Good morning!

Stelco’s U.S. owner and the Canadian government are clashing over layoffs, while Toyota is standing by Canadian production.

Meanwhile, Fairfax’s restaurant group Recipe Unlimited has a Greek deal on the menu.

Let’s get into it.

MARKET RUNDOWN

Yesterday’s Close

Concerns about AI companies’ debt sent investors into safe-haven U.S. government bonds; lower yields and a weaker dollar supported gold, helping miners lift the TSX 1.6%, touching a 3-week high.
The S&P 500 recovered early losses as investors sought shelter in healthcare and consumer staples stocks.
Crude oil jumped 3% on a larger-than-expected drop in U.S. oil stockpiles and hopes that cheaper tanker shipping would boost overseas demand for American crude.

BRIEF OF THE DAY

Stelco’s U.S. Owner Pushes Back as Canada Threatens Forced Sale Over Layoffs

The backdrop: Stelco is a major Canadian steel producer with two steel facilities in Hamilton and Nanticoke, Ontario, supplying industries like construction, autos, and appliances. In 2024, U.S. steelmaker Cleveland-Cliffs (NYSE:CLF) acquired Stelco in a deal worth ~$3.4B.

Why jobs are being cut: In late September 2026, Stelco announced plans to lay off up to 500 workers, stop production in parts of its Hamilton plant, and concentrate production in Nanticoke. Parent company Cleveland-Cliffs says that 50% U.S. tariffs on Canadian steel have made Stelco’s exports less competitive, while competition from imported steel is hurting sales in Canada.

Why Canada is intervening: Federal approval of Cleveland-Cliffs’ takeover of Stelco came with binding 5-year commitments by Cleveland-Cliffs to maintain unionized employment levels and the vast majority of non-union jobs. Industry Minister Mélanie Joly says the layoffs breach those commitments.

Canada’s warnings: Joly has threatened court action to enforce the commitments and seek financial penalties. On Wednesday, she escalated the warning: the Canadian government could also seek a court order forcing Cleveland-Cliffs to sell its Canadian assets.

The latest: On Thursday, Cleveland-Cliffs CEO Lourenco Goncalves called the Canadian government’s threats “bullying and harassment.” He says the layoffs are temporary, denies breaching the commitments, and warns that forcing an asset sale could discourage future foreign investment in Canada.

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💼 Why this matters: Canada is actively trying to attract foreign capital (as highlighted by last month’s Canada Investment Summit) and protect domestic industrial jobs as U.S. tariffs hit Canadian industry. Stelco shows why those goals can clash when business conditions worsen: the government wants foreign companies to keep investing and employing people in Canada, while those companies want flexibility to adjust operations and cut costs when market conditions deteriorate.

HEADLINE RECAP

In Canada

Cleveland-Cliffs CEO calls Canada’s Stelco threats “bullying”, warns of impact on foreign investment (BBG)
Toyota reaffirms commitment to Canadian auto manufacturing as U.S. rivals cut production (BBG)
Canadian manufacturing sales rise 1.5% month-over-month in August, led by metals and chemicals (FP)
72% of Canadian business leaders want Canada to wait for a better U.S. trade deal, even at an economic cost, KPMG survey finds (TL)
Canadian SMEs’ growth ambitions rise to 78% from 67% last year despite trade uncertainty, BDC survey finds (TL)
Canada commits $100M to advance Nova Scotia offshore wind projects (G&M)
Canada commits $50M to Canadian Food Innovation Network to boost food sector technology adoption (BK)
Carney urges Albertans to remain in Canada ahead of Oct. 19 referendum (BBG)
British Columbia's proposed 57.5% top income tax rate raises competitiveness concerns (BBG)
Supreme Court to hear appeal related to Canada’s single-use plastics ban (G&M)
Banks should have kill switches and IDs for AI agents, global watchdog says (TL)

DEALS WITH CANADIAN PARTIES

M&A & Investments

Recipe Unlimited: Fairfax Financial’s (TSX:FFH) Ontario-based restaurant subsidiary Recipe Unlimited, which owns brands like Swiss Chalet and Harvey’s, agreed to acquire Greek restaurant group Evergood from CVC-owned Vivartia at a reported enterprise value of €300M (~$477M).
- Scotiabank advised Recipe Unlimited; Rothschild & Co advised Vivartia.
Cohere: The Toronto-based enterprise AI company signed a letter of intent to acquire Aisle, a Prague-based startup that uses AI to identify and fix software vulnerabilities; Cohere plans to make Prague its global AI cybersecurity hub, while Aisle’s CEO would lead the new Cohere Cyber division.
Nine Mile Metals (CSE:NINE): The Toronto-based mineral explorer expanded its Nine Mile Brook exploration project in New Brunswick by acquiring 66 mineral claims across two blocks totalling 14.42 km².

VC & Growth Equity

Molagri: The Toronto-based biopesticide developer raised US$5.2M (~$7.4M) in seed funding led by Convective Capital, with participation from Y Combinator, Superorganism, Robinhood Ventures, and Paul Graham.
Sprout Family: The Toronto-based family benefits platform for employers raised $3.55M in seed funding led by BDC’s Thrive Venture Fund, with participation from Accelia Capital, MaRS Investment Accelerator Fund, StandUp Ventures, and The51.

ECM

Brookfield Corporation (TSX:BN): The Toronto-based investment firm announced a $150M bought-deal offering of preferred shares at $25 each, paying 5.65% through 2031 and resetting every 5 years thereafter, subject to a 5.65% floor.
- RBC, BMO, CIBC, National Bank, Scotiabank, and TD were joint bookrunners.
Canadian Banc (TSX:BK): The Toronto-based fund which invests in Canada’s Big 6 banks expects to raise ~$60M through its overnight offering, with preferred shares priced at $10.35 and Class A shares at $15.40.
- National Bank led the offering.

DCM & Credit

Vancity: The Vancouver-based credit union priced a $225M offering of subordinated notes due 2036, paying 6.185% until 2031 and a floating rate thereafter.
- BMO, Cedar Leaf Capital, CIBC, Desjardins, National Bank, RBC, and Scotiabank were joint bookrunners.
Province of British Columbia announced an additional $1.05B of its existing 4.70% bonds due 2037, bringing total outstanding to $2.55B.
- CIBC led the offering, with BMO and RBC as joint lead managers.

BAY STREET TRIVIA

Which Canadian bill denomination was discontinued partly because it made illicit cash too easy to transport?

FOR THE GROUP CHAT

💼 Stelco’s Owner Versus Canada