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The Mergers & Acquisitions Review: Canada (Twelfth Edition)

Author(s): Emmanuel Pressman, Jeremy Fraiberg, Robert M. Yalden

Oct 16, 2018

After a sluggish start to 2016, Canadian deal-making increased through the latter half of 2016 and into 2017, buoyed by solid economic growth in Canada and the United States. The pace of activity saw 2,991 deals announced in 2017, an increase on the 2,685 announced deals in 2016. At the same time, the mixture of deals was evolving. The total transaction value of C$252 billion in 2017 was down 24 per cent from the 2016 level (C$331.5 billion), revealing a lower volume of mega-deals but a meaningful increase in activity in the mid-market.

The most active sector by deal count in 2017 was metals and mining, with 453 transactions announced. However, the utilities sector was the most vibrant when measured by deal value, representing some C$55 billion in transactions, largely due to several announced mega-deals. These included the C$22 billion acquisition of Calpine Corporation (America’s largest generator of electricity from natural gas and geothermal resources) by Energy Capital Partners and a consortium led by Canada Pension Plan Investment Board (CPPIB) and Access Industries, Hydro One’s C$6.7 billion acquisition of Avista Corporation, and the C$6.3 billion acquisition of an Asian wind and solar renewable energy asset portfolio from Equis Funds Group by a consortium led by Global Infrastructure Partners III in conjunction with the Public Sector Pension Investment Board (PSP) and CIC Capital Corporation.

The energy sector was also very active, with some 204 deals that included several mega-deals: for example, Cenovus Energy’s C$18 billion acquisition of ConocoPhillips assets that included a 50 per cent interest in the FCCL Partnership (a jointly owned oil sands venture operated by Cenovus) and Pembina Pipeline Corporation’s C$7.1 billion acquisition of Veresen. Other sectors that saw sustained activity were traditional pillars of the Canadian M&A market such as financial services and real estate, but there was also considerable activity in the increasingly vibrant information technology and healthcare sectors, as well as in the consumer staples sector.

Trends that are characteristic of M&A in Canada came into even sharper focus during 2017; for example, companies continued to be active in pursuing international expansion. Indeed, some 847 deals announced in 2017 involved outbound transactions, while there were 539 announced inbound deals. This ratio of 1.6 to 1 was somewhat higher than 2016. Notwithstanding the frequently expressed concern that Canadian companies are being acquired by non-Canadians, the reality is that for many years there have been meaningfully more outbound transactions than inbound, in particular, as measured by volume. Some of the drivers of this activity continue to be Canadian pension funds, as they remain active in leading large deals abroad for assets that offer exposure to stable returns. In addition to some of the examples listed above involving CPPIB and PSP, Quebec’s CDPQ partnered up in Q1 not only with Suez SA with respect to the C$4.5 billion acquisition of GE water, but also with KKR & Co to acquire USI Insurance Services from Onex Corporation for C$5.8 billion. In Q4 2017, CDPQ partnered with CKD Infraestructura to purchase a portfolio of renewable power generation assets in Mexico from Enel Green Power Mexico for C$1.7 billion.

Another trend that we flagged in the last edition of The Mergers & Acquisitions Review and that continued to play out in 2017 was the importance of mid-market M&A. As noted, much of the increase in the number of deals announced in 2017 was attributable to this slice of the market and there is every reason to believe that this will remain a fundamental feature of current Canadian M&A not only domestically but also internationally.

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Reproduced with permission from Law Business Research Ltd. This article excerpt was first published in The Mergers and Acquisitions Review, Edition 12 (published in August 2018 – editor Mark Zerdin).


The authors would like to acknowledge the contributions of fellow partners Patrick Marley and Shuli Rodal. The authors (ex-Yalden) also wish to thank Robert Yalden for his invaluable contributions to our firm, his friendship and his partnership. After nearly 30 years, Robert is retiring to join the Queen’s University Faculty of Law as the inaugural holder of the Stephen Sigurdson Chair In Corporate Law and Finance.

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