Canadian stocks fell for the first time in a week after regulators rejected BCE Inc. (BCE)’s C$3 billion ($3.1 billion) bid to acquire Astral Media Inc. (ACM/A) and data signaled weakening economic growth.
Astral, a Quebec specialty channel provider, slumped 15 percent for the biggest drop in at least 24 years after the Canadian Radio-television and Telecommunications Commission said the deal would place too much market power with one company. BCE slipped 1.4 percent. Niko Resources Ltd. (NKO) tumbled 14 percent after the natural gas producer lowered its full-year production forecast.
The Standard & Poor’s/TSX Composite Index (SPTSX) lost 76.43 points, or 0.6 percent, to 12,389.69 at 12:38 p.m. in Toronto. The benchmark equity gauge is up 1.6 percent this week, on pace for its biggest gain in more than a month. Bank and energy stocks contributed most to declines on the S&P/TSX as all 10 industries retreated.
“The decision by the CRTC yesterday not to allow BCE to buy Astral is not very good news as far as mergers and acquisitions is concerned,” said Stephen Gauthier, a fund manager with Fin-XO Securities Inc. in Montreal. His firm manages about C$600 million ($605 million). “There were also inflation numbers that were below expectations, it shows the Canadian economy is really slowing down.”
Consumer prices advanced less than economists forecast last month, suggesting Bank of Canada Governor Mark Carney doesn’t need to emphasize raising interest rates at next week’s decision. The consumer price index rose 1.2 percent in September from a year ago, matching the August pace, Statistics Canada said.
The central bank’s preferred core rate slowed to 1.3 percent from 1.6 percent in August, the least in more than a year. Economists surveyed by Bloomberg forecast total inflation of 1.3 percent and a core rate of 1.4 percent.
Barrick Gold Corp. (ABX), the world’s largest gold producer, lost 0.3 percent to C$38.25 as bullion headed for the biggest weekly decline since June. Gold futures for December delivery fell 1.3 percent to $1,723.26 an ounce in New York.
Astral lost 15 percent to C$39.56. BCE, Canada’s largest telecommunications company, retreated 1.4 percent to C$42.89.
“Assuming Bell moves on, we don’t see any other party stepping forward to bid on Astral in totality,” said Adam Shine, analyst with National Bank Financial, in a note to clients today. “As to any urgency to scramble a deal together, we’re not convinced anyone needs to move quickly.”
Corus Entertainment Inc. (CJR/B), a rival television media company, sank 3.9 percent to C$22.09 after Shine cut the firm’s rating to sector perform from outperform. He trimmed his one-year price forecast to C$24 from C$26 on forecasts for lower valuations after the CRTC decision.
Canadian Natural Resources Ltd. (CNQ) slipped 1.2 percent to C$30.59 and Cenovus Energy Inc. (CVE) retreated 1.2 percent to C$34.12 as crude declined for a second day. Oil for November delivery dropped 1.9 percent to $90.71 a barrel in New York.
Oil drilling services companies dropped after Schlumberger Ltd., the world’s largest oilfield-services provider, said in its third-quarter earnings report that it expects lower growth in Canada in the coming quarters. Trican Well Service Ltd. (TCW) dropped 3.5 percent to C$13.14 and Precision Drilling Corp. fell 1.6 percent to C$8.05.
Niko, the worst-performing stock in the S&P/TSX this year, sank 14 percent to C$12.05. The company said it will pre-pay $90 million of its $310 million convertible debt due at the end of the year and evaluate options to pay for the rest.
“We believe this update is somewhat disappointing, in particular given our anticipation of further advancement on debt repaying,” said Jared Dziuba, analyst with BMO Capital Markets, in a research note today.
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