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Recent Trends in Cross-Border Canada-U.S. M&A Activity

Aug 5, 2016

Osler's analysis of Canada-U.S. cross-border M&A over the past five years shows growth in the strong ties held between Canadian and U.S. financial markets. The following charts each focus on a unique aspect of this relationship.

Canadian Cross Border M&A Activity with a US Counterparty

It is evident from recent growth in M&A activity across the Canada-U.S. border that investment and deal-flow between the neighboring countries is strong. Aggregate Canada-U.S. cross-border M&A in the last twelve months rose to $187.5bn, up 14% from the twelve months prior. Overall, recent M&A activity between Canada and the United States is weighted towards outbound investment from Canada into the United States - between 2010 and 2016, 64.7% of Canada-U.S. cross border activity involved the acquisition of a U.S. target by a Canadian buyer. However, with H1 2016 seeing the Canadian dollar reach a 13-year low against the US dollar, it is reasonable to expect that cross-border deal flow attributable to inbound investment from the United States to Canada will grow.

Canadian Cross Border M&A Activity with a US Counterparty - Breakdown

Canada-U.S. cross-border M&A shows a weighting towards mid-size deals, with an average 60% of value being attributable to deals sized between $50m and $300m CAD, a trend that is (on both an inbound and outbound basis) relatively unchanged since 2010. This time period shows no significant difference in the most common deal sizes when comparing acquisitions by a US and Canadian buyer of a cross-border target. Overall, deals sized above $600m CAD account for a healthy 23% of the Canada-U.S. cross-border market since 2010.

Top 10 Canadian Pension Fund Canada-US Cross-Border M&A Activity

Large Canadian pension funds helped fuel the growth trend in Canada-U.S. cross border M&A, with the aggregate value of their involvement growing at a 76% CAGR since 2012 projected to the end of 2016. This growth occurred during a period of a declining Canadian dollar, showing the appetite for Canadian pension fund investment in the United States regardless of currency-based increases in effective asset prices.