Commodity Channel Index
|Bid||226.84 x 800|
|Ask||227.27 x 900|
|Day's Range||220.25 - 227.33|
|52 Week Range||173.26 - 275.13|
|Beta (5Y Monthly)||0.91|
|PE Ratio (TTM)||18.13|
|Forward Dividend & Yield||2.36 (1.06%)|
|Ex-Dividend Date||Mar 25, 2020|
|1y Target Est||344.64|
The Canadian government has issued new guidance that revises how fast freight trains carrying dangerous goods can go.The new orders, announced by Minister of Transport Marc Garneau on April 3, slow down the speeds of what Transport Canada calls "higher-risk key trains" during the winter months, with new speeds prescribed if temperatures fall below -25°C. The orders also direct the railways to improve maintenance and inspection practices by updating current industry rules governing track safety and addressing the movement of dangerous goods in Canada. Freight trains are considered key trains if they have one or more loaded tank cars of dangerous goods that are toxic by inhalation or if they contain 20 or more tank cars containing dangerous goods. Higher-risk key trains carry crude oil or liquefied petroleum gases in a continuous block of 20 more tank cars or 35 or more tank cars dispersed throughout the train, according to Transport Canada. The orders, which are effective immediately, are in response to several recent incidents that involved derailed trains that carried railcars hauling dangerous goods. Transport Canada restricted train speeds following a February 6 derailment of a Canadian Pacific Railway Limited (NYSE: CP) train near Guernsey, Saskatchewan, but it revised the speed restrictions later that month. Another train derailment involving a CP train also occurred on December 9 near Guernsey.While the Transportation Safety Board is still investigating both incidents, the new guidance revises what defines higher-risk key trains and it asks the railways to slow down train speeds between November 15 and March 15. The former guidance defined higher-risk key trains as unit trains where tank cars are loaded with a single dangerous goods commodity moving to the same point of destination, or trains that include any combination of 80 or more tank cars containing dangerous goods.The new restrictions are as follows: Type of train Speed limit of train in metropolitan areas Speed limit of train in areas where there are track signals Speed limit of train in areas where there are no track signals Higher-risk key trainsMarch 16 to November 14 30 miles per hour (mph) 50 mph 50 mph (previously 25 mph per Feb. 16 guidance) Higher-risk key trainsNovember 15 to March 15 (new category) 25 mph 40 mphOR 30 mph when temperature is -25°C or colder 25 mph Key trains 35 mph 50 mph 50 mph (previously 40 mph per Feb. 16 guidance) Image: Flickr/Marty BernardSee more from Benzinga * 'People Die' if US-Canada Medical Trade Stops, Pharma Hauler Says * Truckstop And FreightWaves Partner To Provide Relief To Trucking Providers * American Trucking Associations: 'The Second Quarter Is Going To Be Terrible'(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Canadian Pacific (CP) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.
Teck (TECK) provides operational update for Q1 and withdraws financial guidance for the current year on slowing production amid coronavirus crisis.
The Canadian railways say they will have the network capacity available to handle an anticipated surge in volumes once the coronavirus pandemic plays out and consumer patterns shift back to normal.Speaking at the virtual BMO Capital Markets investor conference last week, executives with Canadian National Railway Comapny (NYSE: CNI) and Canadian Pacific Railway Limited (NYSE: CP) said they have adopted measures that will enable them to respond quickly to any volume surges later this year.Rail observers have said that the Class I railroads have a tendency to struggle to respond to sudden surges in rail demand because it takes some time to get assets, power and crews in order, especially if the railroads have reduced power and crews in response to a downturn."At this point, I don't know what the rebound will be – whether it will be fast – but the [situation is] so volatile, that if people can leave their homes and eventually go back to work, in a couple of months, this [situation] could look drastically different," said Canadian National (CN) CEO JJ Ruest on March. 26. Ruest was referring to nationwide recommendations that citizens practice social distancing and minimize trips outside of the home as a means to safeguard them from contracting the novel coronavirus, or COVID-19, as well as provincial orders to stay at home. However, the recommendations have also crippled small businesses, the hospitality industry and retail, among other consumer-oriented sectors.CN has created a plan that lays out how to determine which locomotives and railcars to park and where they should park these assets. By doing so, CN hopes to have these assets ready to respond to any volume rebounds quickly. As railcars come back from an interchange, CN's network centers have lists that detail which railcars to park and where to park them, Ruest said. "We want to do this strategically so that when business comes back for specific commodities or for a specific geography, we will have assets deployed in ways that can [help us] actually respond better," he said. As the coronavirus pandemic plays out throughout North America, CN's roughly 5,000 office employees are working remotely or are using social distancing techniques, Ruest said. About 20,000 employees work in field operations, and CN has adapted policies such as staggered start times and smaller groupings for maintenance work. CN also expanded its rail traffic control from three physical locations to five – Edmonton and Chicago each have two separate locations, while Montreal continues to serve as a rail traffic control center. Each of these five locations have medical personnel on staff, Ruest said. CN has "rightsized" its employee headcount to match volumes, but the railway has people in reserve, Ruest said. CN has closed its training campuses in Winnipeg and Chicago temporarily, and it could slow down activity at its smaller rail yards and repair shops if carload business dwindles. However, service metrics such as train speed and car velocity have improved, although rolling stock was down in March to 100,000 cars compared to 110,000 cars in March 2019, Ruest said. And while Chinese manufacturing appears to be returning, with roughly 90% of large-scale enterprises in operation, with 70-80% of their workers back at their jobs, according to CN"s freight forwarders working in China, one issue will be whether there will be enough demand in the U.S. and Canada to support an anticipated return in container volume in May at the western Canadian ports, Ruest said. Meanwhile, CP CEO Keith Creel said precision scheduled railroading (PSR), an operating model that seeks to streamline operations, will enable the railway to respond quickly to any sudden surge in rail volumes.PSR helps because it allows CP to look at rail productivity at various timetables, including daily, weekly and month-to-date compared with last year, and it helps CP analyze asset use, Creel said on March 24."When you get a feel for those things and you know where the number should be or what your potential is...as soon as you start to see slippage, we have an ability with our measures to drill down to territory-specific, to lane-specific. So, it's not just at a global number," Creel said. In these next several months, CP will continue to retrofit locomotives so that they're more fuel-efficient, Creel said. Right now, the railway is determining which leases and fleets to keep online and which ones to put into storage, he said. "We'll constrain and take resources out so that the supply chain will run faster. And when you run faster, reliably, you'll be able to move more product, and your costs and your margins are going to be protected," Creel said. CP's actions are "a bunch of singles and doubles that we'll do to protect the margins on the downside and [we'll] have the resources in hand and even the willingness of the employees to bounce back when the economy bounces back."CP could lay off roughly 250 employees in the next several months, but it is working with the unions and speaking with workers to help determine how to lay off people in such a way that lessens the blow, both for employees and for the railway, according to Creel. "If I talk about the people side...working with the union – okay, let's talk about what we can do to keep them in here as long as we possibly can, what we can do when the economy bounces back to make sure that our employees are back quicker than they otherwise would be," Creel said. For instance, "What can the employees do working with the unions and with the collective agreements to tweak some of what would be a normal call back time, which is normally 14 or 15 days? How about if we adjust that to make it a 48-hour or 72-hour [call back time]? So, those kinds of discussions are fluid discussions and they're going on today with their union leadership as we try to navigate this thing together. And I think that bodes us well for the bounce back," Creel said.Image: Flickr/Chu Shau-LuenSee more from Benzinga * Hub Group Pulls Earnings Outlook, Builds Cash Position * Logistics Companies Rush In With Services For Supply Chain Stakeholders Battling COVID-19 * Big Logistics Companies Invoke 'Act Of God' Clause In Contracts(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Canadian Pacific (TSX: CP) (NYSE: CP) will release its first-quarter 2020 financial and operating results after the market close on April 21, 2020.
Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) announced today that it has completed the filing of its notice of meeting and management proxy circular for CP's 2020 annual meeting of shareholders with Canadian and U.S. securities regulators. A copy of the proxy materials is available at investor.cpr.ca.
(Bloomberg) -- The Federal Reserve unleashed two emergency lending programs on Tuesday to help keep credit flowing to the U.S. economy amid strain in financial markets that it blamed on the coronavirus pandemic.The central bank is using emergency authorities to establish a Commercial Paper Funding Facility with the approval of the Treasury secretary, according to a Fed statement on Tuesday. The Treasury will provide $10 billion of credit protection from its Exchange Stabilization Fund. Later in the day it announced a Primary Dealer Credit Facility, also with backing from Treasury.The moves follow mounting pressure to act after the Fed’s Sunday evening emergency interest-rate cut to nearly zero and other measures failed to stem market stress as investors reacted to the risk that the virus will tip the U.S. and global economy into a recession.Help Businesses“We heard loud and clear there were liquidity issues,” Treasury Secretary Steven Mnuchin told a White House press conference, referring to the commercial paper facility. “This is critical to American business.”The Fed said it will provide financing to a special-purpose vehicle that will purchase A1/P1 rated commercial paper from eligible companies, and purchases will last for one year unless the Fed extends the program.Its primary dealer credit facility will offer overnight and term funding with maturities up to 90 days. It will be available for at least six months from March 20, at an interest rate equal to the discount rate, which was lowered to 0.25% on Sunday as part of the central bank’s emergency action.“They are doing everything within their powers,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities. “There is a lot of stress in the market and this should help to alleviate that stress. This is a huge shock to the system. More broadly, we are heading into a sharp slowdown in the economy.”Market ReliefThe S&P 500 index, rebounding from the steepest losses since 1987 the day before, closed 6% higher as investors digested the moves as well as bold fiscal stimulus proposals from the Trump administration for as much as $1.2 trillion.Still, strains remain. Three-month euro cross-currency basis swaps have been notably wider than they have been on average this year. Stress was also evident earlier Tuesday when the three-month London interbank offered rate for dollars, a benchmark set daily that underpins swaths of global financial products, recorded its biggest one day jump in over a decade.The steps comes as central banks and governments around the world roll out emergency liquidity measures for markets and economic stimulus programs designed to soften the impact of the spreading coronavirus. A number of economists have said virus-triggered closures and national lock-downs are making a global recession increasingly likely.The Fed on Sunday also announced enhanced dollar swap lines with other central banks and said it would buy at least $700 billion in Treasuries and mortgage backed securities to ensure market functioning and keep credit flowing.“At this point the Fed has dusted off and rolled out the facilities at its fingertips from the 2008 crisis: a backstop for CP and effective access to discount window funding for primary dealers,” economist Julia Coronado, president of MacroPolicy Perspectives LLC, wrote in a tweet.Flight to SafetyIn financial markets, the rush of investors into cash and other safe havens has threatened to deny companies a crucial source of short-term lending. Firms frequently issue commercial paper -- IOUs that generally mature in fewer than 270 days -- to fund everyday expenses, like rent and payroll.The cost of borrowing in the commercial paper market for 90 days spiked an additional 1 percentage point Monday to reach more than 3%, according to Federal Reserve data.Companies that have sought to issue commercial paper in recent days have still been able to, according to a person familiar with the matter who asked not to be named because the transactions are private. But secondary-market trading has been weak, a sign that some dealers may be pulling back, the person added.Crisis-Era Play BookThe new facilities reprise programs the Fed rolled out in the depths of the financial crisis in October 2008 as global credit markets seized up. At the time, companies were even more reliant on short-term lending and the crisis left several industrial giants, including General Electric Co., scrambling for cash.The controversy that surrounded that commercial paper program, and several other facilities implemented during the crisis, however, spurred lawmakers to put greater restrictions on the Fed’s use of emergency lending.Under changes created by the Dodd-Frank Act, the Fed has to secure permission from the U.S. Treasury to purchase commercial paper, and must also report to Congress on the program’s recipients and the collateral that is offered to secure the loans.Despite clearing those hurdles, the step could prove controversial again, with some Democrats likely to call it a bailout for corporations and banks while Americans struggle to pay bills. Some Republicans may also attack it as unnecessary government intervention in the market.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like...
(Bloomberg) -- After twice seeing stocks on Wall Street tumble by the most since 1987 in recent days, market participants are largely averse to calling a bottom to the rout in global equities.Investors are grappling in the dark on earnings estimates as authorities around the world shut down economic activity in an effort to avert a humanitarian disaster caused by the coronavirus. That’s overshadowing moves by economic policy makers to cushion the impact. With volatility expected to remain high, traders are on the lookout for more fiscal stimulus and, most importantly, evidence the outbreak is on the wane.Here are some of the views of investors and strategists:UninvestibleNadine Terman, chief executive officer of Solstein Capital LLC:“When VIX is above 31, we call it uninvestible. The issue is that safe havens like gold or Treasuries can go down just with everything else. What you have to do is be very cautious about going into longs.”Room for De-RatingJPMorgan Chase & Co. strategists including Mislav Matejka:“In order for a more lasting market rally, we believe that we need to see either an exceptional policy response, which has not happened yet, or more directly, we would need to become comfortable that the peaking out in the virus outbreak is at hand. This still seems to be quite far away, and things could get a lot worse before they get better.”On stocks, “we note that markets lost more than half of their initial value during the last two recessions, versus current 20%. In addition, the last three recessions saw P/E multiples of 10.1x, 13.8x, and 10.2x at the low, while current P/E stands at 15.2x, and 14.5x at the recent trough on 12 March. There could be room for more de-rating from here.”Encouraging SignsJean Boivin, Head of BlackRock Investment Institute:“What will it take to stabilize markets? A decisive, preemptive and coordinated policy response is key, in our view. We see encouraging signs on both sides of the Atlantic that such a monetary and fiscal response is underway. The sharper the containment measures taken and the deeper the economic hit in the near-term, the more confident we should be about the rebound after such measures are lifted. We see the shock as akin to a large-scale natural disaster that severely disrupts activity for one or two quarters, but eventually results in a sharp economic recovery.”Mind the CP GapNed Rumpeltin, European head of currency strategy, Toronto Dominion:“The Fed is doing a lot but it has a bit more to do. The dislocations we are seeing in commercial paper markets, for example, is an area that needs to be addressed. That will help ease pressures elsewhere, as we still have plenty of signs of stress, illiquidity, and wide spreads. Beyond the Fed, we are encouraged to see policy responses accumulating. The G7 pledged to cooperate on the virus response while the EU finance ministers are moving clearer in the direction of a stronger fiscal response. There is still some distance to travel, but we are at least on the right track. It may be very difficult to begin pricing in any sort of real recovery until the pace of contagion starts to slow.”Impossible to PredictJon Hill, U.S. rates strategist at BMO Capital Markets:“That the VIX closed above 80 for only the third time in history is deeply concerning. The other two instances were during the global financial crisis in the fourth quarter of 2008. It’s now apparent that we’re in the depths of the Covid-19 financial crisis of 2020, with much left to be written. What comes next is nearly impossible to predict, but escalating fiscal injections and a commercial paper funding facility look to be the proximate policy steps.”Government ActionMark Haefele, chief investment officer at UBS Global Wealth Management:“Governments have started to announce the sort of targeted fiscal policies that the market is looking for -- aimed at helping viable businesses survive the crisis. But to reassure markets in the absence of better news on the spread of the virus, we may need to see a more open-ended commitment from governments to assist companies and individuals facing cash flow problems arising from the Covid-19 outbreak.”Still TemporaryJim Paulsen, chief investment strategist at the Leuthold Group:“Beginning this week, economic reports will most likely start reflecting the negative impacts of the recent virus-related shutdowns. No doubt, the news will get worse, but at least investors will finally be reconnected with fundamental information flow. The fear of bad data is often worse than its reality.”“The essential premise widely believed when this crisis began -- that it would be temporary -- still appears to be its most likely outcome. Markets will still be apt to look beyond the current economic hit if a consensus develops that it is indeed temporary, and the economy will recover. And, stock prices and bond yields will not only increase to reflect a pending recovery but will rise because of a reversal of fears.”Wait it OutEleanor Creagh, market strategist at Saxo Capital Markets:“It is too early to tell whether the health crisis will develop into a more serious and lasting global solvency crisis, or how deep and dark a recession would be. Confidence is frail and the fear of the unknown and prospect of continued aggressive economic shutdowns is enough to keep risk assets under pressure. There will come a time for bargain hunting, but we are inclined to wait it out. Plan for the best and prepare for the worst.”Correlation PanicAltaf Kassam, EMEA Head of Investment Strategy & Research at State Street Global Advisors:“What makes for a panic feel is the speed and broad-based nature of the sell-off, not the absolute levels we have: We’ve seen a higher VIX, a lower oil price, and steeper credit spreads in the recent past, but not all at the same time, and together with the lowest rates ever.”“The more the coronavirus spreads, the more financial markets will continue to sell off. The question now is what more aggressive, coordinated responses policy makers can offer to further support markets considering the underwhelming response to policy action so far.”Peak UncertaintyManishi Raychaudhuri, head of Asia Pacific equity research at BNP Paribas SA in Hong Kong:“Investors don’t have a sense of where the earnings are likely to be -- in fact, those are the most basic variables.”“Possibly we’re living in an environment of peak uncertainty.”Generational MovesJohn Woods, chief Asia-Pacific investment officer at Credit Suisse Group AG:“For as long as we see concern over the policy reaction, it’s far too soon to call an end to this crisis.” Even so, “increasingly I’m of the view that the worst of the damage is behind us.”“The volatility that we have seen in the markets over the last week or so happens only once or twice in a generation.”Confidence CrisisOlivier d’Assier, head of APAC applied research at analytics firm Qontigo:“While it is not yet a financial crisis, it is already a crisis of confidence. When confidence goes, everything goes. It does not matter what ‘rational’ monetary or fiscal measures are hastily put in place, investors simply do not have enough confidence to make a forecast of return and therefore only focus on the risk side of the equation.”No Sign of BottomMark Galasiewski, chief Asia-Pacific analyst at Elliott Wave International:“Before you see a bottom you want to see markets returns diverge across asset classes. Right now, everything seems to be correlated, falling uniformly so there’s no sign of a bottom yet.”(Adds BlackRock Investment, Toronto Dominion)\--With assistance from Cormac Mullen, Shery Ahn, Matthew Burgess, Gregor Stuart Hunter, Abhishek Vishnoi, Ishika Mookerjee, Lilian Karunungan, Cecile Gutscher and Anchalee Worrachate.To contact the reporters on this story: Andreea Papuc in Sydney at email@example.com;Joanna Ossinger in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Christopher Anstey at email@example.com, Cecile Gutscher, Sid VermaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy […]
(Bloomberg) -- Thai billionaire Dhanin Chearavanont often vowed that he would reclaim a lost flagship of his family’s business after being forced to divest its Lotus retail chain to Tesco Plc at the height of the Asian financial crisis in 1998.Dhanin, who turns 81 next month, is about to fulfill that promise, after his Charoen Pokphand Group reached a $10.6 billion deal with the British retailer for a network of more than 2,000 hypermarket and grocery stores across Thailand and Malaysia. The outlets were renamed long ago to highlight the Tesco brand.“This deal is about much more than just money, as Lotus was his baby,” said William Mellor, a co-author of the book “Dhanin Chearavanont: Roots & Vision,” referring to not only the original name but also the brand the group operates in China. “There was no way he was going to let any rival Thai company get in the way of that.”Still, the patriarch, whose family was ranked the world’s 13th richest in a Bloomberg report in August, faces a challenge. He must convince the Thai antitrust agency to approve the deal, even though the CP Group already controls one of the world’s biggest 7-Eleven convenience-store chains and the domestic operations of cash-and-carry specialist Siam Makro Pcl.If the Tesco acquisition goes through, the trio of retailers will have a combined annual revenue of about 695 billion baht ($22 billion), according to a report by Maybank Kim Eng Securities (Thailand) Pcl. That doesn’t include about $17 billion of sales in 2019 at Charoen Pokphand Foods Pcl, which is among the world’s largest animal feed, animal breeding and food processing businesses.Years ago, Dhanin turned around the group’s fortunes that were squeezed by a regional crash set off by Thailand’s devaluation of the baht in July 1997. In the past decade, he’s overseen acquisitions and investments worth more than $32 billion at home and abroad, including the purchase for $9.4 billion of a stake in China’s Ping An Insurance (Group) Co. That deal in 2012 was the biggest-ever overseas investment by a Thai company, according to data compiled by Bloomberg, but is about to be topped by the one with Tesco.“I was forced to sell my beloved baby, Lotus, to repay debt and save the entire group from bankruptcy during the financial crisis,” Dhanin said last week in an interview with the Standard, a Thai online news outlet. “I now have a capability to take it back and develop this baby into something much better.”Enhancing LotusCP Group’s vast business networks such as meat production, technology and logistics will provide “great enhancements” to Lotus’s operations, according to Dhanin, who used the original name. He didn’t respond to a request for comments for this story, but was quoted by the Standard as saying that Thai regulators would clear the deal because the stores operate in a market segment that’s different from the group’s other retail units.Dhanin’s individual net worth is $4.8 billion, according to the Bloomberg Billionaires Index.“The deal will benefit the CP Group in the long term as the group has demonstrated with the acquisition of Siam Makro,” said Sasikorn Charoensuwan, head of research at Phillip Securities (Thailand) Pcl. “The key concern is the regulatory risk that could block the deal.”CP Group wasn’t the only Thai group interested in Tesco’s operations. The group’s bid beat those of the TCC Group, controlled by Charoen Sirivadhanabhakdi, the nation’s richest person, and the Central Group, a retail conglomerate led by the Chirathivat family.CP Group has hired JPMorgan Chase & Co., UBS Group AG and Siam Commercial Bank Pcl to arrange more than $7 billion of financing for the acquisition.Walmart InspirationThe reversal of fortune with Lotus is not the first for Dhanin. In 2013, CP Group bought majority control of Siam Makro from SHV Holdings NV for about $6.6 billion. The group was a founding partner of the cash-and-carry chain’s Thai unit, but divested in 2005 to help with debt repayment.Dhanin founded Lotus Supercenter in 1994, inspired by Walmart Inc. stores in the U.S., he said. Four years later, he sold majority control to Tesco to protect CP Group from bankruptcy, he said.Dhanin has always been fond of the Chinese word for “crisis” because its two characters can mean “risk” and “opportunity,” said Mellor.(Updates with CP Group’s financing mandate in 12th paragraph)\--With assistance from Jeffrey Hernandez.To contact the reporters on this story: Lee Miller in Bangkok at firstname.lastname@example.org;Anuchit Nguyen in Bangkok at email@example.comTo contact the editors responsible for this story: Sunil Jagtiani at firstname.lastname@example.org, Lee Miller, Sam NagarajanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Canadian Pacific (TSX:CP) (NYSE:CP) is proud to announce that its Executive Vice-President and Chief Financial Officer Nadeem Velani has been named Canada's CFO Of The Year™ for 2020. The award, presented annually by Financial Executives International Canada (FEI Canada), PwC Canada and Robert Half, honours senior financial leaders who have made significant contributions to business in Canada.
CALGARY , March 9, 2020 /CNW/ - Canadian Pacific (CP) (CP) is proud to announce that its Executive Vice-President and Chief Financial Officer Nadeem Velani has been named Canada's CFO Of The Year™ for 2020. The award, presented annually by Financial Executives International Canada (FEI Canada), PwC Canada and Robert Half , honours senior financial leaders who have made significant contributions to business in Canada . "Our family of 13,000 railroaders celebrates this accomplishment with Nadeem," said Keith Creel , CP President and CEO.
(Bloomberg Opinion) -- Britain’s largest grocer is heading for the checkout in Southeast Asia with an impressively full trolley. Tesco Plc said Monday it had sold its Thai and Malaysian business to entities linked to Dhanin Chearavanont’s Charoen Pokphand Group for more than $10 billion, a heftier than expected price. It’s a bold bet on billionaire clout. Picking a buyer that already touches most of Thailand’s food chain and in the process taking on a newly revamped antitrust authority isn’t without risk.Tesco joins a long line of international supermarket giants that have struggled to harness the potential of the region’s middle classes. The U.K. company had already retreated from Japan and South Korea, and completed its exit from China last month. But it had soldiered on in Southeast Asia and particularly Thailand, where it operates under the Tesco Lotus brand.Outgoing Chief Executive Officer Dave Lewis was right to sell. The Asian business amounted to a modest 9% of Tesco’s total revenue in the first half of last year. It needed investment and Thailand’s economy is flatlining. Worse, the business was undervalued in a group that trades at close to 8 times forward Ebitda. The sale announced Monday, by contrast, was done at a multiple of 12.5 times – a premium even to Thai retailers. On a day when markets were crashing, Tesco shares were relatively resilient in London trading. Shareholders cheered plans for a 5 billion pound ($6.6 billion) special dividend, and will begin looking toward the next sale, in central Europe.The bigger question may be the chosen buyer. CP Group, already highly indebted, will be betting on Tesco’s juicy property portfolio, plus cost synergies it can reap by pumping its food manufacturing businesses into the target’s supply chain. It will want to do that quickly. Funding the biggest-ever Thai purchase won’t have come cheap, even with rock-bottom interest rates and plenty of banks keen to finance deals.This isn’t the end, though. The Office of Trade Competition Commission has said it could rule against any combination that grabs too much of the market. The regulator, recently restructured, may be keen to seize the opportunity of its first high-profile, consumer-facing case. Thailand’s pro-military government, on the back foot after setbacks including a devastating drought, may also want to bolster its consumer-protection credentials.As ever in antitrust, market share can be understood differently. CP, hoping to keep the figure below 50%, will no doubt argue that its 7-Eleven outlets – plus a cash and carry business, and poultry, shrimp and other agricultural produce — don’t compete with Tesco’s hypermarkets. That’s questionable.Dhanin is Thailand’s third-richest man. That doesn’t hurt in a country where his companies are stock-market heavyweights along with businesses owned by the two other bidders for the Tesco assets: Charoen Sirivadhanabhakdi’s TCC Group and Bangkok-based Central Group, owned by the billionaire Chirathivat family. His desire to take over the chain can’t be underestimated. Dhanin is buying back a business that CP Group founded in 1994 and sold to Tesco during the Asian financial crisis four years later. Tesco is clearly betting the argument will go Dhanin's way – so much so that it hasn’t included a break fee. It may well be right. Supermarkets, though, are a sensitive area for antitrust authorities, especially young ones. Britain’s Competition and Markets Authority last year scrapped J Sainsbury Plc’s plan to buy Walmart Inc.’s Asda and create the country’s largest supermarket chain. Shareholders should hold off cheering until they get delivery. To contact the authors of this story: Clara Ferreira Marques at email@example.comNisha Gopalan at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Canadian Pacific Railway Limited ("CP") (TSX:CP) (NYSE:CP) announces that its wholly- owned subsidiary, Canadian Pacific Railway Company, is issuing C$300 million of 3.05% Notes due 2050, which will be guaranteed by Canadian Pacific Railway Limited.
Issuers sold 5.25 billion euros on Europe's debt capital markets on Tuesday, a day after stocks rallied strongly on hopes of central bank support. UK analytics company Relx raised 2 billion euros of four, eight and 12-year bonds, while U.S. industrial conglomerate Honeywell International, which recently saw a surge in demand for its protective face masks, priced 1 billion euros of four and 12-year bonds.