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Bloomberg: Canadian Stocks Have Biggest Weekly Gain in 3 Months on M&A

By John Kipphoff

June 15 (Bloomberg) — Canadian stocks had their biggest weekly gain in three months, on takeover speculation, after uranium explorer UraMin Inc. agreed to be bought by Areva SA, and Total SA was reported to be preparing a bid for Western Oil Sands Inc.

Global demand for energy and metals have helped commodities rise to records amid a takeover boom, boosting Canada’s main stock index, almost half of which is commodity-related, to a record earlier this month.

“There’s a huge amount of M&A and there will be more of it, but it’s unpredictable,” said Rick Hutcheon, who manages about $171 million as chief investment officer at RKH Financial in Toronto. “We’ve got the reserves and we’ve been selling them. There’s a lot of cash around. Why spend on exploration if you can buy them.”

The Standard & Poor’s/TSX Composite Index added 135.42, or 1 percent, to 14,137.41 in Toronto. The benchmark had a weekly gain of 2.5 percent, the best since a 3.2 percent rise in the week ended March 23. The index had dropped 2.3 percent the previous week on concerns that rising bond yields and interest rates would curb profit growth and acquisitions. The index is within 10 points of its June 4 record of 14,146.74.

Uramin advanced 91 cents, or 11 percent, to C$8.85 in Toronto. Areva, the world’s largest manufacturer of nuclear plants, offered to buy UraMin, a uranium explorer in sub-Saharan Africa, for more than $2.5 billion, or $7.75 a share, in cash, Johannesburg-based UraMin said. UraMin’s board supports the bid. Uramin shares have more than doubled in 2007 after uranium prices appreciated more than sixfold in the past three years.

Nuclear Fuel

Cameco Corp., the world’s largest producer of the nuclear fuel, advanced C$2.19 to a record C$59.46. It’s risen 8.2 percent in a week.

Western Oil Sands climbed C$2.41, or 6.8 percent, to C$37.91 for the top gain in the S&P/TSX. La Lettre de l’Expansion reported that Paris-based Total hired Merrill Lynch & Co. to advise on a possible bid for the owner of a stake in Royal Dutch Shell Plc’s Athabasca oil-sands project, without saying where it got the information.

Others interested in Western Oil Sands include Royal Dutch and Texaco, the publication said. Western Oil in February hired bankers to advise it on possible transactions. Total spokeswoman Lisa Wyler in Paris declined to comment. Western Oil Sands spokeswoman Dorreen Miller didn’t immediately return a voice-mail left at her office in Calgary.

Shares of UTS Energy Inc., which has a 30 percent stake in the Fort Hills oil-sands project that Petro-Canada is developing, added 21 cents to C$5.96. They’ve gained 11 percent this week.

Extending Record

EnCana Corp. gained 93 cents to C$70.21, extending a record reached yesterday. Canada’s biggest energy company by market value is developing the Foster Lake and Christina Lake tar-sands projects in Northern Alberta.

Canada’s oil sands contain an estimated 175 billion barrels of oil, second only to Saudi Arabia’s reserves.

Fording Canadian Coal Trust, co-owner of the world’s biggest producer of coal used in making steel, advanced C$1.52 to C$34.01, taking its weekly gain to 12 percent. It was raised to “sector outperform” from “sector perform” this week by Scotia capital analyst Onno Rutten, who forecast a 26 percent increase in 2008 in metallurgical coking coal prices.

Stocks were also lifted today by a report showing that U.S. consumer prices rose less than forecast in May, easing concern inflation will spur higher interest rates in the world’s biggest economy. The U.S, took 87 percent of Canadian exports last year. Stable interest rates also mean that cheap credit, which has supported record buyouts may continue.

Bidding War

Shares of BCE Inc., Canada’s biggest phone carrier, rose 34 cents to C$39.19 after CNBC reported that the company might receive bids as soon as June 26. At least three investor groups are examining making offers for BCE in what would be the biggest takeover of a Canadian company to date. BCE shares have risen by a third since March 28, when it was first reported that U.S. buyout firm Kohlberg Kravis Roberts & Co. was considering a bid.

Rogers Communications Inc., the nation’s biggest mobile phone and cable television company, added 88 cents to C$46.73. It’s up 7.2 percent this week after agreeing to buy five television stations from CTVglobemedia Inc., part-owned by BCE.

A gauge of telephone shares added 1.5 percent.

Aluminum Bid

Alcan Inc. the aluminum maker facing a $27.7 billion hostile takeover attempt by rival Alcoa Inc. rose 53 cents to C$88.69. That’s almost 10 percent above the implied value per Alcan share of Alcoa’s cash and stock bid of about C$80.47 today.

“BCE and Alcan are heavyweights. They can move the market,” RKH’s Hutcheon said. “A couple of more takeovers and the TSX may be at 17,000” by year-end.

Crude oil in New York rose to a nine-month high of $68 a barrel in New York, on concern that U.S. refiners will be unable to keep up with growing gasoline demand. Copper futures climbed for third day in New York and are up 18 percent this year. Gold rose, notching a 1.3 percent weekly gain.

Barrick Gold Corp., the biggest bullion miner, increased 78 cents to C$31.13.

Teck Cominco Ltd., a miner of zinc and copper and a junior partner in the Fort Hills oil-sands project, added 61 cents to C$49.61. It’s also, with Fording, a co-owner of the Elk Valley Coal Partnership, the biggest coking coal miner. Teck has risen 9.5 percent this week.

Measures of materials and energy stocks, which account for 45 percent of the S&P/TSX’s value, rose 1.6 percent and 1.2 percent apiece. They’ve gained 4 percent and 3.7 percent, respectively, this week for the best performance among 10 industry groups in the index.

The following shares had unusual price changes.

Com Dev International Ltd. (CDV CN) gained 20 cents, or 4.1 percent, to C$5.11. The maker of satellite sub-systems posted a second-quarter loss of 2 cents a share. That compares with the 6- cent loss estimated by six analysts in a Bloomberg survey.

European Goldfields Ltd. (EGU CN) added 58 cents, or 11 percent, to C$5.73. The Canadian mining explorer with properties in Europe said it 27 million shares at C$5 apiece, raising C$120 million for itself and C$15 million for an investor, to underwriters led by RBC Capital Markets. The proceeds will be used to fund projects in Greece and Romania.

Barrick Gold Corp. (ABX CN)
BCE Inc. (BCE CN)
Cameco Corp. (CCO CN)
EnCana Corp. (ECA CN)
Fording Canadian Coal Trust (FDG-U CN)
Rogers Communications Inc. (RCI/B CN)
Teck Cominco Ltd. (TCK/B CN)
UraMin Inc. (UMN CN)
UTS Energy Inc. (UTS CN)
Western Oil Sands Inc. (WTO CN)
To contact the reporter on this story: John Kipphoff in Toronto at [email protected] .

Last Updated: June 15, 2007 16:41 EDT

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