Tilray CEO on beer acquisitions and signs of cannabis legalization in the U.S.

Ben Cousins, BNN Bloomberg

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ks on an upward trend

The CEO of Tilray Brands anticipates creating beer infused with cannabis if the drug becomes legal across the United States. 

Last month, Tilray bought eight beer brands from Anheuser-Busch for US$85 million and followed it up with a deal to take over 100 per cent of cannabis beverage company Truss Beverage Co. from Molson Coors Canada.

“I’m buying these brands too because I think there’s a big opportunity in the beer business and my whole strategy is craft beer,” Irwin Simon, chairman and CEO of Tilray Brands, told BNN Bloomberg in a television interview.

“Upon legalization (in the U.S.) one day, we will infuse these drinks with THC, with CBD, but we’ll have the distribution and we’ll have the brands when and if legalization does happen.”

Cannabis remains federally illegal in the U.S., though 23 states have legalized the drug for recreational use and another 13 have legalized it for medicinal purposes.

U.S. LEGALIZATION?

Last month, the U.S. Department of Health and Human Services recommended easing restrictions on cannabis by reclassifying it as a Schedule III drug, the same category as testosterone and anabolic steroids, rather than its current Schedule I distinction along with heroin and LSD.

For Simon, the move is the latest in a series of steps closer to federal cannabis legalization in the U.S.

“The news last week gives hope that the government will do something,” he said. “I think what’s going to happen, in my opinion. Medical cannabis will be legalized first and they’ll leave it up to each of the states.”

If federal legalization comes to pass in the U.S., Simon said his company will be in a position to benefit.

“Tilray today is well diversified, well positioned and with legalization happening in the U.S., we are set to capitalize on that in a big way too,” he added. 

 

SNC-Lavalin rebrand: Firm changing its name this month

Stéphane Rolland and Christopher Reynolds, The Canadian Press

SNC-Lavalin is changing its name to AtkinsRéalis as it faces an "inflection point" in its 112-year history, according to CEO Ian Edwards, after a tumultuous decade for the engineering giant.

The rebrand follows 11 years marked by trouble with the law, including the Libya corruption scandal that tarnished its reputation and ensnared the highest office of the Canadian government, as well as lacklustre earnings at times.

The company also hopes to shed the costly backlog of big, over-budget rail contracts that has plagued it for years and launch expansion plans after a steady slim-down regimen and, until 2021, declining revenue and headcount.

"Four years ago when I became the CEO, I think we were very transparent: We said there's a part of the company which is excellent, performs really well; there's parts of the company which don't ... We're going to stop doing what's not working, we're going to do more of what working really well," Edwards told The Canadian Press in an interview.

"From here, it's all about growth."

The name change to AtkinsRéalis signifies an "inflection point" for the firm and offers a greater sense of belonging to employees who work for its subsidiaries, Edwards said.

The company sold its unprofitable activities in the oil sector two years ago for a fraction of what it had paid in 2014 and no longer bids on fixed-price construction contracts due to frequent cost overruns, which are typically borne by the contractor.

Last month, less than five years after SNC embarked on a mission to streamline its operations, Edwards told analysts on a conference call the company aimed to blaze a "methodical" trail of mergers and acquisitions starting as early as 2024.

In this week's interview, he said the company will focus on mostly U.S. acquisitions, with two deals "probably" coming next year, followed by more in 2025. “We will start small, and we'll do it very, very step by step. We're not going to go into big M&A," he said.

The hoped-for turning point could mark the end of a long purgatory for SNC investors. The stock has traced a solid recovery since the start of the year, rising more than 75 per cent to top $43 per share. But the price remains at levels comparable to 2012, when questionable practices first surfaced and prompted the departure of former chief executive Pierre Duhaime.

Doubts persist in the financial community that SNC's newfound momentum will continue, particularly given its inconsistent performance over the years, said National Bank analyst Maxim Sytchev. But those worries can overlook the fact the company has a new management team and board of directors, he added.

"While we think that while margin expansion is certainly possible, it is by no means an easy task," he said.

The Montreal-based company said its symbol on the Toronto Stock Exchange will change from SNC to ATRL as of Monday, Sept. 18.

The moniker "SNC" stems from early partners Surveyer, Nenniger and Chênevert, after whom the company was officially named in 1946, with the title later shortened to the three-letter abbreviation. SNC merged with its heavily indebted chief rival Lavalin in 1991.

The company says its new name combines "Atkins" — the U.K.-based engineering firm WS Atkins it bought in 2017 — with “Réalis," a word "inspired by the city of Montreal and the company’s French-Canadian roots," the company said in a release Tuesday.

“'Réalis' also resembles the verb 'to realize' or 'to make happen' which emphasizes our focus on outcomes and project delivery."

The ongoing francophone emphasis is key. Edwards, who hails from the United Kingdom, cancelled an English-only speech in 2021 in the wake of controversies over unilingual anglophone CEOs' serving atop several Montreal-based companies.

Asked if the identity shift might mark a break with the firm's Montreal history, Edwards smiled.

"You know, we acquired Atkins. So it's not like a reverse," he said.

"We're kind of hoping that the 'Réalis' part of the name put those fears to bed ... This is absolutely staying a Quebec-based business with a head office in Montreal. Because there's no plans to move."

This report by The Canadian Press was first published Sept. 12, 2023.

POSTMODERN MANICHAEISM

TKO Group, which houses WWE and UFC, begins trading on the New York Stock Exchange

Michelle Chapman, The Associated Press

The UFC logo is shown on a fighters hand during UFC Fight Night at Rogers Arena in Vancouver, Saturday, September, 14, 2019. THE CANADIAN PRESS/Jonathan Hayward

Shares of TKO Group, the new company that houses WWE and UFC, opened at US$102 per share in their first day of trading on the New York Stock Exchange on Tuesday.

Endeavor Group Holdings Inc. has closed its previously announced deal with World Wrestling Entertainment Inc. The pairing of WWE with the company that runs the Ultimate Fighting Championship creates a $21.4 billion sports entertainment company.

In a presentation after the deal was announced in April, the WWE and Endeavor said that they will cross-promote to drive brand awareness and deepen penetration of their overlapping fan base of more than 700 million UFC fans and 1.2 billion WWE fans worldwide.

Endeavor has a 51 per cent controlling interest in the new company. Existing WWE shareholders hold a 49% stake.

"With UFC and WWE under one roof, we will provide unrivalled experiences for more than a billion passionate fans worldwide,” Ariel Emanuel, CEO of Endeavor and TKO Group, said in a statement.

Jefferies analyst Randal Konik likes the combination of UFC and WWE.

“We like the assets of UFC and WWE in a world where linear TV is losing market share to streaming, thus live sports content is in high demand,” he wrote in a note to clients. “The upcoming rights expirations for both WWE and UFC present meaningful upside opportunities to the cash flows of both UFC and WWE in their own rights and will further drive EBITDA margins in each franchise incrementally higher.”

TKO Group Holdings Inc. is trading on the NYSE under the “TKO” ticker symbol.

 

PWHL, Canadian Tire reach multi-year agreement on sponsorship deal

BNN Bloomberg

A man cycles by a Canadian Tire store in North Vancouver on May 10, 2012. THE CANADIAN PRESS/Jonathan Hayward

 

The Professional Women's Hockey League has struck a multi-year agreement with Canadian Tire to be the league's first funding partner. 

The collaboration includes sponsorship of the PWHL’s inaugural draft on Sept. 18 in Toronto.

Canadian Tire has committed to allocate a minimum of 50 per cent of its sponsorship dollars towards women’s professional sports by 2026 through its Women’s Sports Initiative.

The company was one of the premier sponsors which permanently ended its relationship with Hockey Canada because of the national sporting organization's handling of sexual assault allegations in the past.

The PWHL was officially introduced on Aug. 29 with an announcement naming its six markets between Canada and the U.S. 

The teams will be in Montreal, Ottawa, Toronto, Boston, Minneapolis-St. Paul, and the New York City area, with play set to begin in January.

This report by The Canadian Press was first published Sept. 13, 2023.

WORKERS CAPITAL

AIMCo opens first Asia office in Singapore, remains leery of China

Amanda Stephenson, The Canadian Press

Alberta Investment Management Corp. (AIMCo) is opening its first Asian office, but the Edmonton-based fund manager says it will steer well clear of China to focus instead on markets with less geopolitical risk.

The official opening Tuesday of AIMCo's new Singapore office marks the first foray into the Asia-Pacific region for what is one of Canada's largest institutional investors, with $158 billion of assets under management as of 2022.

CEO Evan Siddall said AIMCo, which invests on behalf of 17 pension, endowment and government fund clients in Alberta and manages more than 30 pools of capital, has up until recently been missing out on some of the investment opportunities that exist within the large, fast-growing economies of the Asian continent.

"We really are very under-represented in Asia. You know, we have less (investment) in Asia than we do in Alberta," Siddall said in an interview.

"I don't want to look in the rear-view mirror, but we've missed opportunities for sure."

Siddall said the Singapore office opening is part of a larger push by AIMCo towards greater diversification globally. The fund manager — which invests in public and private markets, real estate and infrastructure — already has offices in Calgary, Toronto, London and Luxembourg, in addition to Edmonton, and will be opening a New York City office soon.

But Siddall said Asia is important, as many countries there have economic growth that's outstripping that of the U.S and Europe. 

"In many of them, we just don't have any experience. But on a risk-adjusted basis, we think we can and we should do more (in Asia)," he said. 

"We have no rule of thumb, we have no target ... but it's more than we're doing now, and it's a fair bit more."

AIMCo is lagging behind many other Canadian institutional investors when it comes to establishing a foothold in Asia. A report by the Asia Pacific Foundation of Canada found that between 2003 and 2017, Canadian pension funds invested $25 billion in the region.

The Ontario Teachers' Pension Plan Board has had an on-the-ground presence on the continent for over a decade, and currently has offices in Singapore as well as Hong Kong and Mumbai. The Canada Pension Plan Investment Board also has offices in Mumbai and Hong Kong.

However, Canadian pension funds have also been under scrutiny recently for their exposure to China, particularly given questions around the health of that country's economy as well as its ongoing tensions with the West.

According to a Reuters report earlier this month, the Canada Pension Plan Investment Board has laid off at least five employees at its Hong Kong office as it steps back from deals in China.

Last spring, representatives of the Ontario Teachers’ Pension Plan and the British Columbia Investment Management Corporation told a parliamentary committee studying Canada-China relations that they had paused new direct investment in China because of the increasing risks associated with that country.

Siddall said geopolitics is a significant risk factor in investing, and is the reason AIMCo has chosen to focus on the comparatively safe Singapore market rather than setting its sights on the world's second-largest economy. 

"We're not rushing into China. We basically have almost nothing (invested) in China and really only in passive instruments," Siddall said.

"There are some countries, where the rule of law and corruption are concerns, that we would rather just avoid, frankly." 

After reporting a loss of 3.4 per cent for 2022, AIMCo says its performance has improved significantly in 2023. The fund manager said for the six-month period ending June 30, its net investment return was 4.5 per cent.

This report by The Canadian Press was first published Sept. 12, 2023.

PRICE GOUGING PROFITEERING

Grocer Empire reports Q1 profit and sales up from year ago

The Canadian Press

Empire Co. Ltd. says it earned $261.0 million in its latest quarter, up from $187.5 million in the same quarter last year, boosted by the sale of its 56 gas stations in Western Canada to Shell Canada.

The grocer, which owns Sobeys and Safeway and other banners, says the profit amounted to $1.03 per share for the quarter ended Aug. 5, up from a profit of 71 cents per share a year earlier.

Sales in what was Empire's first quarter totalled $8.08 billion, up from $7.94 billion in the same quarter last year. 

Same-store sales were up 3.0 per cent, while same-store sales, excluding fuel, were up 4.1 per cent.

On an adjusted basis, Empire says it earned 78 cents per share in its latest quarter, up from an adjusted profit of 71 cents per share a year earlier.

The average analyst estimate had been for an adjusted profit of 75 cents per share, based on estimates compiled by financial markets data firm Refinitiv.

This report by The Canadian Press was first published Sept. 14, 2023.

It will take 20 years for feds to break even with Volkswagen, Stellantis deals: PBO

Nojoud Al Mallees, The Canadian Press

The parliamentary budget officer says it will take the federal and Ontario governments until 2043 to break even on their electric-vehicle battery deals with two automotive giants.

The governments announced subsidies for Volkswagen and Stellantis-LG Energy Solution this year to entice them to build electric vehicle battery plants in Canada.

A report released by the PBO on Tuesday says it will take 20 years for government revenues generated from the production of both plants to equal the production subsidies, which will total $28.2 billion by the end of 2032. 

In March, Canada reached a deal that will see Volkswagen get up to $13.2 billion in production subsidies for batteries they produce at a plant planned for St. Thomas, Ont.

Stellantis later asked for a similar deal for a plant it's constructing in Windsor, Ont., and ultimately secured a $15-billion agreement.

The production subsidies for both plants are supposed to mirror incentives offered by the U.S. through the Inflation Reduction Act, a law passed in the summer of 2022 that makes significant investments in the green economy.

The cost of the Canadian production subsidies are to be shared between the federal and Ontario governments, with Ottawa shouldering two-thirds of the cost.

However, the PBO report includes a notable caveat: the analysis does not include any additional government revenue that may be generated from spillover effects in the economy.

That's in contrast to the federal government's five-year break-even calculation for the Volkswagen deal, which includes expected revenue from production increases across the supply chain.

The Liberals have argued that these hefty production subsidies will have larger effects in the economy by encouraging more companies involved in the automotive industry to invest in Canada. That, in turn, would help push the country ahead with its green transition plans.

Industry Minister François-Philippe Champagne said the PBO's findings demonstrate that the agreements are "good deals." 

"While the parliamentary budget officer's report does not capture many of the broader economic impacts on the supply chain, it does highlight, once again, that the investments will generate economic benefits far greater than our government's contribution," Champagne said in a statement published on X, formerly known as Twitter.

The federal government has not provided a break-even estimate for the Stellantis deal.

This report by The Canadian Press was first published Sept. 12, 2023.

International Petroleum to expand Blackrod, Alta. facility

Ben Cousins, BNN Bloomberg

International Petroleum Corp. is expanding its facility in Blackrod, Alta., with the goal of producing oil at a new development project by the end of 2026.

The company says the US$850-million project is expected to produce 30,000 barrels of oil daily by 2028. IPC holds a 100 per cent working interest in the project.

“We took a strategic decision at the start of this year to sanction the Greenfield development project, which hasn’t been done in quite some time,” William Lundin, chief operating officer of International Petroleum, told BNN Bloomberg in a television interview on Tuesday.

“This asset has a significant amount of resource at play.”

A greenfield project refers to a development on bare, undeveloped land.

Lundin said the project is particularly exciting given its proximity to a pipeline leading to Edmonton, which can then connect to shipping options through the Trans Mountain pipeline. 

TRANS MOUNTAIN TIMELINE

The beleaguered Trans Mountain pipeline has faced several delays, including the possibility of another nine months due to a route change. In a worst-case scenario, the pipeline won’t be finished until the end of 2024.

“It might be a little delayed potentially, as we’re hearing some rumblings about that, but I think we’ll be in good time,” Lundin said. “By the time Blackrod comes on, I’m sure that pipeline will be in service.”

With files from Bloomberg News

'We have never consumed more oil in history than we have today': Eric Nuttall

Daniel Johnson , BNN Bloomberg 

Sep 11, 2023

One prominent energy investor says the world has never consumed more oil than it currently does, despite narratives of waning demand.

Oil prices have moved higher over the past three months, with West Texas Intermediate (WTI) oil prices closed at just above US$87 per barrel on Monday, up from a relative low point of about US$67 per barrel in June.

Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, said in an interview with BNN Bloomberg that recessionary fears had been weighing on the demand outlook for oil – despite high consumption of the commodity.

“We've been fighting this narrative about weak demand due to a recession, which we've been hearing about for a year. We have never consumed more oil in history than we have today,” Nuttall said on Monday.

FALLING INVENTORIES

Additionally, OPEC+ has been “curtailing volumes,” Nuttall said, as oil inventories have hit their lowest levels since about 2017 and demand has reached record levels. Earlier this month, oil prices hit $85 per barrel following efforts by OPEC+ to reduce oil output. 

Nuttall, who has been consistently bullish on oil, said he expects falling inventories will keep prices high.

“But because of recessionary fears, you had oil drifting,” he said. 

“As inventories continue to fall this year and next year, we think that will propel oil meaningfully higher.” 

 

NDP wants Suncor CEO to tell MPs why company moving away from focus on clean energy

Mia Rabson, The Canadian Press

NDP MP Charlie Angus will ask the natural resources committee to summon the CEO of oilsands giant Suncor when the House of Commons resumes next week.

Angus said CEO Rich Kruger has a lot of explaining to over his remarks to investors on a conference call in August.

Kruger, who took over as Suncor CEO in April, said the company had a "disproportionate" focus on the longer-term energy transition to low-emitting and renewable fuels. He said it needed to revise its direction toward the immediate financial opportunities in the oilsands.

"Today, we win by creating value through our large integrated asset base underpinned by oilsands," he said on Aug. 15.

Last year, before Kruger took over, Suncor sold off its solar and wind power assets, and expanded its fossil fuel assets by purchasing a new oilsands mine.

Angus, who is the NDP critic for natural resources, called Kruger's comments "shocking" and "irresponsible."

"We've had thousands of people displaced, millions of hectares of forest destroyed, large sections of North America covered in toxic smoke, and as everyone was talking about the urgency of dealing with this, we have Mr. Kruger saying the only urgency he sees is making as much money as possible," Angus said in an interview Monday.

Angus said Kruger needs "to come and explain why they're refusing to accept responsibility or even to take up a role that can reassure Canadians that they have our best interests or any of our interests at heart."

Angus first needs to get the motion on the agenda of the committee, which has not yet set a date for its next meeting. He will then need the support of at least five other committee members for the motion to pass.

Liberal MP and committee member Julie Dabrusin said she needs to discuss the motion with her colleagues before deciding whether to support it, but does feel companies need to show how they will make climate change action a priority.

"Oil and gas is the largest emitting sector in the country and meaningful action to decarbonize is a necessity to reach net-zero by 2050," she said in a written statement.

"The CEOs of Canada's largest emitters must clearly outline how climate change is an economic and environmental priority and be clear with Canadians what efforts they are taking to decarbonize and meet the goals they have committed to."

Environment Minister Steven Guilbeault won't get a vote but has already publicly criticized Kruger's comments.

In an interview with The Canadian Press during last month's Liberal cabinet retreat in Charlottetown, Guilbeault said an oilsands company retreating from clean energy investments proves why the government needs to regulate climate action in the industry.

"To see the leader of a great Canadian company say that he is basically disengaging from climate change and sustainability, that he's going to focus on short-term profit, it's all the wrong answers," Guilbeault said on Aug. 22.

"If I was convinced before that we needed to do regulation, I am even more convinced now."

Later this fall he intends to publish draft regulations setting a cap on greenhouse-gas emissions from the oil and gas industry that will be lowered over time. Companies that exceed the cap will face financial penalties, such as through buying credits from companies that cut their emissions below their capped amount.

The government has not yet said where the cap will be set but the Emissions Reduction Plan seeks about a 40 per cent reduction in emissions from oil and gas production by 2030.

The Pathways Alliance, a consortium of oilsands companies working together to install emissions trapping technology known as carbon capture and storage, has said that is an unrealistic goal.

Oil and gas contributed 28 per cent of Canada's total emissions in 2021, and the oilsands alone account for 13 per cent.

Suncor contributed 17.4 million tonnes, or 2.5 per cent of the national total. Suncor's emissions in 2021 were 50 per cent higher than they were in 2011. Canada's total emissions have fallen six per cent compared with 10 years ago.

Suncor is part of the Pathways Alliance and Kruger said Suncor remains committed to that project.

Suncor did not respond to a request for comment on Monday.