Canadian mergers, acquisitions picking up

Canadian mergers and acquisitions are set to increase following a modest third-quarter recovery from multi-year lows, as market stability and access to capital give companies the confidence to negotiate and price transactions.

Equity offerings also picked up in the three months through September, as stock market recovery following a tumultuous few months early in the coronavirus pandemic encouraged issuers to tap markets to recapitalize.

Some $40.9 billion worth of merger and acquisition

(M and A) deals were announced in the third quarter, the highest since the onset of the coronavirus crisis in late 2019 and a 200 per cent jump from the three months ended in June, Refinitiv data showed. But it was lower than the $50.7 billion worth of transactions from a year ago, the data showed.

“There are clearly indications that we’re in the early stages of recovery, a lot more strategic dialogue going on and private equity is continuing to be very active,” said Emmanuel Pressman, partner at Osler, Hoskin & Harcourt LLP.

Canadian security firm GardaWorld’s 2.95 $3.8-billion offer for Britain’s G4S and cable operator Altice USA Inc.’s $10.3-billion proposal to buy Canadian cable company Cogeco Inc. were among the deals announced in the past quarter.

“We expect continued growth in M and A volumes in 2021, fueled by reduced volatility, increased market confidence and improved access to capital,” said Dany Beauchemin, co-head, Global Investment Banking and Canadian Corporate Banking at Scotiabank.

A deal frenzy in September led to a record third quarter with more than $1 trillion worth of transactions globally.

In Canada, total equity linked deals rose 19 per cent in the third quarter to $10.5 billion from the previous quarter, though it was flat on the year.

“As volatility and COVID19 concerns subside, we see both private and public corporate issuers continuing to assess the need to recapitalize and strategically access the equity capital markets,” Beauchemin said.