Deal values near 2007 record high but only because of Nexen / CNOOC proposal
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 Marcoux.
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 volume.
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% respectively.
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 Broadband.
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
About PwC's Deal Team
PwC's Deal Team (www.pwc.com/ca/deals) helps clients to achieve deal
success—from concept to close and beyond. As part of the world's largest
Transaction Advisory practice(1) the PwC Canada Deals Team is your gateway
to an exciting new world of emerging M&A opportunities.
About PwC Canada
PwC Canada helps organizations and individuals create the value they're
looking for. More than 5,700 partners and staff in offices across the country
are committed to delivering quality in assurance, tax, consulting and deals
services. PwC Canada is a member of the PwC network of firms with close to
169,000 people in 158 countries. Find out more by visiting us at
(1) Source: Kennedy; "Business Advisory Services Marketplace 2009-2012" © BNA
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-0- Oct/18/2012 12:29 GMT
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