A quick look at the biggest business stories this week
Stephen Poloz, the Bank of Canada’s governor, is warning that Canada’s economy could miss even scaled-back expectations in the early part of this year, and that the bank could implement extraordinary measures to fight the slump triggered by a collapse in oil prices. In talks with the U.K.’s Financial Times, Poloz’s comments come days before the March 31 release of GDP figures for January, which will give Canadians the first official glimpse of how the economy has been doing in 2015. Though Poloz and many other economists have said lower gas prices would boost consumer turnout, offsetting some of the damage to oil exporters, he suggested that may not work for Canada this time.
Stephen Harper is undoubtedly hoping that this year’s round of tax cuts and expanded family benefits will make Canadians feel richer as they approach a fall election, but a report from the Bank of Montreal suggests this may not be so. The Harper government’s strategies will put some $4.5 billion into Canadians’ pockets this year, but provincial austerity budgets will eat up about three-quarters of that. Provinces like Ontario, saddled with a $12.5-billion budget deficit, may need to lean on taxpayers or face the wrath of credit-rating agencies. With this in mind, it is likely that a large chunk of the money given will be taken by provincial budgets in need of fast cash.
…a large chunk of the money given will be taken by provincial budgets in need of fast cash.
The electronics store Future Shop shut down on Saturday, March 28, closing 66 of its stores and converting the other 65 to Best Buy outlets. This is just the latest in a string of electronic store closures, including most recently all 14 Canadian Sony stores. With online shopping growing in popularity and the need for expert advice waning, actual stores are quickly becoming irrelevant to shoppers looking for new tech. With this change in need for electronic-focused stores, Best Buy has now turned to appliances as one of its major outputs, hoping that they can survive the shift away from hands-on buying.
UnitedHealth Group, one of the U.S.’s biggest health insurance companies, is looking to up its pharmacy benefits management business with a $13 billion acquisition of the Catamaran Corporation. In an all-cash deal announced on Monday, March 30, UnitedHealth will pay $61.50 a share for Catamaran, a 27 per cent premium over the March 27 closing price of $48.32 a share. The acquisition of Catamaran represents a big investment outside of the company’s core insurance business. Catamaran, which is based in Schaumburg, Illinois, will be combined with UnitedHealth’s pharmacy services business, OptumRx. Catamaran manages more than 400 million prescriptions each year on behalf of 35 million people — or about one in every five prescription claims in the United States. The combined company will face off against other big pharmacy benefits managers, including Express Scripts and CVS Caremark.
In related news, Teva Pharmaceutical announced on Monday, March 30 that it had agreed to acquire Auspex Pharmaceuticals, a developer of drugs that treat people with movement disorders, for about $3.2 billion. Teva will pay $101 a share for Auspex. Including debt, the deal is worth $3.5 billion, and has been approved by both companies’ boards. Based in Jerusalem, Teva is the biggest maker of generic drugs in the world. Auspex, based in La Jolla, California, does not have any products for sale yet, but is developing several drugs that focus on the central nervous system to treat disorders like Huntington’s disease, tardive dyskinesia, and Tourette syndrome.