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Cenovus to cut up to 25% of combined workforce with Husky Energy after merger – CBC.ca

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The $3.8-billion merger between Cenovus Energy and Husky Energy will result in a trimming of the workforce by as much as 25 per cent, CBC News has confirmed.

“The estimate is that the reductions will be approximately 20 per cent to 25 per cent of the combined workforce, which is about 8,600 employees and contractors,” Reg Curren, senior media advisor for Cenovus, said in an email to CBC News on Tuesday, two days after the merger was announced.

The majority of the job cuts of 1,720 to 2,150 positions are expected to take place in Calgary, where both firms are headquartered.

The new company will operate as Cenovus Energy and will be based out of Calgary.

“As with any merger of this type, there will be overlap and there will be some difficult decisions as we work to create a combined organization best positioned for the future,” Kim Guttormson, communications manager at Husky, said in an emailed statement.

Cenovus CEO Alex Pourbaix said his company’s merger with rival Husky would create a new entity that’s stronger, more resilient and operating with ‘significantly reduced’ risk to market volatility. (Jeff McIntosh/The Canadian Press)

Cenovus CEO Alex Pourbaix said the merger would create a new entity that’s stronger, more resilient and operating with “significantly reduced” risk to market volatility.

His counterpart at Husky, CEO Rob Peabody, said the deal would allow the combined companies to “make better returns in a tougher environment.”

Husky Energy president and CEO Robert Peabody said the two companies have talked about a merger for several years, but discussions picked up in March. (Jeff McIntosh/The Canadian Press)

Analysts generally applauded the surprise Cenovus-Husky hookup for its operational advantages but criticized the plus-20-per-cent premium in the price for Husky.

“The deal does make strategic sense,” said Manav Gupta of Credit Suisse in a note to investors.

“Like U.S. E&P (exploration and production companies), Canadian energy companies also need to come together, cut costs and become leaner to better adapt to lower energy demand in [a] post-pandemic world.”

Both companies are carrying a relatively hefty amount of debt and that’s why joining forces made financial sense. 

While the oilpatch has struggled for many years, this deal is happening in a remarkably unique time in the industry, with many companies bleeding money with historically low oil prices that even turned negative this year.

The oil pipeline and tank storage facilities at the Husky Energy oil terminal in Hardisty, Alta. Husky’s CEO says the combined company will be better able to achieve climate targets, such as the goal to have net-zero emissions by 2050. (Larry MacDougal/The Canadian Press)

Cenovus shares fell by as much as 15 per cent to $4.15 in Monday trading in Toronto before closing down 8.4 per cent at $4.47.

Husky, meanwhile, gained as much as 14.2 per cent to $3.62 before closing up 12 per cent at $3.55

Earlier in 2020, Cenovus and Husky shares had lost 63 per cent and 70 per cent of their value, respectively.

Cenovus expects to find savings of $1.2 billion.

The all-share deal will likely spark more mega-mergers among Canadian oil and gas majors, according to a veteran oilsands analyst.

“This is likely just the start of big deals in Canadian energy land and thus it begs the question of who is next?” said analyst Phil Skolnick of Eight Capital in a report on Monday.

“As seen in the U.S. with the accelerated M&A activity, when there’s one meaningful transaction, there’s likely more to come.”

Several industry observers point to Calgary-based oilsands producer MEG Energy Inc. as the leading potential target, noting Husky’s failed $3.3-billion hostile takeover attempt of its smaller rival two years ago.

The Husky-Cenovus merger calls for Husky shareholders to receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share if the deal is concluded.

Cenovus shareholders would own about 61 per cent of the combined company and Husky shareholders about 39 per cent.

The transaction must be approved by at least two-thirds of Husky’s shareholders but Hong Kong billionaire Li Ka-Shing controls 70 per cent of Husky’s shares and has agreed to vote them in favour of the deal.

The announcement Sunday came just as Calgary’s oilsands companies are about to start rolling out third-quarter financial results, with Suncor Energy Inc. set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.

More Alberta business news:

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Lack of raw materials blamed for slashed supply target of Pfizer's COVID-19 vaccine – CBC.ca

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A lack of raw materials used in the manufacture of Pfizer’s COVID-19 vaccine played a role in the company’s decision to slash its 2020 production target, a spokeswoman told Reuters.

Pfizer has said in recent weeks that it anticipates producing 50 million doses of its COVID-19 vaccine this year. That is down from an earlier target of 100 million doses. Pfizer’s vaccine relies on a two-dose regimen, meaning 50 million doses is enough to inoculate 25 million people.

A company spokeswoman said the “scale-up of the raw material supply chain took longer than expected.” She also cited later-than-expected results from Pfizer’s clinical trial as a reason for the smaller number of doses expected to be produced by the end of 2020.

The spokeswoman added that the modifications to Pfizer’s production lines are now complete and finished doses are being made at a rapid pace.

The Wall Street Journal was the first to report the news. It reported that an unnamed person directly involved in the development of the Pfizer vaccine said “some early batches of the raw materials failed to meet the standards,” which caused production delays.

Pfizer applied in November for emergency authorization for its COVID-19 vaccine from U.S. regulators. U.S. officials said they expect its vaccine to get regulatory clearance this month. The U.S. government expects its first allocation of the vaccine to include 6.4 million doses, with more to follow.

Regulators in the U.K. have already authorized Pfizer’s vaccine for use in that country.

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Pfizer slashing COVID-19 vaccine doses from 100M to 50M due to ‘production quality issues’ – 680 News

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Pharmaceutical giant Pfizer is now expecting to ship only half of its COVID-19 vaccines it originally planned for by the end of this year because of supply-chain problems.

A company spokesperson tells the Wall Street Journal that the scaling up of the raw material supply chain took longer than expected.

Pfizer and it’s German-based partner hoped to roll out 100 million vaccines world-wide by December 31; that plan has now been reduced to 50 million.

The company still expects to ship more than a billion doses in 2021.

In mid-November, Ontario’s Health Minister Christine Elliott said that Canada is expected to receive millions of doses in the coming months.

The country is expected to receive four million doses of Pfizer’s vaccine and two million doses of Moderna’s between January and March.

Subsequently, Elliott said that Ontario will get roughly 1.6 million doses of Pfizer’s vaccine and around 800,000 of Moderna’s for proper distribution.

On Wednesday, Pfizer and BioNTech won permission for emergency use of their COVID-19 vaccine in Britain. The move allowed Britain to become one of the first countries to begin vaccinating its population.

In a series of tweets, Canada’s Health Minister, Patty Hajdu, described the United Kingdom’s decision to authorize the Pfizer’s vaccine as “encouraging.”

The federal government has been facing criticism on vaccines since Prime Minister Justin Trudeau admitted last week that other countries with domestic vaccine production are likely to inoculate their citizens first before shipping doses to Canada.

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3 Cheap TSX Stocks I’d Buy for the 2021 Bull Run – The Motley Fool Canada

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Canadian equity markets have made a robust recovery after bottoming out in March, with the S&P/TSX Composite Index rising over 55% and is trading just 3.4% lower from its all-time high. The strong upward momentum could continue next year, driven by the pent-up demand as the vaccine’s availability inches closer. Goldman Sachs projects the global real gross domestic product (GDP) to grow by 6% next year.

Meanwhile, the pandemic took a severe toll on some of the Canadian stocks. Despite the last month’s recovery, these companies are trading at a discount and are offering excellent buying opportunities for long-term investors. So, here are the three TSX stocks that you should buy for higher returns during the 2021 bull run.

Air Canada

Amid the pandemic, the governments worldwide had imposed travel restrictions, severely impacting the passenger airline industry, including Air Canada (TSX:AC). With several of its aircraft grounded, Air Canada’s passenger volumes fell 96% and 88% in the second and third quarters on a year-over-year basis. It incurred net losses of $2.45 billion and burnt $2.54 billion of cash during the same period.

Meanwhile, the buying in Air Canada’s stock has been returning slowly amid the vaccine hope, with its stock price rising over 75% since the beginning of November. The vaccine could prompt the governments to ease restrictions, potentially boosting its lucrative international travel. Further, Air Canada has taken several initiatives to lower its expenses and cash burn, which is encouraging.

Although it could take a couple of years for the passenger demand to reach its pre-pandemic levels, Air Canada, a market leader, could bounce back more quickly. Despite the recent surge, Air Canada is still trading over 45% lower for this year, proving an excellent buying opportunity for long-term investors.

Enbridge

The oil prices have surged since Pfizer made the encouraging announcement on the vaccine on November 9, as investors grew optimistic about life and business returning to pre-pandemic ways. The surge in oil prices has brought some relief to the energy sector, including Enbridge (TSX:ENB)(NYSE:ENB), which rose over 13% since the beginning of November.

The rise in oil prices could boost its liquid mainline throughput driving its financials. Further, Enbridge continues to make advancements with its $11 billion secured growth projects, with approximately $5 billion left to spend by 2022.

The company’s management hopes that these projects and organic growth within its various segments to generate 5-7% DCF-per-share annual growth until 2022. So, the company’s growth prospects look healthy.

Besides, at 7.8%, Enbridge’s dividend yield looks attractive. Given its stable cash flows and healthy liquidity position, its dividends are safe. The company has consistently hiked its dividends for the past 25 years at a compound annual growth rate (CAGR) of 11%.

Cineplex

The pandemic-infused lockdown and the following restrictions have weighed heavily on Cineplex’s (TSX:CGX) financials. The company, which owns and operates 164 theatres across Canada, has incurred net losses of $98.9 million and $121.2 million in the second and third quarters. Its high cash burn and rising debt levels are also a cause of concern.

Cineplex has currently opened all its 164 theaters but operates them at a limited capacity, as per the local government restrictions. Meanwhile, the vaccine could increase customer footfalls and also aid the company to operate at full capacity. Further, many distributors have shifted the release dates of major movies to next year, which could contribute to the next year’s increased footfalls.

Cineplex has also taken several initiatives to reduce its expenses and cash burn, which is encouraging. Its valuation also looks attractive, with its forward price-to-earnings standing at 17.4.

Meanwhile, if you are looking for high-growth stock to invest, the following report would be of great help.

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The Motley Fool owns shares of and recommends Enbridge. Fool contributor Rajiv Nanjapla has no position in the companies mentioned.

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