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WHAT'S ON TAP
HOT OFF THE PRESS
Saputo sells UK division for $1.9B
After its $540M Argentina divestiture, Saputo (SAP) announced the £988M sale of its UK business - which represents roughly 7% of company revenue…
… and has faced margin pressure in recent years on a weaker product mix, inventory write-downs, and segment restructuring.
Assuming a normalization in segment profitability (14% margins), the transaction is priced around 10x EBITDA - in line with where SAP currently trades…
… so the deal looks good in my view, given it lets management recycle capital into its core North American operations and hit the buyback.
Manufacturing sales rise to $79B
Manufacturing sales of $79B in June rose slightly, beating estimates on gains in most categories - with chemicals and transportation leading the way again…
… which helped offset a 14% drawdown in petroleum products on lower oil prices. Similar dynamics played out in inventory, where transportation offset petroleum to drive a 0.6% build…
… while the continued rise in unfilled orders was driven by a 2% increase in aerospace product backlog.
In wholesale sales the gain was more pronounced at 3%, with a 26% increase in farm equipment and an 8% bump in agricultural supplies leading the way.
ON OUR RADAR
With the Andrew Peller and Boralex deals closing Friday, we figured it’s a good time for a pulse check on Canadian M&A activity - where the number of take-privates YTD is tracking ahead of 2024 and 2025…
… which were already elevated relative to historical norms, as private capital took advantage of valuations that didn’t rebound as fundamentals did post-COVID. That dynamic has let buyers take bigger swings…
… as evidenced by the $2.5B Jamieson and $1.2B Info Services deals, which won’t be the last if Canadian small/mid cap names can’t get the capital they deserve from public markets.
GAINERS & LOSERS
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High Liner (HLF) rose 8% on the back of its Q2 results, which beat small on revenue thanks to continued growth in both price and volumes…
… and crushed on profit, with $8M of tariff refunds and another $28M coming in Q3. Even without these recoveries, management expects to deliver Y/Y EBITDA growth…
… but the windfall will support leverage reduction towards their sub-3x target by year end.
It also skews HLF’s valuation, with the subsequent $20M bump to consensus estimates for NTM EBITDA compressing the multiple by a full turn.
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