TSX heads for higher open amid major dealmaking, corporate earnings

TORONTO – The Toronto stock market was set to advance Tuesday amid major dealmaking in the pharmaceutical sector and earnings reports from the rail, telecom and mining sectors.

The Canadian dollar dipped 0.03 of a cent to 90.76 cents US.

U.S. futures were positive with the Dow Jones industrial futures ahead two points to 16,373, the Nasdaq futures were four points higher to 3,555.3 and the S&P 500 futures dipped 0.5 of a point to 1,864.

Canadian drug company Valeant Pharmaceutical International Inc. (TSX:VRX) (NYSE:VRX) has teamed with Bill Ackman’s Pershing Square Capital Management in a US$40-billion cash and stock bid for Botox maker Allergan. Under the buyout offer Allergan shareholders would receive $48.30 in cash and 0.83 Valeant share for each share of Allergan. Valeant said it expected the cash portion of the deal to be at least US$15 billion. In a separate filing, Pershing Square said it owns a 9.7 per cent stake in Allergan worth $4.1 billion. Valeant shares shot up 10 per cent in pre-market trading in New York.

Swiss pharmaceutical giant Novartis AG is buying GlaxoSmithKline plc’s cancer-drug business for $14.5 billion, plus up to $1.5 billion more if certain milestones are met, and to divest most of its vaccines business to GSK for $7.1 billion, plus royalties.

Separately, Novartis said it will sell off its animal health division to U.S.-based Eli Lilly & Co. for about $5.4 billion.

The transactions affect some 15,000 of Novartis’ 135,000 employees globally.

On the earnings front, Canadian Pacific Railway (TSX:CP) had $254 million of net income in the first quarter, up from $217 million a year earlier. Net income per share increased 16 per cent year-year, rising to $1.44 from $1.24 in the first quarter of 2013. The Calgary-based company’s revenue also increased, to $1.509 billion from $1.495 billion.

Teck Resources Ltd. (TSX:TCK.B) posted an adjusted profit of $105 million or 18 cents a share, down from $328 million or $0.56 per share in 2013. That was below the 24 cents per share that analysts expected. Revenue also fell more than analysts had projected, dropping to $2.084 billion from $2.33 billion and below the $2.098 billion that had been forecast. Teck also plans to eliminate 600 positions, delay the restart of a B.C. coal mine and cut spending by five per cent.

In the U.S., McDonald’s said first quarter earnings per share came in at $1.21, missing analysts expectations by three cents.

And after the close Monday, Rogers Communications Inc. (TSX:RCI.B) reported that quarterly net income dropped 13 per cent to $307 million or 57 cents per share. On an adjusted basis, the results missed analyst expectations, coming in at 66 cents per share, four cents below the average estimate. Wireless revenues, by far the biggest part of its business, dropped by two per cent to $1.73 billion.

Commodity prices were mixed with the May crude contract in New York down 46 cents to US$103.91 a barrel.

June bullion was up $1.60 to US$1,290.10 an ounce while May copper shed a cent to US$3.04 a pound.