TSX heads for lower open; Valeant confirms US$8.7-billion deal for Bausch + Lomb

TORONTO – The Toronto stock market appeared set for a flat open Monday morning in what could be a listless session with U.S. markets closed for Memorial Day.

However, there was major acquisition activity to digest after Valeant Pharmaceuticals (TSX:VRX) confirmed that it plans to expand its eye-care business by buying Bausch and Lomb for US$8.7 billion in cash.

The Montreal-area company will finance the deal by issuing up to $2 million of new equity, with the remainder paid for with debt.

Valeant stock hit an all time high Friday amid reports that the acquisition was about to go through, hitting $90.17 before closing at $87.02, up $10.18 or 13.25 per cent on the Toronto Stock Exchange.

The Canadian dollar was off 0.03 of a cent to 96.86 cents US amid mixed commodity prices.

Traders also took in another big slide on the Tokyo stock market.

Tokyo’s Nikkei 225 tumbled 3.2 per cent as its export sector was hit with wide-ranging losses amid a rising yen.

The Japanese benchmark has been on a tear, rising 36 per cent since the beginning of the year. At the same time, the yen has fallen steadily against other major currencies in a byproduct of the economic stimulus policies launched this year by Prime Minister Shinzo Abe. He’s embarked on an aggressive campaign to lift consumer prices and encourage borrowing and spending.

As part of that effort, Japan’s central bank is flooding its financial system with money, helping reduce the value of the yen. The yen reversed some of its recent declines Monday after reaching 103 to the U.S. dollar last week.

The TSX finished last week with a modest gain as hopes for a global economic recovery faded somewhat amid a survey on China’s monthly manufacturing pace which showed a bigger-than-expected decline.

Less-than-clear indications from the U.S. Federal Reserve on whether it might scale back its aggressive bond-buying program, dubbed quantitative easing or QE, also caused investors to curb their enthusiasm and New York’s Dow Industrials registered a small loss for last week.

On commodity markets, the July crude contract was off 54 cents to US$93.61 in electronic trading on the New York Mercantile Exchange.

June bullion gained $7.20 to US$1,393.80 an ounce while July copper added a penny to US$3.31 an ounce.

Elsewhere in Asia, Hong Kong’s Hang Seng rose 0.3 per cent, South Korea’s Kospi gained 0.3 per cent while benchmarks in mainland China and Taiwan rose. Australia’s S&P/ASX 200 declined 0.5 per cent.

In Europe, Frankfurt’s DAX and the Paris CAC 40 rose about 0.65 per cent while London markets were closed for a spring Bank Holiday.

In other corporate developments, Catalyst Paper (TSX:CYT) said Friday it has sold its Elk Falls industrial site and related assets to Calgary-based Quicksilver Resources Canada Inc. for $8.6 million.

The site formerly housed a paper and pulp mill which began operation in 1952, was indefinitely curtailed in 2009 and closed permanently in 2010.