U.S. markets were closed on Thursday for the Thanksgiving Holiday. Toronto was up 0.2%.
Alcanna continues to rise and was up 2.45% today.
The Boston Pizza units were up 4%. This may have been driven by Ontario’s decision to cap the fees that the likes of Skip the Dishes charges them.
Bombardier and its preferred share BBD.PR.C were each up over 4%.
CRH Medical jumped 8.6% despite not issuing any news.
I note that September Retail Trade in Canada was up 4.6% versus September of last year. That seems rather amazing given the higher unemployment. Presumably this is due in large part to the various government programs designed to keep money flowing to unemployed people during the pandemic. It could also be due to some changes in consumption patterns. People can’t spend on travel so employed people had more money to spend in retail stores. People are also spending less in restaurants which frees up cash for other spending including liquor store sales. These government assistance programs appear to be vastly more generous than what is happening in the U.S.
After the close, the Melcor REIT put out a press release indicating it had met to consider FIRM Capitals’s proposal that Melcor Developments take the REIT private. They indicated they will consider the matter further at their upcoming regularly scheduled meeting and said they are open to value-enhancing suggestions.
The REIT has about 13 million units that trade publicly. At $5.00 per unit that has a value of $65 million. At the $8.70 price suggested by FIRM, it would cost Melcor Developments $113 million to buy out the public unit holders. With assets of 2,029 million, Melcor Developments could probably do that if it wanted to. Possibly they would consider that the experiment (or experience) in having the REIT trade separately has not worked out all that well. But Melcor Developments is a conservative company. They might hesitate to take on the added debt and to spend cash to do this. And they might consider $8.70 to be too generous at this time.
Another option would be for Melcor Developments to sell off most or all of its share on the REIT. But that probably only makes sense if they can get a good price. They could continue to manage the REIT without owning much of it. But they would probably have to allow the REIT the right to find a new manager if it wanted to.
It’s interesting to see that there has been no indication that the Melcor Developments Board has met to consider FIRM Capitals suggestion.
The REIT’s Board appears to have a reasonable degree of independence from the Melton family. But the REIT certainly can’t force the parent Melcor Developments to do anything. And if anything had to go to a vote then Melcor Developments and the Melton family can defeat any REIT Board proposal that they don’t agree with.
Overall while these sorts of outsider agitator actions often do result in action, they also often fizzle to nothing. At $5.00 the REIT is good value and it might be worth buying some on speculation that something could happen to boost the share price and that in any event it’s probably a decent investment even if nothing happens.