TORONTO, Jan. 7 /CNW/ - In 2007, the number of completed Canadian M&A
deals topped 2,000 transactions for the first time, resulting in a total deal
value of US $268.6 billion according to an analysis conducted by KPMG
Corporate Finance based on data supplied by Thomson Financial. In Canada,
2,098 deals were completed last year representing an increase of 16 percent in
number and a staggering increase of 50 percent in value over 2006. The value
of M&A deals in 2007 was triple the amount completed in 2005. Despite credit
market concerns and a relatively quiet third quarter, the year ended up with
some of the biggest deals coming together in the last quarter. Canadians fared
well in the biggest deals of the year, being successful acquirers in four of
the top 10 Canadian deals.
The largest completed deal in 2007 was the acquisition of Alcan by
Rio Tinto with a deal value of $37.6 billion, followed by the sale of Thomson
Learning to private equity groups OMERS Capital Partners and Apax Partners.
Canadian companies completed 527 foreign acquisitions valued at
US $72.4 billion and 1,086 domestic acquisitions valued at US $63.6 billion.
The number of foreign takeovers of Canadian companies amounted to 485, about
23 percent of all Canadian M&A activity by number, but approximately
49 percent by value or US $132.6 billion.
"Resource transactions continue to dominate the largest Canadian M&A
deals" said Peter Hatges a Corporate Finance Partner with KPMG in Toronto.
KPMG predicts the trend for resource transactions will continue, despite
lingering concerns about an economic slowdown in 2008. The rate of
urbanization in developing countries is expected to continue to fuel demand
for raw materials and resources making for a relatively vibrant M&A market in
Al Kanji, a Corporate Finance Partner with KPMG in Vancouver said, "the
trend we see is continued growth in the Canadian private company M&A market,
as private equity and strategic purchasers continue to absorb private and
family owned enterprises, even in the wake of the credit crunch and the
contraction of leveraged financing. Accordingly, we expect the demand for well
managed and profitable Canadian private companies will remain strong."
"Furthermore, businesses with significant sales in the US will need to
focus on productivity in 2008 in order to overcome the continued strength of
the Canadian dollar as a number of Canadian companies have lost the currency
advantage that helped their profitability for many years."
KPMG expects one of the big catalysts for 2008 will be "value deals".
Peter Hatges says, "There has been some more sensible pricing discipline
in the market recently due, in part, to more conservative debt capital
markets. This will pull in the boundaries of purchase price multiples but will
lead to more conservative capital structures to deal with the anticipated
volatility in the economy. After a truly stellar deal-making year, Canadian
and North American companies generally, will have to face up to a new reality
in 2008 which is expected include tighter credit markets. We've lowered our
expectations for 08 accordingly, but the basic fact of the matter is that many
Canadian companies do not have the luxury of standing still."
The 10 largest completed deals in Canada are summarized below:
(*) AV Aluminum Inc. is a Canadian subsidiary of Hindalco Industries
Inc., an Indian company.
Source: Thomson Financial
About KPMG in Canada
KPMG Corporate Finance practices in KPMG member firms around the world
completed 450 M&A transactions in 2007, reaching second place in the Global
M&A league tables based on number of deals completed.
KPMG LLP, a Canadian limited liability partnership established under the
laws of Ontario, is the Canadian member firm affiliated with KPMG
International, a global network of professional firms providing Audit, Tax,
and Advisory services. Member firms operate in 145 countries and have more
than 123,000 professionals working around the world.
The independent member firms of the KPMG network are affiliated with KPMG
International, a Swiss cooperative. KPMG International provides no client
KPMG's Canadian Web site is located at www.kpmg.ca
For further information:
For further information: Media Contacts: Julie Bannerjea, Senior
Manager, Media Relations, KPMG, (416) 777-3243, email@example.com