Toronto Legal Blog

Business and commercial: CannTrust halts cannabis production

One of the country's major cannabis producers has stopped production amid allegations by Health Canada officials that the company was producing product illegally. The business and commercial world was sent reeling recently as CannTrust's market shares plummeted and the company voluntarily halted production at its headquarters in Vaughn, Ontario. The company is accused of growing cannabis at its Pelham, Ontario location between Oct. 2018 and this past March -- in rooms that were apparently unlicensed to do so.

The company has set up an independent committee to look into allegations of rule-breaking at the Pelham facility. Company shares have dropped 40% as a result of this recent allegation by Health Canada.  A former CannTrust employee apparently blew the whistle on the company saying that CannTrust was following Health Canada rules for a few months, then decided to move in its own direction.

Mergers and acquisitions: Transat snubs second bidder

A second bidder for one of Canada's major airlines has withdrawn its bid. On the mergers and acquisitions news front recently, Group Mach has withdrawn its offer for Transat A.T. since the company didn't acknowledge its offer despite it being higher than Air Canada's bid. Group Mach offered $14 a share, while Air Canada's offer stands at $13 per share, or $520 million.

Transat has chosen not to entertain the offer put forth by Group Mach despite the fact that agreement between Air Canada and Transat stipulates that Transat can entertain other offers of at least $14 per share plus a $15 million break fee for Air Canada. Transat shareholders vote on the Air Canada proposal currently on the table, which is on Aug. 26. Air Canada has the opportunity to match any potential competing bids for the airline.

Gold prices perfect atmosphere for mergers and acquisitions deals

What's happening in the gold market lately could mean a lot of dealmaking is in the works. Mergers and acquisitions could be on the upswing in Canada's gold mining sector as gold prices continue to soar in the country. Yet on the eve of this news, many companies' stocks were trading down by more than 2%.

Gold has recently been trading for about US$1,400 an ounce -- the highest it's been since 2013. The Canadian dollar is worth far less today, but Canadian investors have lots to gain when it comes to the gold market. Some gold company CEOs reckon that if gold prices remain at their current levels, they will stand to gain millions of dollars. It's likely the current market will entice investors to gold. 

Mergers and acquisitions: Investors straying from foreign market

It seems that foreign investors are staying away from Canada. A recent Statistics Canada report indicated that  these investors reduced their holdings in Canada by more than $12 billion. Apparently, some of this decrease has been attributed to cross-border mergers and acquisitions. This has been the most significant decline since 2015.

As of this past April, non-Canadian investors have reduced their Canadian debt securities by more than $4 billion. By the same token, Canadian investors aren't putting as much money into securing foreign holdings either. As matter of fact, Canadians reduced their foreign holdings by $194 million as of this past April after investing more than $1 billion in March.

Commercial litigation: Consulting firm, feds in contract battle

The owner of a well-known consulting firm is at odds with the government. The primary owner of Ontario-based Bronson Consulting is embroiled in a commercial litigation lawsuit with the federal government and has had his security clearance revoked as well as being at risk of not being able to vie for future contracts with the feds. He pins his current problems on disputing a contract last year that was awarded to another firm.

The company given the contract -- VF Worldwide -- which won the contract for providing services for visa applicants to Canada, bills the federal government directly for its services. In addition to the $15 million it receives from the government, the firm bills applicants about $80 million a year for these services. In the meantime, Bronson Consulting claims its bid was ranked above any others. The company claims the federal government killed the contest and awarded the contract to VF.

Mergers and acquisitions: CN has new 3-year profit goal

The head of the nation's major railway is thinking about business deals in the wake of the corporation's profit goals for the next three years. The CEO of Canada's CN Rail is thinking big when it comes to mergers and acquisitions -- particularly acquisitions -- as CN has upped its profit goals from its original 10% per share growth goal. CN purchased the shares of a trucking company this past March as the first step in its new plan.

In addressing investors recently, the company chief said CN plans on playing offensively in business in the next three years, getting more involved in the mergers and acquisitions realm and centering on what he called organic growth. CN tried to pick up eastern Canada's largest container in May but fell short to a company out of Singapore. But CN hooked up with a Hong Kong outfit to open a container business elsewhere in Canada. 

Business and commercial: Canada, U.S. relations on solid ground

According to a leading stateside politician, the relationship between Canada and its nearest neighbour is healthy and vibrant. On his latest trip to Canada, U.S. Vice-president Mike Pence said even though trade problems threatened the friendship of the two countries a year ago, the relationship between Canada and the United States has never been stronger. This assertion bodes well for business and commercial ventures for both countries.

Pence made the visit to solidify trade with Canada and Mexico after President Donald Trump removed tariffs on Canadian steel imports. A new trade deal between the trio of countries was signed this past November. The new deal is meant to replace the North American Free Trade Agreement (NAFTA). Prime Minister Justin Trudeau said his talks with Pence centred around ratifying the new deal that Pence expects to be passed by Congress sometime this year.

Things looking bright on the mergers and acquisitions front

With most analysts predicting the economy will continue on an upswing, many business professionals are getting ready for some deal making ventures. A recent survey of executives in Canada say they are primed for embarking on some mergers and acquisitions this year and moving into 2020. In fact, more than 75% of those surveyed say they see these mergers and acquisitions coming within 12 months.

With expected increases in earnings, increased availability of credit and a promising stock market outlook, entrepreneurs are expecting corporate business growth. Talent and technology are also leading the way for additional mergers and acquisitions this year. Most Canadian companies are expecting to see a 10% growth in revenue moving into the next year.

Business and commercial: Air Canada poised to scoop up Transat

The corporate world is soaring regarding recent rumblings that one of Canada's major airlines is poised to add another under its wing. Recent business and commercial news in Canada has it that Air Canada has made a bid to purchase Transat to the tune of $520 million despite Transat's more than $24 million in losses it suffered last year. Many analysts believe that it's a deal that would benefit both companies.

The merger would increase Air Canada's fleet while reducing competition in leisure travel flight. When Transat began showing signs of problems, a number of corporations began courting the company, among them Quebecor, FNC Capital, and Onex, which recently purchased West Jet for $5 billion. But experts believe the best deal for employees and future growth would come from the merger of Air Canada and Transat. In fact, the stocks in both companies soared amid the prospective amalgamation.

Mergers and acquisitions: Two insurance giants join forces

Things don't always go as planned when one company links up with another. In recent mergers and acquisitions news in Canada, one of the nation's most well-known and respected insurance companies -- Desjardins -- acquired State Farm and things haven't been all smooth sailing. Employees and higher-ups in both companies soon realized it takes time to smooth out any rough spots.

Each company had its own set of values and different cultures according to a recent talk given by Desjardins' senior vice president. Both companies' values were similar, yet different with Desjardins putting emphasis on being pragmatic, while State Farm was fuelled by leadership and relationships. But most State Farm employees were on board with the merger since nearly all employees made the move with the company.

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