Toronto's main stock index jumped on Friday as shares of Astral Media soared on news that BCE Inc will buy the media company for C$3 billion. The parent of Bell Canada said on Friday it has agreed to acquire Astral, its largest content provider, in a deal to lock up more of the programming carried over its media platforms and expand its presence in French-speaking Quebec.
Shares of Astral jumped 33.9 percent to C$48.55. BCE fell 1.1 percent to C$39.64. The news comes on the heels of other recent take-over stories including Neo Material Technologies, which soared last week after Molycorp said it would buy the rare-earth processing company in a C$1.3 billion deal.
Viterra is also the focus of buyout talk with Swiss trading house Glencore planning a three-way carve-up of Canada's biggest grain handler with privately owned Richardson International and fertiliser producer Agrium, according to an industry source. "We like to see these deals. From Neo Materials to Viterra to Astral Media. What does this tell us? It tells us that valuations have gotten too cheap, there's a lot of excess cash," said Barry Schwartz, portfolio manager at Baskin Financial Services.
"You've got low interest rates so it's cheap to borrow money; credit is flowing again. In that situation we're just scratching the surface in terms of take-overs." The Toronto Stock Exchange's S&P/TSX composite index finished the day up 41.14 points, or 0.33 percent, at 12,496.96, with five of its 10 main sectors higher. It slipped 0.05 percent for the week.
The blue chip S&P/TSX 60 index rose 3.08 points, or 0.44 percent, to 710.74. Fred Ketchen, director of equity trading at ScotiaMcLeod, said take-over news tends to put some buying interest into the broader market. "When you get a takeover bid in one area or sector you wonder is this a takeover fever that is rebuilding. There is money around," he said. "It does show the interest is there and the trend is there."
Groups leading Friday's gains included the index's heavyweight materials, energy and financial sectors as investors felt better about the broader economic outlook, while oil prices were higher. Elsewhere, key stocks on the upside included fertiliser companies. Shares of Potash Corp and Agrium rose 6.6 percent and 3.2 percent, respectively, after data indicated that North American inventory levels for potash tightened for the first time since October 2011. Large miners like Potash and Mosaic have been scrambling to cut output for months as farmers and dealers had stalled purchases of the crop nutrient, leading to fears of a decline in the price.