Business

Stocks in action: Great West, Cenovus, Hertz, Starbucks, HDFC Bank

Here is a selection of announcements that have moved (or will move) the prices of these companies:

(Come back to read us from time to time
so as not to miss an update)

Great West

The American branch of Great-West Lifeco (GWO.TO, $36.58) on Monday announced the closing of the multi-billion dollar deal to acquire the full-service retirement business of Prudential Financial.

The US$4.45 billion (US$B) acquisition strengthens the Winnipeg-based company’s presence in the US retirement market through its subsidiary Empower, which is based in Denver, Colorado.

With this acquisition, Empower’s platform will have more than 16.6 million participants and 71,000 workplace savings plans, and its assets under management will reach approximately US$1,400 billion.

Great-West Life President and CEO Paul Mahon said the strategic transaction advances the company’s value creation priorities and accelerates its growth.

According to him, Empower and its customers will benefit from the company’s vastly increased presence and capabilities, which strengthens its leadership position in what he says is “the largest retirement market in the world”. .

The company calculates that Empower’s contribution to Great-West’s bottom line is expected to grow 30% by the end of 2023 as a result of this transaction.

Cenovus

Cenovus Energy (CVE.TO, $23.33) announced on Monday the suspension of its crude oil price hedging operations and warned that it expected significant losses from its existing risk management program for the first trimester.

The company is one of many oil producers that uses a hedging strategy to protect against sudden price declines.

But in recent months, West Texas Intermediate’s benchmark barrel price has surged, making hedging a losing game.

Cenovus said it expects to post a realized loss of about $970 million on its risk management positions for the three months ending March 31. It expects losses for the current quarter attributable to hedging to be approximately $470 million.

The company believes that its balance sheet and liquidity position are now healthy enough to no longer need the hedge.

Cenovus said it plans to close out most of its open risk management positions in the price of WTI crude oil in the next two months.

Hertz

The American car rental company Hertz (HTZ, US$22.70), which wants to expand its offer of electric vehicles, announced on Monday a partnership with Sweden’s Polestar, from which it plans to buy up to 65,000 cars, six months after a first mega-order of Tesla vehicles.

“Availability is expected to begin in Spring 2022 in Europe and late 2022 in North America and Australia,” the two groups announced in a statement. No amount has been disclosed for this order. In October, Hertz said it wanted to offer a large fleet of electric vehicles to its customers.

The rental company then announced an order for 100,000 Teslas by 2022, which had raised the title of Elon Musk’s company on Wall Street. However, an imbroglio ensued, Tesla having subsequently claimed that the contract had not yet been signed. Hertz had placed itself at the start of the pandemic under the protection of the bankruptcy law, from which the company emerged in July.

The rental company, whose financial health was already weakened, had been decimated by the fall in rental car reservations following the measures taken to stem the spread of the COVID-19 pandemic.

Starbucks

The acting boss of Starbucks (SBUX, US$86.30) Howard Schultz has announced the suspension of the company’s stock buyback program, which is facing attempts to create a union in several coffee shops in the United States.

“This decision will allow us to invest more of our profits for the benefit of our employees and our stores, the only way to create long-term value for all stakeholders,” continued Mr. Schultz in a letter addressed to the Starbucks employees, customers and shareholders. The announcement comes as more than 150 Starbucks across the United States have called for a vote on forming a union.

The move follows a vote to unionize at two cafes in Buffalo, New York, last December, a first for directly-operated establishments in the United States. Proponents of unionization have accused management of seeking to undermine their efforts. Mr. Schultz, who has served as executive director twice before this new assignment, said unions were not necessary if companies adequately addressed the concerns of their employees.

Last October, Starbucks announced to its investors that it wanted to spend 20 billion dollars for the payment of dividends and the repurchase of shares by 2025. The Seattle group had reaffirmed this objective in mid-March. The repurchase of shares by a company makes it possible to reduce the number of shares in circulation, the objective being to raise the unit price of the share.

HDFC Bank

India’s largest private bank, HDFC Bank (HDFCBANK.NS, INR $1,656.80), will absorb its parent company, which specializes in home loans, to form a giant in the sector weighing $237 billion, the two establishments announced on Monday.

In a context of rising interest rates which is putting mortgage applications under pressure, HDFC Bank will absorb Housing Development Finance Corporation (HDFC). This operation will be one of the largest mergers ever carried out in India. The assets under management of the two entities amount to 339 billion dollars.

“The son has grown up and is going to acquire his father’s business. That’s what’s going on here,” HDFC boss Deepak Parekh told a press conference. According to him, the operation will facilitate access to “affordable” loans for buyers of real estate with low or average incomes. With 68 million customers, HDFC Bank is currently India’s largest private bank.

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