Big Oil Merger, Sales Taxes and Weekend Reading
Merger News
Suncor (SU) is about to potentially merge with Petro Canada (PCA) in an all stock exchange to become the largest energy company in Canada. Should the deal meet Canadian government approval, both companies will trade under the symbol SU. Existing PCA owners will receive 1.28 shares of SU for every share of PCA that they own.
Question for you, what are your thoughts on selling a company that is about to merge with another? I’ve been thinking about selling my PCA shares ever since the big news.
Disclosure: I hold both SU and PCA.
Sales Tax Going up in Ontario!
It seems that Ontario may be going the way of harmonized sales tax (like Atlantic Canada). The Ontario government may say that it’s for the business owners, but in the end, it’s the consumer who will be paying more taxes. When they harmonized sales tax here in NL, everything went up in price. Gasoline, baby clothes, new houses, real estate/lawyer fees and insurance all got more expensive.
This new change in the taxation system may affect other Canadians as well as there are quite a few mutual fund companies based out of Ontario. This may result in mutual funds increasing their MERs.
You can read more about this on Canadian Capitalist.
Weekend Links
One year ago, I explained the differences in Non-Refundable Tax Credits and Tax Deductions.
Four Pillars hosted this weeks Carnival of Personal Finance!
The Financial Blogger lists 3 reasons why investors should not time the market.
Money Grubbing Lawyer has an entertaining article about negotiating in: Leave Emotion out of Negotiation.
The Digerati Life writes about the buy and hold strategy.
Lazy Man and Money lists 7 new rules of financial security.
The Sun’s Financial Diary evaluates Pin vs Signature debit transactions.
Brip Blap tells us that everything will be fine.
Money Smart Life claims that all CEO’s are crooks!
My Dollar Plan explains how to manage money in your marriage.
Generation X Finance lists 5 things we can learn from the market bust.
Frugal Dad shows us the financial impact of having kids early.
9 Comments, Comment or Ping
1. Canadian Capitalist
Thanks FT! Have a great weekend!
Mar 27th, 2009 @ 8:46 am
2. The Reverend
Why are you thinking of selling your PCA holdings? Worries about the merger not going through and a share price impact (a la BCE)? Diversification issue?
Mar 27th, 2009 @ 9:07 am
3. FrugalTrader
Hey Reverend,
PCA is held in my dividend portfolio, after the merger, I’m thinking that SU will keep it’s low payout. In addition, I already own shares of SU in my RRSP and I don’t want to be over exposed to the one company.
Mar 27th, 2009 @ 9:16 am
4. Finance_Addict
Based on SU isn’t PCA trading roughly $3 dollars below it’s eventual selling price? Would you want to wait for that small gap to close?
Mar 27th, 2009 @ 10:58 am
5. Aman@BullsBattleBears
great links to look at!
FT, when you say overexposed, what % of your portfolio would end up being SU shares?
Mar 27th, 2009 @ 11:00 am
6. Millionaireby45
I think it is crazy to have two separate taxes and I think it only makes sense harmonized them. At the same time, I think that they should reduce the harmonized tax by a few percent. This would result in some services/items having higher taxes and some having lower ones and hopefully on average the overall taxes that an individual would pay would remain neutral.
Mar 27th, 2009 @ 11:17 am
7. CanadianFinance
PCA was on my watch list for a Smith Manoeuvre. As SU, the dividends may not fit my plan.
Mar 27th, 2009 @ 11:48 am
8. FrugalTrader
Aman, approximately 5% of my portfolio will be SU after the merger.
Mar 27th, 2009 @ 12:24 pm
9. Dividend Growth Investor
FT,
You could easily sell the shares. However, if you are confident that the deal would go through and the spread is worth it, why not play some merger arbitrage to get top dollar for your holdings?
Mar 31st, 2009 @ 11:47 am
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