TORONTO, Dec. 20, 2012 /CNW/ - Based on results to date, the Canadian M&A market defied gravity in 2012 surviving a 10 percent decline in the total number of M&A deals completed with a modest rise in total M&A deal values to approximately US $139 billion. The M&A deal value results are surprising given Canada experienced a 50 percent decline in deal values in Canada's biggest sector, Materials & Mining, representing a decline of over US $18 billion over last year. The total number of M&A deals across all sectors involving Canadians is expected to amount to approximately 1,820 based on data provided by Thomson Financial.
The drop in actual deal volume may seem disconcerting as the Canadian environment for M&A is strong given the robust banking market, an abundance of equity capital and a relatively strong economic climate.
"Despite the weakness in mining and commodity prices, many other sectors showed signs of strength, taking up the slack in mining M&A deal value," said Peter Hatges, President, KPMG Corporate Finance, Inc.
Deal values in Consumer Products, Media and Entertainment, Healthcare and Consumer Staples were all up sharply over last year. Highlights include:
- The acquisition of Maple Leaf Sports and Entertainment for US $1.3 billion
- The US $6.6 billion acquisition of Cequel Communication in the United States by a private equity consortium that included CPP Investment Board
- Cogeco's US $1.36 billion acquisition of the Atlantic Broadband Group in the United States
- Bank of Nova Scotia's US $3.2 billion acquisition of ING Bank Canada
- Valeant's acquisition of Medicis Pharmaceutical Corp in the US for US $3.1 billion
In 2012, Canadians acquired the vast majority of the largest Canadian M&A deals with many foreign targets being in the United States.
"Canadian companies have a lot of capital at their disposal," said Martin-Pierre Roussel, Managing Director, KPMG Corporate Finance, Montreal. "Canadian banks are lending, private equity is flush with cash and the Canadian dollar is well valued - it's a significant strategic advantage in the context of M&A deals and expanding the geographic footprint of Canadian companies."
Changing demographics in Canada are another factor in the expected volume of M&A transactions going forward.
"As Canadian business owners reach retirement age, a large number of businesses and assets will come to the market in volumes not seen in prior years and this is expected to continue to stimulate the M&A activity in the non-mining sectors," said Hatges.
KPMG LLP, an Audit, Tax and Advisory firm (kpmg.ca) and a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm of KPMG International Cooperative ("KPMG International"). KPMG member firms around the world have 152,000 professionals, in 156 countries.
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SOURCE: KPMG LLP
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National Manager, Media Relations
KPMG in Canada