Details

  • Type: Press release
  • Date: 1/12/2009

Canadian M&A Deal Value Falls by 50 Percent 

Canadian companies were the acquirers in 6 of the top 10 Canadian deals this year.

 

(Toronto – January 12, 2009) – In 2008 the total value of mergers and acquisitions completed by Canadian companies fell by 50 percent from 2007. Canadian company M&A deal value amounted to US$131.5 billion, according to an analysis conducted by KPMG Corporate Finance based on data supplied by Thomson Financial. There were 1,972 deals in 2008, representing a modest decline from 2,098 in 2007, but a dramatic decrease in total value from the US$269 billion recorded in 2007. Metals, mining, and oil and gas sectors dominated Canadian M&A activity, accounting for approximately 55 percent of the 2008 deal value for Canadian companies.

Tight credit markets and the significant downturn in global equity values in the latter part of the year had a significant adverse impact on the M&A market. The lack of available debt capital-a big catalyst in previous M&A cycles-has made acquisitions far more equity intensive from a financing point of view. Global M&A deal value was down by approximately 33 percent from 2007, but the fall off was more severe in North America and parts of Europe.

 

"The economic outlook and associated profitability concerns are the number one issues facing companies today, making deal pricing very difficult in this market. We expect that a significant amount of M&A activity in the immediate term will be of a defensive or opportunistic nature," said Peter Hatges of KPMG Corporate Finance.

 

"We expect companies to seek out merger partners in order to strengthen balance sheets and realize cost savings and other synergies. The objectives may be different, but the name of the game has not changed. Like every other cycle, a strong period of expansion is followed by rationalization and consolidation.

 

Canadian companies kept up a reasonable pace of foreign acquisitions with 416 foreign takeovers valued at US$29.9 billion. The number of foreign takeovers of Canadian companies amounted to 440 deals for a value of $37 billion, representing 28 percent of total Canadian M&A deal value. The bulk of the M&A activity continues to be Canadian companies buying other Canadian companies, including Canada's largest deal of the year: Teck Cominco's acquisition of Fording Coal valued at US$13.6 billion. TD Bank's acquisition of Commerce Bancorp of New Jersey was the second largest Canadian M&A deal valued at US$8.6 billion. Canadian companies were the acquirers in 6 of the top 10 deals this year. The top 10 Canadian M&A deals are summarized below.

 

Target Name Target
Nation		 Acquirer Name Acquirer
Nation		 Value of
Transaction
($mil)
Fording Canadian Coal Trust Canada Teck Cominco Ltd Canada 13,599
Commerce Bancorp, New Jersey United States Toronto-Dominion Bank Canada 8,638
Duvernay Oil Corp Canada Shell Canada Ltd Canada 5,454
Cognos Inc Canada IBM Corp United States 4,964
IPSCO Inc-Canadian Tubular Op Canada Evraz Group SA Russian Fed 4,025
PrimeWest Energy Trust Canada TAQA Utd Arab Em 3,964
Canetic Resources Trust Canada Penn West Energy Trust Canada 3,816
National Grid PLC-Ravenswood United States TransCanada Corp Canada 2,800
UAP Holding Corp United States Agrium Inc Canada 2,624
RBTT Financial Holdings Ltd Trinidad & Tob Royal Bank of Canada Canada 2,235

 

Media Contacts:

 

Julie Bannerjea, Senior Manager, Media Relations, KPMG, 416-777-3243 or jbannerjea@kpmg.ca

Shilpa Kotecha, Manager, Media relations, 416-777-8918 or skotecha@kpmg.ca

 

About KPMG
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.