TSX up as Valeant confirms acquisition of Bausch + Lomb
The numbers on the TSX board are shown in this August, 2011 file photo. (Aaron Vincent Elkaim / THE CANADIAN PRESS)
Published Monday, May 27, 2013 10:29AM EDT
Last Updated Monday, May 27, 2013 11:40AM EDT
TORONTO -- A major acquisition in the health care sector helped give the Toronto stock market a modest advance Monday.
The S&P/TSX composite index gained 27.55 points to 12,694.77 as Valeant Pharmaceuticals (TSX:VRX) confirmed that it plans to expand its eye-care business by buying Bausch and Lomb for US$8.7 billion in cash.
The Montreal-area company will finance the deal by issuing up to $2 billion of new equity, with the remainder paid for with debt.
Valeant stock was up $6.39 or 7.34 per cent to $93.41 after earlier hitting an all-time high of $95. Its shares had risen 13 per cent on Friday on speculation the deal was set to go through.
"What I found interesting is that usually, the buyer's stock price goes down," said Colin Cieszynski, market analyst at CMC Markets Canada.
"To actually see it go up is quite impressive, which usually means the street thinks it's a good deal."
The Canadian dollar was off 0.01 of a cent to 96.88 cents US amid mixed commodity prices and traders looked to the Bank of Canada's latest announcement on interest rates.
The Bank of Canada makes its next announcement Wednesday, the last such word on rates from outgoing central bank governor Mark Carney. Analysts expect the bank will leave its key rate unchanged.
Trading on the Toronto market was weaker than normal with U.S. markets closed for Memorial Day.
"It's totally typical that on days when the U.S. is closed, Canadian markets are pretty quiet and often trade a little bit higher which is what we're seeing today," added Cieszynski.
The gold sector also helped lift the TSX, up 0.65 per cent as June bullion gained $5.50 to US$1,392.10 an ounce.
Barrick Gold Corp. (TSX:ABX) gained 27 cents to $19.96. The stock fell two per cent Friday after Chile announced it's imposing a US$16 million fine and requiring the company to meet conditions before it can resume construction of the Pascua-Lama project, citing "serious violations" of its environmental permit.
The base metals sector rose 0.4 per cent while July copper edged up a penny to US$3.30 a pound. HudBay Minerals (TSX:HBM) was up 15 cents to $8.28.
The telecom sector was ahead 0.45 per cent with shares in Manitoba Telecom Services (TSX:MBT), which announced last week plans to sell its Allstream business, ahead $1.67 or 4.9 per cent to $35.60. RBC Capital Markets has raised the stock to outperform from sector perform. It also increased its price target to $37 from $33.
The energy sector slipped marginally as concerns about global energy demand sent the July crude contract down 56 cents to US$93.59 a barrel in electronic trading on the New York Mercantile Exchange.
In other corporate news, engineering giant SNC-Lavalin Group Inc. (TSX:SNC) is making a limited-time offer of "amnesty" to whistleblowers within its workforce. The amnesty won't cover executives in SNC's Office of the President, its management committee groups or anyone who directly profited from a violation. SNC is undergoing investigations for alleged fraud and corrupt practices by some former employees. Its stock was 51 cents higher to $41.30.
Traders also took in another big slide on the Tokyo stock market.
Tokyo's Nikkei 225 tumbled 3.2 per cent as its export sector was hit with wide-ranging losses amid a rising yen.
The Japanese benchmark has been on a tear, rising 36 per cent since the beginning of the year. At the same time, the yen has fallen steadily against other major currencies in a byproduct of the economic stimulus policies launched this year by Prime Minister Shinzo Abe. He's embarked on an aggressive campaign to lift consumer prices and encourage borrowing and spending.
As part of that effort, Japan's central bank is flooding its financial system with money, helping reduce the value of the yen. The yen reversed some of its recent declines Monday after reaching 103 to the U.S. dollar last week.
The TSX finished last week with a modest gain as hopes for a global economic recovery faded somewhat amid a survey on China's monthly manufacturing pace which showed a bigger-than-expected decline.
Less-than-clear indications from the U.S. Federal Reserve on whether it might scale back its aggressive bond-buying program, dubbed quantitative easing or QE, also caused investors to curb their enthusiasm and New York's Dow Industrials registered a small loss for last week.
Elsewhere in Asia, Hong Kong's Hang Seng rose 0.3 per cent, South Korea's Kospi gained 0.3 per cent while benchmarks in mainland China and Taiwan rose. Australia's S&P/ASX 200 declined 0.5 per cent.
In Europe, Frankfurt's DAX gained 0.9 per cent, the Paris CAC 40 rose 0.85 per cent while London markets were closed for a spring Bank Holiday.