Microsoft to buy LinkedIn for $26.2 bln

Microsoft Corp agreed to buy LinkedIn Corp for $26.2 billion in its biggest-ever deal, combining the software giant’s fast-growing cloud services business with the world’s largest online network for professionals.

Craig Kielburger: Why The World Needs You To Let Your Kids Fail

It’s the most privileged children whose parents have the means to leave the training wheels on throughout life, who learn that obstacles are like switches that can be turned off. So the less fortunate are more likely to be misunderstood, or written off as lazy and further marginalized.

Read more: Free the Children, We Day, Me to We, Local Issues, Socially Conscious Living, Economy, Employment, Impact News

“An evil person came here”: Florida gun store owner

The owner of a Florida gun store where gunman Omar Mateen bought his guns before killing 49 people over the weekend says the man purchased the weapons legally. Rough Cut (no reporter narration).

Closing in on Falluja

Iraqi forces and militia members close-in on Islamic State-held Falluja as Iraq investigates allegations that Shi’ite militiamen helping the army had executed dozens of Sunni Muslim men fleeing the city. Deborah Lutterbeck reports.

Quebec aims to finalize $1B Bombardier CSeries deal by end of June

MONTREAL — The Canadian province of Quebec expects to finalize an agreement to invest $1 billion in planemaker Bombardier Inc’s CSeries program by the end of June, Premier Philippe Couillard said Monday.

“Our objective is to finish it by June 30,” Couillard told reporters on the sidelines of an international conference in Montreal. “I think that’s realistic. Things are progressing well.”

Couillard said a deal with Bombardier could be reached even if separate talks with Canada’s federal government are not completed by the end of the month. Quebec and Bombardier want the the federal government to match the province’s $1 billion investment in the narrowbody jet program, but talks have dragged on amid governance concerns by the country’s Liberal government over the plane-and-train-maker’s dual class share structure.

“It’s up to them (Canada) to negotiate with Bombardier. Our deal is going forward. We are going to formally sign the agreement very soon,” Couillard said.

“And we’ll do our first payment very soon.”

Couillard could not say whether the first payment of $500 million would be made before the Farnborough International Air show, which starts in mid-July.

“It would be ideal,” said Couillard of paying an installment before the show.

Couillard said the terms of the federal and Quebec deals with Bombardier would need to be complementary but not necessarily the same. While Quebec has agreed to invest in the now money-losing 110-150 seat CSeries planes, media reports have said Canada wants to invest in Bombardier Inc’s parent company.

“They can be complementary, they don’t have to be absolutely identical,” Couillard said of the deal’s conditions.”But they have to be in-synch. They have to work with one another.”

Thomson Reuters

Penn West Petroleum stock soars 40 per cent after company sells one of its ‘jewels’

Penn West Petroleum Ltd. was upgraded to outperform from underperform at Raymond James after announcing the sale of its Saskatchewan assets, including those in the Dodsland Viking area.

Analyst Jeremy McCrea also raised his price target on Penn West shares to $3 from 75 cents, telling clients the $975 million transaction marks a definitive step toward shifting the focus away from the company’s debt situation, and toward more constructive conversations around its performance in the Cardium oil play.

“Meaningful solutions cannot be achieved through half measures,” McCrea said in a research note. “In the case of Penn West, the full measure solution of its debt overhang was the sale of one of its jewels – its Dodsland Viking.”

The company stock was trading at $1.64, up 40.5 per cent on the Toronto Stock Exchange at 3.31 p.m. ET.

The analyst considers this the right move for Penn West, noting that it’s been a consistent performer in the Cardium, and its success in the Saskatchewan Viking bodes well for the Alberta Viking lands.

With the sale of the Saskatchewan assets, along with Slave Point and various other Alberta assets in the second quarter, Penn West will cut its debt to below $600 million.

McCrea noted that its debt-to-PDP (proved-developed-producing reserves) ratio falls to 33 per cent, which is well below the industry median of 51 per cent.

The analyst believes lenders will be very comfortable with this level, as they typically look for a figure below 60 per cent.

While some may consider Penn West’s debt-to-cash flow ratio of 3.9x for 2017 relatively high, McCrea pointed out that it fails to capture the company’s low decline profile of roughly 19 per cent. That, combined with a renewed capex program, should allow Penn West to grow much easier, and reduce that debt-to-cash flow figure further into 2018.

OECD flags housing correction as Canada’s biggest risk and urges tighter rules

OTTAWA — Canada’s housing regulations should be further tightened and regionally targeted to help cool real estate markets that are booming in some of its major cities, a report from the OECD recommended on Monday.

A disorderly housing market correction, particularly in Toronto and Vancouver, remains the main domestic downside risk to Canada’s economic outlook, the Organisation for Economic Co-operation and Development said.

Vulnerabilities related to housing and high household debt are still increasing, though at a slower pace, the report found.

Canadian authorities have taken steps to shore up the housing market, but further regionally focused measures should be considered, it said.

The Canadian government has acted five times since 2008 to clamp down on heated housing markets, most recently in December 2015.

But policymakers are challenged by the need to prevent certain housing markets, such as those in Toronto and Vancouver, from becoming overheated without further depressing slower activity in commodity-sensitive regions.

“We recognize it’s a complex market with different situations going on,” Finance Minister Bill Morneau told reporters.

Morneau said the government was looking closely at the impact of a number of factors in the housing market, including demographics, supply issues and foreign investment.

The Bank of Canada warned last week that the rapid pace of home price increases in Toronto and Vancouver was unlikely to continue.

Targeted measures could go beyond the changes to capital requirements in regions with high price-to-income ratios that are already planned by Canada’s financial regulator to make capital requirements more responsive to market developments, the OECD said.

It cited New Zealand as an example where policymakers have put lower caps on loan-to-value ratios in the hot Auckland market.

On the whole, the OECD sees Canada’s economy growing 1.7 per cent this year and 2.2 per cent next year, unchanged from its downgraded forecasts released earlier this month. It had previously forecast 2 per cent growth in 2016 and 2.3 per cent in 2017.  

© Thomson Reuters 2016

Is Walmart playing chicken with Visa in rejecting cards?

TORONTO — There is speculation in retail and financial circles that Walmart’s decision to stop accepting Visa at the retailer’s Canadian stores is merely a bargaining tactic aimed at securing a better fee arrangement from the credit card giant.

But if the plan to bar one of the country’s largest credit cards from Walmart sticks, it would be unpleasant news for Canada’s banks that share in the fees levied on each credit card transaction.

“I think it would have some [impact],” Jason Mercer, an assistant vice-president and analyst at Moody’s Investors Service, said after the surprise weekend announcement that Walmart would begin phasing out acceptance of Visa cards across the country next month.

Another industry source calculated that there could be some $82 million in interchange fees at stake for the Canadian banks that issue Visa cards. It’s not material, but it’s not insubstantial either, and it could cause the banks to put pressure on Visa to head back to the negotiating table and cut a deal to lower fees charged to the retailing giant, this person said.

Interchange fees paid by merchants on each credit card transaction — and shared by the banks that issue the cards, credit card processors, and the credit card networks like Visa and MasterCard — have come under increasing scrutiny in recent years by retail groups and politicians who fear they ultimately drive up the cost of goods for consumers.

In late 2014, after a series of negotiations, the fees charged to retailers in Canada were voluntarily reduced in a move that kept the government from entering the fray and regulating the interchange rates set by credit card networks.

But retail and consumer groups have continued to complain that the rates in Canada outstrip those in jurisdictions including Australia and parts of Europe.

On the weekend, Walmart shocked even seasoned industry analysts by announcing that the retailer would no longer accept Visa in Canadian stores, with a countrywide rollout beginning July 18 in Thunder Bay, Ont.

In a statement, Walmart said the fees applied to Visa credit card transactions in Canada were “unacceptably high,” and the retailer was unable to negotiate an acceptable fee it needed to keep its own costs in check.

Walmart Canada pays more than $100 million in fees each year to accept credit cards including Visa, MasterCard, American Express, and Discover, according to the statement.

The weekend announcement from Walmart prompted Visa to issue a statement, which defended the fee it offered as “one of the lowest rates available to any merchant in the country.” The credit card network said Walmart’s decision would have a “negative impact … on loyal shoppers” across the country.

Visa is not the first credit card company to feel the effects of a retailer taking a hard line on costs.

Last year, American Express learned its cards would be cast out of wholesale retailer Costco. The relationship between Costco and Amex was first severed in Canada in late 2014 when the credit card company and the retailer could come to terms when it came time to renegotiate their 15-year-old arrangement.

A Canadian retail analyst, who spoke on condition of anonymity, says more tussles are likely to emerge as retailers grapple with thin margins that are being further pressed by fierce competition including online shopping alternatives.

The analyst pointed to troubled companies such as clothing retailer Aeropostale, which announced in May it would be closing all its Canadian outlets as it sought bankruptcy protection in the United States, as evidence of the serious challenges facing the industry right now.

Mercer, the Moody’s analyst, said although banks would be affected by a long-term suspension of the use of Visa cards in Walmart — which intends to continue accepting debit and the other credit cards previously accepted — the spending patterns of Walmart customers could soften the blow.

A portion of Walmart customers tend to carry balances, and make less frequent purchases that generate the interchange fees shared by credit card companies and banks, he explained.

“I would suggest that these customers are more likely to use their card as a financing rather than a payment vehicle… As I understand it, people who carry a balance use their card less for transactions,” Mercer said.

The “prime” customer for a bank credit card is known as a “transactor,” he said, describing this segment as cardholders who pay their bill in full every month and then go on to make more purchases the following month.

“This is where the majority of interchange revenue is generated,” said Mercer.

Four of Canada’s five largest banks issue Visa cards, while Bank of Montreal issues only MasterCard.

Royal Bank of Canada and Toronto-Dominion Bank also issue MasterCard credit cards, while Canadian Imperial Bank of Commerce has a relationship with MasterCard through its association with President’s Choice Financial. Bank of Nova Scotia, which issues Visa and American Express cards, acquired the Sears Financial MasterCard portfolio from JP Morgan Chase Bank last year.