Diversified Royalty Corp T.DIV

Opinion on BMO Air miles purchase on DIV

[Divies]

Q: Hi There

Is the recent acquisition of Air Miles by BMO a positive, negative or neutral transaction for DIV?

Thanks Robert

Asked by Robert on March 13, 2023

 

5I RESEARCH ANSWER:

It is likely positive, but will ultimately depend on what BMO plans for it down the road. All of DIV's rights and royalties remain intact, and AirMiles remains current in its payments to DIV. Certainly having the division owned by a stronger entity is a net positive in the short term, but at this time we are not sure if BMO plans any changes to the program. But the agreement on royalties will transfer to the new owner, and we BMO is not buying AirMiles to shut it down, more so to compete with other bank-sponsored programs. 

[Tommy123]

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[Divies]

The market is not always right.  Time will tell, but if you read their financials, DIV is doing very well. I don't think the net loss is significant at all as I was a non-cash impairment loss, with no impact on cash flows.  " net loss in Q4 2022 and the decrease in net income for the year ended December 31, 2022, were primarily due to the non-cash impairment losses"