By James Langton

(August 21 – 09:00 ET) – In what is being dubbed “the largest acquisition in Canadian telecommunications history”, TELUS Corp. is buying Clearnet Communications Inc. for about $6.6 billion. Clearnet has agreed to support the offer, which will see TELUS offer $70 a share for Clearnet, with a choice between $70 in cash or 1.636 TELUS non-voting shares for each Clearnet share. The offer represents a 53% premium. TELUS has entered into lock-up agreements with certain Clearnet shareholders holding more than 86% of the voting shares in Clearnet. After the deal Clearnet shareholders will hold 18.5% of TELUS.

While the telecommunications deal should generate some trading activity, investors will be focused on the U.S. Fed today, with a rate announcement due tomorrow at 14:15 ET. No change is expected, but investors will pay close attention to the accompanying policy statement.

In Canada, retail sales advanced 0.8% in June to $22.9 billion, following a 0.5% gain in May. Economists were expecting another 0.5% rise. StatsCan says the gains of the last two months completely offset the 1.1% decline in April, bringing the level of retail sales slightly above the previous high of $22.8 billion observed in March.

The automotive sector was responsible for all the gains, excluding them, sales increased just 0.4% in June. All other retail sectors were up in June, except for furniture stores. Although the strong numbers indicate the anticipated slowing may be illusory, this result likely won’t ruffle markets ahead of an imminent rate decision.

In Europe stocks are down led by techs and drugs. The FTSE is down 18 points to 6,525. The CAC 40 is off 40 points to 6,554. The DAX is down 56 to 7,176.

In international M&A news, the world’s largest offshore driller, Transocean Sedco Forex Inc., is buying rival R&B Falcon Corp. for about US$8.8 billion in stock and assumed debt. There are reports that Royal Dutch Shell Group may bid about US$1.4 billion for Fletcher Energy. Washington Mutual Inc. is buying Bank United Corp. for about US$1.5 billion in stock.

Overnight in Asia stocks were mixed. The Nikkei dropped 240 points to 16,040. However the Hang Seng added 61 points to 17,501.

In other news, Bombardier Transportation says it will be a member of a consortium that has been selected by the Government of the Republic of Korea to build a rapid transit system linking Kimhae to Pusan. Bombardier will be providing 46 vehicles to the project.