M&A activity going strong

(November 15, 2004) Canadian mergers and acquisitions activity continues to set a pace not seen since 2001, with 200 transactions worth $31.8 billion taking place in the third quarter, according to investment bank Crosbie and Company.

So far this year, there have been 649 transactions worth a total of $86.5 billion, up 40% from 2003 and the highest level since 2001.

“Market conditions continue to be favourable for M&A,” says Colin Walker, managing director at Crosbie. “Both financial and strategic buyers are active, valuations are reasonable and the availability of financing is strong.”

A handful of key “mega-deals” announced in the third quarter helped propel the year-to-date totals to their highest level since 2001. The two largest transactions of the year were announced, with TD Bank Financial’s $4.9 billion bid for Banknorth Group in the U.S., and the proposed $4.5 billion merger of brewers Molson and Adolph Coors. The $2.7 billion takeover of Iamgold by Gold Fields rounded out the top three.

“Canadian companies have become more acquisitive internationally in recent years, given competitive pressures and the need for global strategies,” Walker says. “Overall, we have seen strongly disproportionate buying by Canadian companies relative to foreign interests acquiring Canadian businesses.”

With the Canadian dollar at its highest value in years versus the U.S. greenback, Canadian acquirors are enjoying a more level playing field. The balance of Canadian versus American acquirors in cross-border transactions was about three to one.

Activity remained high in the energy sector, with 24 transactions accounting for $3.7 billion in value. The media and communication sector saw fewer, but more valuable deals, with 14 transactions worth $3.8 billion.

Chief among these deals were Bain Communications’ purchase of SuperPages, worth nearly $2 billion and the Rogers Communications bid to take its cellphone subsidiary private, which was worth about $1.8 billion alone.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com