GDP was largely flat in July, in line with preliminary estimates…

… on zero growth in both goods and services GDP. At the sector level, results were mixed…

… with strength in construction and utilities offsetting weakness in manufacturing, retail trade, and resource extraction.

Momentum is building in construction, which has recovered all lost ground since August of last year and posted its highest growth in two years - thanks to a large hospital project in Ontario…

… while the manufacturing decline was the first in the last four months, driven mainly by natural resources - with petroleum refining activity down 6%.

Despite the soft print, early estimates call for a 0.2% recovery in August - with a rebound in mining and retail trade carrying weaker oil & gas extraction.

Right on cue following its dividend suspension, Slate Grocery (SGR-UN) announced it’s going private in a US$2.3B deal, representing a 13% premium to the pre-strategic review price…

… and adding to the growing list of REIT take-privates we’ve seen this year.

Plaza Retail REIT (PLZ-UN) looks like it could be next, with Axia making a hostile bid in July and indications that other buyers are circling - which comes during a period of improving fundamentals…

… that could enable the Board to demand more value for unitholders. We’ll see how it plays out, with Morguard (15% owner) already indicating support for Axia’s bid…

… while Plaza’s founders (near-20% total ownership) have naturally remained quiet during the review.

AutoCanada (ACQ) was up 4% after initiating a strategic review of its collision business, which management believes isn’t fully reflected in the share price. While the segment is small at ~3% of revenue…

… it’s grown much faster than the company’s core dealership operations…

… runs at structurally higher margins…

… and has plenty of room to scale in a highly fragmented Canadian market.

ACQ grew its collision business to nearly 40 locations through M&A, buying at an average of 6-8x EBITDA - which would translate to an EV of $112-149M if applied to the platform today…

… which approaches $200M if you assume the platform deserves some multiple expansion. Larger comps like Boyd Group (BYD) have commanded 13x historically, slightly above where ACQ trades…

… so if it isn’t looking to get big, a sale makes sense from both a valuation and strategy perspective - given scale is the only way to unlock operating leverage.

Sangoma Technologies (STC) jumped nearly 40% after agreeing to go private in a $289M deal, a price tag that values the company at ~1x sales…

… which feels reasonable, with revenue declining in each of the past three years…

… resulting in margin pressure, given the company’s cost base is largely fixed (operating deleverage).

With 27% of shares outstanding entering support agreements and continued operational challenges, we suspect this bid is the best and final.

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