A leak first published in the Globe and Mail revealed last week that Laurentian Bank was looking for a buyer. This immediately generated a lot of interest among arbitrageurs in these mergers and acquisitions (M&A) transactions.
The Laurentian stock, which closed Wednesday’s session at $33.50, ended the week at $42.41, having even touched $48 on Thursday. Marc Amirault, president of Gestion Cristallin and manager of the Amethyst Arbitrage Fund, one of whose strategies is precisely the arbitrage of these mergers and acquisitions transactions, sees an interesting case for arbitrageurs of all sizes in the sale of the Bank Laurentian.
There will likely be buyers for the bank’s assets, and governments will have little reason to oppose the transaction, as the bank has long been positioning itself for this eventuality, meaning it will not result in few job losses, believes the manager. The offer(s) that Laurentian Bank will attract should be known within about three months for a transaction that could close in about a year, given the usual slowness of regulators. This therefore leaves time for arbitrageurs to establish a position that they can increase or decrease over time depending on developments. The initial position must however remain modest, because in M&A, nothing is ever certain until the transaction has been concluded, recalls Mr. Amirault.
Note that the book value of the bank is around $60 per share. Whether the buyers who show up will be willing to pay that price remains to be seen.
JP Morgan Chase, the largest U.S. bank, posted net income of US$14.5 billion in the second quarter, or US$4.75 per share, against analysts’ expectations of US$4.00 per share. Of these profits, US$0.38 is attributable to the low-cost purchase of the regional bank First Republic which the US government passed on to it in order to stem the banking crisis triggered by the failure of the Silicon Valley Bank last winter . Like what, the misfortune of some…
The Bank of Canada last Wednesday raised its key rate by 0.25% to 5.00%, a high in 22 years. After a pause during the winter, the central bank resumed its tightening cycle with two successive hikes in less than two months. Will it stop there? One might think so assuming that it will want to take the time to measure the impact of these last two increases before taking any other measure. But this is not the perception of economists at National Bank Financial. Their analyzes of the press release accompanying the announcement of the decision and the press conference that followed lead them to conclude that the Bank of Canada’s leaders still maintain a clear bias in favor of further hikes eventually. Should we then expect a further increase at its next meeting in September? This could depend on new data that will have come to clarify the economic landscape by then.
Departure of a big size at Dollarama. The retailer will have to find a new chief financial officer: it has just announced that JP Towner will leave his post in the coming months. Note that he has held this position since March 2021 and that the stock of the low-cost retailer achieved a total return of 79.5% during this period, compared to a return of 9.5% for the TSX 60 index, according to National Bank Financial estimates.
Canopy Growth announced on Friday that it had reached an agreement with its lenders to reduce its debt. It will take more to convince investors, it seems, because the title yielded more than 35% of its value at mid-session on a volume of more than 14 million shares. The stock is now only worth $0.55.