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WHAT'S ON TAP
HOT OFF THE PRESS
Trade surplus of $4B is the third straight
May’s trade surplus of $4.2B came in better than expected, growing over the previous month…
… on the back of a 0.9% increase in exports, which came despite flat volumes and a sequential drawdown in energy…
… as the category showed some moderation after carrying the prior two prints.
With a 50% M/M gain in aluminum exports on European demand, metals and minerals were the primary upward driver…
… and were the main drag on imports, which fell 0.2% M/M despite gains in the other categories.
Rogers gets ready for sports media sell-down
Rogers (RCI-B) has finally consolidated MLSE, buying Kilmer’s 25% stake for $4.4B which implies an enterprise value of $17B (24% of total). Packaged with the rest of its media assets…
… management expects to sell a 20-30% stake at a $25B valuation, which would generate ~$6B of proceeds for leverage reduction (15% of total debt).
More importantly, a partial sell down would formally mark the sports and media segment - which should be reflected in RCI’s valuation going forward.
Purchasing activity has price-driven expansion
The Ivey PMI came in at 56.2, indicating purchasing activity continues to expand…
… likely driven by inflation, with the price index remaining elevated in the near-term…
… and inventories stabilizing despite continued challenges in delivery times.
The employment index edged lower for the second straight month, but with it still sitting well above 50…
… manufacturing will likely be a positive contributor to Friday’s jobs print.
ON OUR RADAR
Despite Hanwha’s best efforts, Carney picked NATO-linked TKMS to replace its aging submarine fleet - which pushed the valuation of Bombardier (BBD) and Magellan (MAL) higher…
… given they’re second-order beneficiaries of the deal. In Magellan’s case, a teaming agreement with TKMS for torpedo production is step one - with potential for growth in Europe as an end market beyond that…
… while Bombardier’s windfall is less direct, with NATO announcing the purchase of 10 surveillance aircraft from Saab the following day - which are built on Bombardier jets and should add to the company’s $20B backlog.
GAINERS & LOSERS
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Axia is going hostile on Plaza Retail REIT (PLZ-U), making a $1.2B bid that sent shares up 11% - with the asset manager arguing PLZ’s discount to NAV is forcing property divestments to fund CapEx.
With First Capital in April, Slate Grocery in May, and now this potential deal - it’s clear that there’s demand for retail REITs right now. Unsurprising, considering the relative resilience the category has shown…
… which is slowly being reflected in public valuations, with NAV discounts narrowing since Choice (CHP-U) kicked off this wave of M&A.
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