TSX falls as deal news pressures Cenovus, CIBC
By Leah Schnurr
TORONTO (Reuters) - Canada's main stock index pulled back from a one-month high on Thursday as deal-related news pressured shares of Cenovus Energy Inc (CVE.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote).
Cenovus shares had their biggest one-day percentage fall ever, down 13.75 percent at C$15.05, after the Canadian company agreed to buy oil sands and natural gas assets from ConocoPhillips (COP.N: Quote) for C$17.7 billion.
The deal weighed on the overall energy group, which was down 2.6 percent even as oil prices rose. U.S. crude CLc1 settled up 1.7 percent at $50.35 a barrel. [O/R]
The drop in Cenovus' stock showed investors are viewing the deal as "highly dilutive to the shareholders and a company with pretty much a pristine balance sheet is now leveraged to the hilt and very, very, very dependent on higher oil prices to make sure the deal actually works as planned," said Norman Levine, managing director at Portfolio Management Corp.
"So the market is giving, in the short term, a very big thumbs down on it," Levine said.
Shares of CIBC fell 2.9 percent to C$113.78 after it raised its offer for PrivateBancorp Inc PVTB.O ahead of a June deadline. CIBC said it offered about $4.9 billion in cash and stock, up from the earlier $3.8 billion offer.
The Toronto Stock Exchange's S&P/TSX composite index .GSPTSE closed down 78.87 points, or 0.50 percent, at 15,578.76 the day after the index posted its highest close in more than a month at 15,657.63. Five of the index's 10 main groups ended lower on Thursday.
Elsewhere in the financial sector, Toronto-Dominion Bank's (TD.TO: Quote) chief executive officer told shareholders at the bank's annual meeting that it does not have a "widespread problem" with its sales practices, responding to a report staffers were pressured to meet targets. Continued...