One of North America’s most aggressive activist investors has set its sights on Suncor Energy Inc., seeking an overhaul of the company’s board and management team, along with the possible sale of Petro-Canada.
In a letter to Suncor’s board on Thursday, U.S.-based Elliott Investment Management expressed frustration in what it said is a recent decline in performance at the energy producer.
“It is evident that Suncor’s status quo is not working,” Elliott partner John Pike and portfolio manager Mike Tomkins wrote in their letter.
“Shareholders have seen their investment lag behind nearly all large-cap North American oil and gas companies, as Suncor’s share price has remained virtually unchanged since early 2019, even as oil prices have climbed to their highest level in almost a decade.”
Suncor, which was the most valuable Canadian energy company by market capitalization from 2000 until 2018, has been in a slump recently. Elliott’s letter points out the company’s share price has lagged that of its closest oilsands peer, Canadian Natural Resources Ltd., by 137 per cent over the last three years.
The company has also been plagued by a recent spate of operational difficulties — missing its corporate production guidance due to equipment failure and cold weather— as well as significant workplace safety concerns. Since 2014, there have been 12 workplace deaths at Suncor sites, which Elliott said is more than all of the company’s closest peers combined.
In their letter, Pike and Tomkins said all of these problems have roots in what they called Suncor’s “slow-moving, overly bureaucratic corporate culture.”
Elliot Investment Management is a well-known activist investor with approximately US$51.5 billion of assets under management. It has previously targeted large corporations such as AT&T, Hyundai, and Softbank.
It holds a 3.4 per cent economic interest including shares and cash-settled derivatives contracts in the Calgary-based company.
In its letter, Elliott laid out its proposal for Suncor, which includes adding five new independent directors to the company’s board and then undertaking a strategic review of Suncor’s executive management team, including CEO Mark Little.
It also wants Suncor to explore opportunities to “unlock the value” outside of its core oilsands business. Possibilities could include the potential sale or spinoff of Suncor’s Petro-Canada 1,800-location retail network.
Elliott will have done its research and clearly knows other Suncor investors are also unhappy, said Josh Young, chief investment officer and founder of Bison Investments, an oil and gas-focused investment firm based in Houston, TX.
Young pointed out that Suncor cut its dividend by over 50 per cent in the downturn of 2020, while Canadian Natural Resources Ltd. was able to maintain its dividend in spite the market challenges.
“Even if Elliott doesn’t own a lot of the stock, they’ve probably rightly identified that a lot of (Suncor’s) common shareholders would be interested in a change,” Young said.
More activist investment activity in oil and gas sector possible
Young said while activist investors have historically not had a lot of success targeting oil and gas companies, it’s likely that some of them are taking a fresh look at the sector right now given high oil prices and the industry’s positive market fundamentals in the near-term.
“It makes sense that activist investors are getting the all-clear from the market to refocus and go after low-hanging fruit,” he said. “And Suncor is a pretty obvious one — you have to be a big fund to target them, but it’s a pretty obvious target.”
Young added it wouldn’t be surprising to see more activist investment activity in the oil and gas sector, now that the ice has been broken.
“It seems more doable, now that Elliott’s done it,” Young said.
In their letter, Pike and Tomkins said they look forward to engaging with the board, along with their fellow shareholders, and hoped to meet with the board as soon as possible.
Suncor’s share price was up $4.74, or 11.3 per cent, to $46.90 in mid-afternoon trading Thursday on the Toronto Stock Exchange.
Elliott said it believes its proposal for Suncor could result in a share price of $60 or higher, a roughly 50 per cent increase in shareholder value.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
