Deal values near 2007 record high but only because of Nexen / CNOOC
TORONTO, Oct. 18, 2012 /CNW/ - The third quarter of 2012 saw 599
announced Canadian M&A transactions worth $58.6 billion. Volumes were
down 17% from Q2 2012 and 21% from the same period last year, according
to PwC's Q3 Canadian M&A Deals Quarterly.
Conversely, deal values surged 23% over the prior quarter and 16% over
Q3 2011. But excluding the $19 billion pending acquisition of Nexen
Inc. (Nexen) by China National Offshore Oil Company Limited (CNOOC),
deal values would have declined 17% from Q2 2012 and 22% from the same
period last year.
Nicolas Marcoux, PwC's Canadian Deals Leader says, "The drop off in activity is attributable to an absence of targets in
the market, rather than an absence of demand for deals. Well
capitalized corporate and private equity firms continue their hunt for
strong middle market tuck under deals."Inbound transactions, where
foreign buyers target Canadian companies surged 235% over Q2 2012 and
were up more than 64% compared to a year ago. But the trend was rather
misleading as the Nexen/CNOOC transaction accounted for over 62% of all
inbound dollar values. Absent this transaction, foreign acquisitions
of Canadian assets would still have registered a respectable 26%
quarter over quarter increase, while dropping 38% year over year.
Foreign acquisitions by Canadian entities continued to be strong,
totaling $18.9 billion in Q3 2012, a modest decline of 13% compared to
Q2 but still 23% ahead of the tally from Q3 2011. On the other hand,
domestic M&A activity slumped 47% from Q2 and 50% when compared to the
same period last year.
"Inbound and outbound transaction activity continued to be resilient
even in the face of a quiet quarter of domestic M&A activity" said
The US replaced Europe as the dominant target for Canadian suitors, with
over $13.8 billion or more than 73% of the Canadian outbound
acquisition dollars heading south of the border. Two of the four
largest acquisition targets were cable service providers, while real
estate and metals & mining remained the two most targeted sectors by
Canadian acquisitions into Europe surged to a post crisis high in Q2
2012, but activity on the continent during the third quarter saw a
sharp drop-off as volume and value fell 50% and 83% respectively.
Canadian M&A activity in growth markets exhibited a similar trend to
that of Europe as the volume and value of acquisitions fell 35% and 78%
As expected, the mega deal between Nexen and CNOOC propelled energy to
the top of the five most targeted industries in Canadian M&A, unseating
real estate from its Q2 perch.
Media made a rare appearance in the top five targeted industries on the
strength of CPP Investment Board's consortium purchase of Suddenlink
Communications and Cogeco Cable Inc.'s acquisition of Atlantic
Largely on the back of a slowing Chinese economy, metals & mining fell
from its peak as being the most targeted industry in 2011 to not even
appearing as a top targeted industry in the second and third quarters
of this year.
PwC's Q3 Canadian M&A Deals Quarterly is available at www.pwc.com/ca/QuarterlyDeals. A copy is also available from the media contacts.
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beyond. As part of the world's largest Transaction Advisory practice1 the PwC Canada Deals Team is your gateway to an exciting new world of
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About PwC Canada
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1 Source: Kennedy; "Business Advisory Services Marketplace 2009-2012" ©
BNA Subsidiaries, LLC. Reproduced under license.© 2012
PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
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SOURCE: PwC (PricewaterhouseCoopers)
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