Canadian Manufacturing

Canadian-led European M&As set post-crisis quarterly high

Canuck firms announced $15-billion in European deals in second quarter of 2012, according to PwC

Toronto—Canadian companies enjoyed a post-crisis quarterly high in mergers and acquisitions (M&A) in Europe despite continued economic uncertainty across the globe, according to advisory group PwC.

During the second quarter of 2012, Canadian companies announced $15.1-billion in European deals.

According to PwC, $21.8-billion in acquisitions were announced in 40 countries outside of Canada, including 27 growth markets, one of the highest outbound deal values on record.

“Canadian firms are combating slow domestic growth by making acquisitions abroad,” PwC Canadian deals leader Nicolas Marcoux said in a statement. “Quite often, M&A can be utilized as a tool to achieve growth as well as a means to innovate.”

The middle market segment of Canadian M&As gained momentum in the second quarter, with 51 transactions worth $12.2-billion announced, numbers up 21- and 35 per cent, respectively, over the first quarter of the year.

According to Marcoux, the results aren’t surprising, as a number of corporate and private equity firms have been publicly stating their desire for bolt-on acquisitions.

The second quarter saw 721 M&A announcements overall worth $47.7-billion, according to PwC.

Deal volumes and values declined seven- and two per cent, respectively, over the prior quarter.

On a year-ago basis, they were down 14- and four per cent, respectively, with an overall tally in line with the average post-crisis performance.

PwC credits a decline in “mega deals” with the overall drop-off in announced M&A during the second quarter.

The aggregate value of M&A transactions worth more than $1-billion dropped by $4.8-billion, or 16 per cent, compared to quarter one, according to the advisory group.

Ontario overtook Alberta as the most popular province to make an investment, with 41 per cent of announced deals in Ontario compared to 36 per cent in Alberta by value.

According to PwC, a key reason for the change was because of fewer large deals in Alberta’s oil sands.

By sector, real estate and energy continued to see a flurry of M&A activity, while diversified financials made a comeback as a result of deals in the insurance and banking industries.

Activity in the metals and mining sector dropped to just five per cent of Canadian M&A activity by value, according to PwC, largely due to a decline in commodity prices and a slowdown in demand for resources—particularly from China.

PwC found cancelled deal activity dropped to a record low in the quarter despite shaky markets, with only 12 deal cancellations in quarter two.

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