What You Need To Know This Week — October 24th, 2020
What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
ALTICE AND ROGERS TURN UP THE HEAT ON COGECO AS THEY INCREASE THEIR BID BY $800 MILLION
Altice and Rogers surprised the market this week as they unveiled an improved unsolicited offer for Quebec-based rival Cogeco worth $11.1 billion, representing an increase of $800 million above their original offer. The current offer stands at $150.00 per Cogeco Communications share and $123.00 per Cogeco Inc share, representing premiums of 51% and 56%, respectively. Unfortunately for Cogeco shareholders, the company rejected the lucrative takeover offer, costing shareholders $2.1 billion of lost value. The Cogeco board of directors rejected the premium offer, mainly due to the Chairman Louis Audet’s controlling stake in the corporation, represented by a 66% voting interest but only a 3.3% economic interest (a relic of a time gone by when poor corporate governance was not frowned upon). Cogeco shares fell -8.9% this week on news of the rejection and now trade at a shocking 35.5% discount to the offer. The Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) holds Cogeco shares.
PAYPAL TO ALLOW CUSTOMERS TO BUY, SELL AND SHOP USING BITCOIN
Fintech giant Paypal Holdings announced that it would allow its customers to hold bitcoin in its online wallet and be able to shop using bitcoin with the 26 million merchants on its service network. The news is notable for Bitcoin given Paypal’s size — it has a nearly $250 billion market cap and 346 million active customer accounts. This week, the price of Bitcoin jumped over 13% on the positive development.
CONOCOPHILLIPS TO ACQUIRE CONCHO RESOURCES FOR $13 BILLION
After a brutal bear market, consolidation in the oil patch continues as ConocoPhillips struck a friendly deal to acquire Concho Resources for $13 billion, including debt. The all-share merger was struck at a 15.4% premium, lower than the average M&A control premium but above the low premiums paid recently in oilpatch mergers and acquisitions. Conoco’s counter-cyclical deal represents a continued bet on U.S. shale oil and gas production, specifically in the Permian Basin. Investors were lukewarm on the deal, as Conoco shares declined nearly -5% this week while Concho stock dropped -5.1%.
Notable Insights, Articles, Podcasts, and Tweets
Listen to entrepreneur, angel investor and philosopher, Naval Ravikant talk about reducing anxiety, happiness and cryptocurrency on the Tim Ferriss Show podcast.
Listen to Keith Wu and Julian Klymochko discuss Alternative Investments and Your Investment Portfolio on the TSX Exchange Leadership Series.
Please join Martin Pelletier, Neville Joanes, Julian Klymochko, and Colin Ryan on Thursday, November 12th, for a panel discussion on the Wealth Management industry’s evolution.
Warren Buffett’s great-nephew, Alex Buffett Rozek (the grandson of Warren’s late sister Doris Buffett), launched a SPAC called Yellowstone Acquisition Company.
After getting rejected by both Airbnb and Stripe, Bill Ackman tried and failed to combine his Pershing Square SPAC with Bloomberg.
Interested in a trade with potential 17% annualized returns with no downside? Check out Accelerate’s latest AlphaRank SPAC Monitor.
Beware of growth stocks with sexy stories but no revenue. The average three-year return for companies that go public with no revenue and $1 billion-plus valuations is negative 41%.
The classic mailroom-to-CEO story is still happening today. Rania Llewellyn, now CEO of Laurentian Bank of Canada, started as part-time bank teller at 18. Now 26 years later, she’s its new CEO.
Private equity has come roaring back after a coronavirus-related lull. These days, most of the big leveraged buyouts are just private equity firms buying and selling from each other. These so called “secondary deals” are proof that in private equity, generally, the illiquidity premium does not exist (if one PE firms earns it, then the other pays it), nor make operational improvements (what is left for the third PE owner going to improve?).
