Newspaper article The Canadian Press

TSX Adds to Gains amid Major Dealmaking in Drug, Mining, Oilfield Sectors

Newspaper article The Canadian Press

TSX Adds to Gains amid Major Dealmaking in Drug, Mining, Oilfield Sectors

Article excerpt

Toronto stock market up amid major dealmaking

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TORONTO - The Toronto stock market closed with a modest advance Monday with gains spread out across almost all sectors despite disappointing economic news from the world's third-largest economy.

The S&P/TSX composite index added to last week's one per cent advance, up 39.4 points to 14,882.5 as Japan's economy unexpectedly slipped back into recession in the third quarter, contracting at a 1.6 per cent annual pace following a sales tax hike.

But traders preferred to concentrate on the positive, including a wave of merger and acquisition activity.

American Botox maker Allergan reached a friendly deal to be acquired by Irish drug company Actavis in a deal valued at US$66 billion, which trumps a hostile offer by Quebec-based Valeant Pharmaceuticals (TSX:VRX). Allergan shareholders will receive about US$219 in cash and stock.

Valeant's most recent bid was valued at US$53 billion and the company said Monday it couldn't justify matching the Actavis offer. Valeant shares rose $2.93 to $154.40.

Analysts note that conditions -- particularly inexpensive financing -- are currently very favourable for M&A activity.

"Money is cheap, growth opportunities inside of a relatively slow growth economic environment are a little harder to come by and so we're seeing companies pursue growth opportunities outside of the organic kind," said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

Osisko Gold Royalties Ltd. (TSX:OR) and Virginia Mines Inc. (TSX:VGQ) plan to combine their businesses to create a royalty company with revenue from two Quebec operating gold mines. The friendly deal values Virginia Mines of Quebec City at about $479 million, about 41 per cent above its closing stock price on Friday. Osisko shares slipped 56 cents to $14.86 while Virginia Mines jumped 35. …

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