|
|
||||
|
|
||||
|
|
||||
|
|
Before diving in, we recently crossed 10,000 Morning Meeting readers. While we’ve only been at it for a year, your support validates the reason we exist: to get you smarter on Canadian markets.
We’ve got a lot more coming in pursuit of that goal, but for now I just want to say thank you for tuning in. Here’s to the next 10,000 🤝.
WHAT'S ON TAP
Xanadu breaks TSX tech drought
HOT OFF THE PRESS
Linamar keeps the M&A pipeline moving
Linamar (LNR) announced a tuck-in acquisition on Friday, adding another $200M in mobility revenue after its $300M US deal late last year.
The two German facilities acquired expand the company’s European footprint…
… and could be a sign of things to come, with management highlighting the region as an attractive source of distressed asset opportunities.
I would particularly point you to Europe as a real key area for that distress because, again, capacitization and they probably don’t work as fast on consolidation or making decisions. So I think there’s a real catalyst over there...
They’ve got the balance sheet to keep executing M&A, with leverage sitting at nearly half of LNR’s target limit…
… and $2.1B of available liquidity. Combined with its exposure to Canadian industry support, continued execution should eventually translate to multiple expansion.
Clarke’s $1B bailout
Unlike the Minto and InterRent takeouts, Clarke’s (CKI) $1.1B acquisition of Ravelin (formerly Slate Office) is a distressed situation - with falling occupancy and increasing leverage…
… pushing the target towards bankruptcy. Clarke CEO George Armoyan’s family office is a secured debt holder, allowing them to dictate restructuring terms - which wipe out equity holders…
… and force conversion on ~$160M of convertible debentures, taking the pro-forma entity’s loan-to-value ratio below 65% (from 94%).
ON OUR RADAR
Xanadu (XNDU) was up 15% in its first day of trading, which broke a five-year TSX tech listing drought. Given photonic quantum computing isn’t easy to understand…
… nearly 90% of the SPAC holders exercised their redemption option, resulting in total proceeds of ~$300M (including a $275M PIPE) - under the up-to-$500M outlined previously. While nascent, the tech seems interesting…
… as it doesn’t require extensive cooling like other solutions (expensive), but with full commercialization still years away - XNDU is a high risk bet on unproven technology.
GAINERS & LOSERS
|
|
||||
|
|
||||
|
|
Lassonde (LAS-A) was up 13% after reporting a big Q4 beat, which came despite moderating revenue growth…
… thanks to continued margin expansion, as the impact of higher volumes and the non-repeat of some one-time costs pushed EBITDA margins above 13% for the first time since 2017.
Management is looking to repeat that margin performance through 2026, which should help keep leverage below 2x - as the company deploys $200M+ of CapEx…
… most of which is funding the construction of its New Jersey facility. If they can execute, there’s room in the multiple - which sits two turns below the long-term average.
INSIDER TRANSACTIONS
| Insider | Company | Value |
|---|---|---|
| Andrew Dahlin | Cenovus (CVE) | $2.1M |
| Karamjit Sandhar | Cenovus (CVE) | $3.2M |
| Geoffrey Burns | Triple Flag (TFPM) | $4.5M |
| Nojan Abrary | Methanex (MX) | $441K |
| Marcel Bourassa | Savaria (SIS) | $2.7M |
| William Brennan | Altus (AIF) | $693K |
| Nick Toor | Tidewater (TWM) | $473K |
| Jacques Martin | iA Financial (IAG) | $110K |
| Justin Trainor | Exchange Income (EIF) | $141K |
Was this forwarded to you? Join 10,000+ investors reading The Morning Meeting by clicking the button below.
