By Jeff Sanford
Toronto, Ontario — December 5, 2017 — In this week’s Tuesday Ticker: AkzoNobel reaffirms plans to split in half, the Axalta-Nippon deal falls apart, the Alberta economy is finally booming again, and much, much more!
AkzoNobel
AkzoNobel management is reporting that it gained shareholder approval last Thursday to go ahead with its plan to spin off its chemical division into a stand-alone company. The unit is expected to become a USD $11.9 billion chemicals business. The plan was floated during the recent takeover battle with PPG as a way of placating shareholders. Management has indicated that the proceeds from the sale will go to investors. The company has promised a special dividend of 1 billion euros to be paid to shareholders in December. A media report notes that shareholders of AkzoNobel are still “disappointed” with the way AkzoNobel handled the overture from PPG.
A spokesperson for a British pension fund was quoted as saying, “Confidence in the supervisory board has still not been restored. That was not conducive to restoring relations with shareholders.”
Axalta
Axalta and Nippon Paint Holdings had been discussing a possible merger. The talks have already fallen apart. Shares in both companies sold off on news that the merger talks ended quickly. Share prices of Axalta fell almost 20% in a single day last week. Nippon shares were off a similar amount. Nippon is thought to have offered an all-cash offer of USD $9.1 billion, which is a premium to Axalta’s market capitalization of USD $8 billion. The offer was even less than what AkzoNobel was offering. Warren Buffett is Axalta’s single largest shareholder. Buffett is showing interest in the auto sector these days. He is also backing a Chinese-maker of electric vehicles called BYD. The company is expected to open a truck manufacturing facility in Ontario.
LKQ
Shares in auto parts recycler LKQ are on a tear of late. Over the last quarter the share price is up almost five percent. The company recently released its third quarter earnings report. Earnings beat analyst estimates. Overall, total revenue at the company was up almost twelve percent compared to the same period last year. LKQ acquired eleven companies over the quarter. The company also opened up several new offices in Europe during the quarter.
AutoCanada
AutoCanada declared a quarterly dividend of ten cents per share in November. That works out to an annual dividend of forty cents, or a yield of about 1.68%. Investors are taking interest in the company as the economy in Alberta recovers. The West Coast-based brokerage Canaccord Genuity upped its price target from CDN $21.00 to CDN $22.00 in a recent report to clients. CIBC also recently increased their price target from CDN $22.00 to CDN $29.00.
Related Market News
-Well-known auto industry analyst Dennis DeRosiers has said there is no way the Ontario government will reach its goal of seeing five percent of the car fleet electric by 2020. The Liberals have announced a series of incentives to get people to switch to e-vehicles. But electric cars still make up less than one percent of the current fleet. According to DeRosiers, “The chances of meeting it aren’t low, they’re zero. In the auto sector, all roads lead to electric. It just happens to be that the road to serious acceptance of them is probably at least 2030 and more likely 2040, 2050.”
-The Japanese “quality” crisis continues. A Japanese maker of airplane and car parts is the latest company to admit that it had falsified quality-assurance data. Toray Industries announced it had found 149 instances of altered data. Some of the products involved include cords used for tires and car hose belts.
-After a couple years of recession it seems Alberta is ready to rebound. The Conference Board of Canada reports the province will grow by a remarkable 6.7 per cent this year. This rate will far outpace every other province. A press release from the organization notes that, “Thanks to rising oil production and a swift turnaround in drilling levels, Alberta surged out of recession this year. The domestic economy also performed well, as consumers who had delayed making major purchases during the recession flocked to car dealerships and retail stores.
