were a little too quick to dismiss their own buyout offers,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in a note to clients.
“Both Silver Standard Resources and Gold Fields made attractive offers but both were withdrawn last week,” Coleman added.
The board cited increased analyst coverage and valuation for going through with the Newmarket takeover and the new combined company will operate five mills and eight underground mines which output over 600,000 ounces of gold this year. The main operations will be Newmarket's Fosterville mine in Victoria, Australia, and Kirkland Lake's Macassa mine in Ontario.
The board are expected to make a further announcement at the start of December concerning further details on the deal.
Tuesday, November 29, 2016
Monday, November 28, 2016
JLR wants to bring further production to UK
Indian-owned car company Jaguar Land Rover (JLR) have said in a statement they want to manufacture electric models in the UK, saying it would make sense to build the cars in its home market.
The announcement comes as a further post-Brexit boost to the British car industry, Jaguar Land Rover being the biggest British carmaker having built around 30 percent of the UK’s 1.7 million cars in 2015. The company is owned by a subsidiary of Indian conglomerate Tata Group, Tata Motors Limited.
Ralf Speth, JLR chief executive, had hinted recently that the firm would like to bring more production to the UK, with the company already operating three car manufacturing plants in England.
“The UK is the home of our engineering and design process, it would be great if we could also build our electric vehicles here, specifically in the West Midlands,” said Speth in the statement. “These plans are dependent on various conditions, however, such as scientific support, government initiatives and pilot testing.”
The government have made a tangible effort to promote Britain as a prime location for innovative companies to manufacture their products over the past few years and last Friday authorities announced $490 million of funding to support clean energy production.
Nissan recently said they would manufacture two brand new models at the largest car plant in the UK following pledges by PM Theresa May over government support.
JLR were not immediately available for extra comment regarding job creation or a timeframe for their plans to build electric cars in Britain.
“We think JLR are going to hold out for the same kind of governmental subsidies that Nissan secured a few weeks ago,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “It’s pretty obvious why this statement is coming out now. They are laying the groundwork for negotiations. And the government will be sitting up and taking notice, a new electric vehicle manufacturing plant in the UK is a pretty big carrot.”
JLR currently builds their first electric model in Austria and showed it off at a car show in California two weeks ago.
The announcement comes as a further post-Brexit boost to the British car industry, Jaguar Land Rover being the biggest British carmaker having built around 30 percent of the UK’s 1.7 million cars in 2015. The company is owned by a subsidiary of Indian conglomerate Tata Group, Tata Motors Limited.
Ralf Speth, JLR chief executive, had hinted recently that the firm would like to bring more production to the UK, with the company already operating three car manufacturing plants in England.
“The UK is the home of our engineering and design process, it would be great if we could also build our electric vehicles here, specifically in the West Midlands,” said Speth in the statement. “These plans are dependent on various conditions, however, such as scientific support, government initiatives and pilot testing.”
The government have made a tangible effort to promote Britain as a prime location for innovative companies to manufacture their products over the past few years and last Friday authorities announced $490 million of funding to support clean energy production.
Nissan recently said they would manufacture two brand new models at the largest car plant in the UK following pledges by PM Theresa May over government support.
JLR were not immediately available for extra comment regarding job creation or a timeframe for their plans to build electric cars in Britain.
“We think JLR are going to hold out for the same kind of governmental subsidies that Nissan secured a few weeks ago,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “It’s pretty obvious why this statement is coming out now. They are laying the groundwork for negotiations. And the government will be sitting up and taking notice, a new electric vehicle manufacturing plant in the UK is a pretty big carrot.”
JLR currently builds their first electric model in Austria and showed it off at a car show in California two weeks ago.
Friday, November 25, 2016
Tata calls for emergency meeting as Mistry ousted
Indian firm Tata Steel have said after a special board meeting that they have decided to sack chairman Cyrus Mistry effective immediately, a move which follows Mistry’s exit from two other Tata Group firm’s and the group’s holding company Tata Sons.
Mistry has come under heavy criticism in the past few months and things came to a head in late October when Tata Sons deposed him from his position. In the last month both parties have let loose with a stinging volley of insults and criticisms, both blaming the other for issues at the $120 billion conglomerate.
Last week the board of Tata Steel held an extraordinary general meeting in order to oust Mistry and another executive, Nusli Wadia, from the directorship of the firm. A similar situation occurred last month at Tata Global Beverages, which runs Starbuck’s in the country, as Mistry was removed from that board too. He was also deposed as chairman of Tata Consultancy Services.
A close friend of Mr Mistry who prefers to remain nameless says there was a coup at the highest levels of Tata Group to eliminate his control at the executive level. The source described the behaviour of Tata Sons as “deeply unsettling”.
The new chairman of the board at Tata Steel will be O P Bhatt, a man with plenty of experience as current director of the company’s board.
The purge has not stopped there. Both Tata Motors, which owns Land Rover, and the Indian Hotels Co Ltd group, which is also part of the Tata Group and runs the Taj brand, have also called for extraordinary meetings in order to evaluate Mistry’s positions with the two firms.
“The main reason for Mr Mistry’s demise at Tata seems to be the falling dividends and skyrocketing expenses,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “Of course, when you fall out of favour at corporate level it’s very difficult to keep your standing at all the companies under the umbrella of the conglomerate. It’s a very long fall from that height and you tend to hit every branch on the way down.”
In the middle of November, Mistry attempted to defend the accusations levelled at him by releasing a statement in which he explained why the impairment provisions and other rising expenses were unrelated to his actions. He also accused the board of trying to sway shareholder sentiment towards him.
Mistry has come under heavy criticism in the past few months and things came to a head in late October when Tata Sons deposed him from his position. In the last month both parties have let loose with a stinging volley of insults and criticisms, both blaming the other for issues at the $120 billion conglomerate.
Last week the board of Tata Steel held an extraordinary general meeting in order to oust Mistry and another executive, Nusli Wadia, from the directorship of the firm. A similar situation occurred last month at Tata Global Beverages, which runs Starbuck’s in the country, as Mistry was removed from that board too. He was also deposed as chairman of Tata Consultancy Services.
A close friend of Mr Mistry who prefers to remain nameless says there was a coup at the highest levels of Tata Group to eliminate his control at the executive level. The source described the behaviour of Tata Sons as “deeply unsettling”.
The new chairman of the board at Tata Steel will be O P Bhatt, a man with plenty of experience as current director of the company’s board.
The purge has not stopped there. Both Tata Motors, which owns Land Rover, and the Indian Hotels Co Ltd group, which is also part of the Tata Group and runs the Taj brand, have also called for extraordinary meetings in order to evaluate Mistry’s positions with the two firms.
“The main reason for Mr Mistry’s demise at Tata seems to be the falling dividends and skyrocketing expenses,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “Of course, when you fall out of favour at corporate level it’s very difficult to keep your standing at all the companies under the umbrella of the conglomerate. It’s a very long fall from that height and you tend to hit every branch on the way down.”
In the middle of November, Mistry attempted to defend the accusations levelled at him by releasing a statement in which he explained why the impairment provisions and other rising expenses were unrelated to his actions. He also accused the board of trying to sway shareholder sentiment towards him.
Monday, November 21, 2016
St. Louis Fed president drops heavy hints for holiday rate bump
U.S. Federal Reserve board member James Bullard has warned that fundamental changes stemming from potential policies of incoming president Donald Trump could mean that the Fed would need to adjust their strategy in the coming months, but he still made it clear he feels a rate hike is coming this holiday season.
Bullard, who is president of the St. Louis Fed, said the central bank is now focusing primarily on how they will tackle the 2017 rate path, leading many observers to conclude that a December rate increase is a done deal.
“We are concerned first and foremost on how the President-elect’s policies on taxation and spending are going to interact with Federal Reserve strategy next year,” Bullard told a conference in Germany’s business centre of Frankfurt.
“A December move by the FOMC is what the markets are betting on and I’m supporting that particular view.”
Traders recently upped their bets on a December rate hike by pricing in a 90 percent chance yesterday.
Many investors are expecting some of Trump’s new policies to have a definite impact on the American economy in the short term but that some of his proposals could take longer than he would hold the White House to bear any fruit.
“Trump can only stay in power for eight years, so some of his long term goals regarding immigration and infrastructure probably won’t be realised while he’s still in power,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in an email to clients. “Trade agreements are another policy that can take a long time to come about, years of negotiations and stoppages. There can be an impact in these areas but not before many years, maybe even a decade.”
Some areas that could have an immediate effect are tax reforms and regulatory changes, especially in the financial sector. Investors and policymakers at the Fed are both keen to see the details of Trump’s proposed changes.
Bullard, who is president of the St. Louis Fed, said the central bank is now focusing primarily on how they will tackle the 2017 rate path, leading many observers to conclude that a December rate increase is a done deal.
“We are concerned first and foremost on how the President-elect’s policies on taxation and spending are going to interact with Federal Reserve strategy next year,” Bullard told a conference in Germany’s business centre of Frankfurt.
“A December move by the FOMC is what the markets are betting on and I’m supporting that particular view.”
Traders recently upped their bets on a December rate hike by pricing in a 90 percent chance yesterday.
Many investors are expecting some of Trump’s new policies to have a definite impact on the American economy in the short term but that some of his proposals could take longer than he would hold the White House to bear any fruit.
“Trump can only stay in power for eight years, so some of his long term goals regarding immigration and infrastructure probably won’t be realised while he’s still in power,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in an email to clients. “Trade agreements are another policy that can take a long time to come about, years of negotiations and stoppages. There can be an impact in these areas but not before many years, maybe even a decade.”
Some areas that could have an immediate effect are tax reforms and regulatory changes, especially in the financial sector. Investors and policymakers at the Fed are both keen to see the details of Trump’s proposed changes.
Friday, November 18, 2016
Greenback strides to 30 year high versus yen
The stellar dollar rise continued this week reaching its highest peak against its basket currency competitors since 2002 and putting in its best two-weekly performance versus the yen since 1988 on the back of republican candidate Donald J Trump’s surprise win in the U.S. presidential race.
The dollar was further bolstered by remarks from Janet Yellen, U.S. Federal Reserve Chair, who said last week that she expected interest rates to rise “sooner rather than later” giving the clearest indicator yet that, as the markets expect, the hike will come before the end of the year.
The U.S. currency gained around 8 percent in the last two weeks to hit a six-monthly high against the yen of 110.926. That’s the dollars best performance over a fortnightly period for three decades and its second best performance since floating exchange rates began.
“We are most definitely seeing a very large scale shifting of investments stateside,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in an interview with BBC business news yesterday.
“Not since March 2003 have we seen the dollar index at this kind of level, it shot to 101.36 yesterday. Of course this is all based on the perception that Mr Trump will follow through on his promises to lower taxation and increase spending on major infrastructure projects and defence,” Coleman continued.
As expectations drive asset prices in the U.S., investors are being deterred from stocks in Europe due to continued economic and political concerns, like the effect of the Brexit vote and ever increasing bailouts flowing to Athens. This serves to further bolster the greenback.
Favourable data reports have given even more credence to those speculating on a December rate hike, as encouraging housing starts numbers, which hit a decade long peak, prompted Yellen to say a rate hike was in the offing. Consumer prices posted a semi-annual high and jobless claims hit a 44 year low.
According to research firm, CME FedWatch, traders are now pricing in a 91 percent chance of a rate hike during the holiday season. The Fed is due to convene for their monthly meeting on December 13-14 to decide on policy and will release the minutes the following day.
Olivier Korber, SocieteGenerale senior strategy consultant, said in a recent blogpost, “We might expect the euro to keep falling if certain protectionist policies come into play at the start of 2017.”
The dollar was further bolstered by remarks from Janet Yellen, U.S. Federal Reserve Chair, who said last week that she expected interest rates to rise “sooner rather than later” giving the clearest indicator yet that, as the markets expect, the hike will come before the end of the year.
The U.S. currency gained around 8 percent in the last two weeks to hit a six-monthly high against the yen of 110.926. That’s the dollars best performance over a fortnightly period for three decades and its second best performance since floating exchange rates began.
“We are most definitely seeing a very large scale shifting of investments stateside,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in an interview with BBC business news yesterday.
“Not since March 2003 have we seen the dollar index at this kind of level, it shot to 101.36 yesterday. Of course this is all based on the perception that Mr Trump will follow through on his promises to lower taxation and increase spending on major infrastructure projects and defence,” Coleman continued.
As expectations drive asset prices in the U.S., investors are being deterred from stocks in Europe due to continued economic and political concerns, like the effect of the Brexit vote and ever increasing bailouts flowing to Athens. This serves to further bolster the greenback.
Favourable data reports have given even more credence to those speculating on a December rate hike, as encouraging housing starts numbers, which hit a decade long peak, prompted Yellen to say a rate hike was in the offing. Consumer prices posted a semi-annual high and jobless claims hit a 44 year low.
According to research firm, CME FedWatch, traders are now pricing in a 91 percent chance of a rate hike during the holiday season. The Fed is due to convene for their monthly meeting on December 13-14 to decide on policy and will release the minutes the following day.
Olivier Korber, SocieteGenerale senior strategy consultant, said in a recent blogpost, “We might expect the euro to keep falling if certain protectionist policies come into play at the start of 2017.”
Friday, November 11, 2016
Shares in Fitbit rise on buyout rumours
Fitbit Inc, a San-Francisco-based tech firm that produces wearable gadgets, saw its shares gain as much as 10 percent after a little known private equity firm said it had approached the company with a buyout offer. The shares then gave up some of those gains after Fitbit said they had not been in talks with anyone concerning a sale.
The purported buyers, ABM Capital Ltd, issued a statement on Wednesday saying that their offer had been received by the SEC offices; however a spokesman for Fitbit denied any knowledge of the offer from ABM or anyone else.
Details of the filing are sketchy, but Reuters were able to determine that ABM wanted to purchase Fitbit for $12.60 per share. ABM was not reachable using the telephone number on the case sheet.
“This offer looks suspicious and we are definitely taking it with a pinch of salt,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “The legitimacy of a company has to be called into question when they make spelling mistakes on a filing and their offices can’t be reached by phone.”
According to the U.S. Securities and Exchange Commission (SEC) they received the filing early Tuesday morning but did not comment on the veracity of ABM other than to say they had not received any previous filings from the Beijing-based company.
The SEC has a publicly accessible database called Edgar where thousands of fund managers and public companies make filings. Sector watchdogs have been worried about the security of the database after a previously unknown company called PTG Capital Partners offered to purchase cosmetics giant Avon Products Inc for $4 billion last year.
Fitbit shares rose as much as 10 percent in the morning session as news broke of the offer but sank back down to only $8.89 per share, well below the offer price of $12.60, which would have represented a 47 percent premium.
Fitbit’s performance has been slumping this year, losing 65 percent of their $2 billion valuation amid rising competition from international manufacturers.
Executives of Fitbit declined to comment on the recent developments, but a statement last month said the company are bringing in new initiatives to increase revenue.
The purported buyers, ABM Capital Ltd, issued a statement on Wednesday saying that their offer had been received by the SEC offices; however a spokesman for Fitbit denied any knowledge of the offer from ABM or anyone else.
Details of the filing are sketchy, but Reuters were able to determine that ABM wanted to purchase Fitbit for $12.60 per share. ABM was not reachable using the telephone number on the case sheet.
“This offer looks suspicious and we are definitely taking it with a pinch of salt,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “The legitimacy of a company has to be called into question when they make spelling mistakes on a filing and their offices can’t be reached by phone.”
According to the U.S. Securities and Exchange Commission (SEC) they received the filing early Tuesday morning but did not comment on the veracity of ABM other than to say they had not received any previous filings from the Beijing-based company.
The SEC has a publicly accessible database called Edgar where thousands of fund managers and public companies make filings. Sector watchdogs have been worried about the security of the database after a previously unknown company called PTG Capital Partners offered to purchase cosmetics giant Avon Products Inc for $4 billion last year.
Fitbit shares rose as much as 10 percent in the morning session as news broke of the offer but sank back down to only $8.89 per share, well below the offer price of $12.60, which would have represented a 47 percent premium.
Fitbit’s performance has been slumping this year, losing 65 percent of their $2 billion valuation amid rising competition from international manufacturers.
Executives of Fitbit declined to comment on the recent developments, but a statement last month said the company are bringing in new initiatives to increase revenue.
Thursday, November 10, 2016
ConocoPhillips will streamline to focus on core business
As it attempts to bolster its core businesses, one of the United States’ largest independent oil producers, ConocoPhillips, have announced in a statement that they will offload nearly $10 billion worth of their natural gas assets.
Two years of low commodity prices have squeezed margins for Conoco and similar players in the market and the desire to sell off large chunks of peripheral operations reflects the continued efforts by oil companies to push towards further efficiency and streamlining.
On the statement’s release, shares of Conoco dropped around a percentage point to $45.22 in the morning session in New York and U.S. crude prices fell by the same margin overall.
Chief Executive Ryan Lance has been praised in recent years for his drive to reduce the company’s $30 billion debt, and the sale of the gas assets is another step towards his vision of sustainability for the Houston-based firm.
“Getting debt off our balance sheet is of primary importance both to the board and to shareholders and potential investors,” said Lance in a BBC interview. “The assets in question are not a good fit for the company in the long term so selling now is good on two fronts, to reduce debt and to streamline our operations.”
The planned divestiture is estimated at between $9billion and $11 billion worth of North American gas assets and comes after the company slashed its budget by 50 percent in 2015.
“What the board are essentially doing is not betting on commodity prices coming back to normal levels,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “Instead they are wisely adapting their business model so it can withstand these kinds of price cycles. We don’t know how long the current dip in crude is going to last for.”
The capital inflow expected from the sale will allow Conoco to focus on maintenance of their shale operations in the U.S. and development of new exploration projects in Europe. The company were previously active in 30 nations across the world, but have cut that figure in half in the last ten years.
Brent crude was trading at $45.97 on Friday; a price that still makes it difficult for large oil companies to be profitable. The benchmark figure is $50. This has forced firms like Conoco to develop new methods to raise funds, and Lance recently announced a share repurchase program worth around $4 billion.
Two years of low commodity prices have squeezed margins for Conoco and similar players in the market and the desire to sell off large chunks of peripheral operations reflects the continued efforts by oil companies to push towards further efficiency and streamlining.
On the statement’s release, shares of Conoco dropped around a percentage point to $45.22 in the morning session in New York and U.S. crude prices fell by the same margin overall.
Chief Executive Ryan Lance has been praised in recent years for his drive to reduce the company’s $30 billion debt, and the sale of the gas assets is another step towards his vision of sustainability for the Houston-based firm.
“Getting debt off our balance sheet is of primary importance both to the board and to shareholders and potential investors,” said Lance in a BBC interview. “The assets in question are not a good fit for the company in the long term so selling now is good on two fronts, to reduce debt and to streamline our operations.”
The planned divestiture is estimated at between $9billion and $11 billion worth of North American gas assets and comes after the company slashed its budget by 50 percent in 2015.
“What the board are essentially doing is not betting on commodity prices coming back to normal levels,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “Instead they are wisely adapting their business model so it can withstand these kinds of price cycles. We don’t know how long the current dip in crude is going to last for.”
The capital inflow expected from the sale will allow Conoco to focus on maintenance of their shale operations in the U.S. and development of new exploration projects in Europe. The company were previously active in 30 nations across the world, but have cut that figure in half in the last ten years.
Brent crude was trading at $45.97 on Friday; a price that still makes it difficult for large oil companies to be profitable. The benchmark figure is $50. This has forced firms like Conoco to develop new methods to raise funds, and Lance recently announced a share repurchase program worth around $4 billion.
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