Volume of Canadian M&A at lowest level since 2009: report

TORONTO—Canadian mergers and acquisitions (M&A) volumes were down 21 per cent from the same period last year and hit a three-year low, according to a new report from PricewaterhouseCoopers (PwC).

The third quarter of 2012 saw 599 announced Canadian M&A transactions worth $58.6-billion, down 17 per cent from a quarter earlier.

Deal values surged 23 per cent over the prior quarter, but PwC says that was buoyed by the $19-billion pending acquisition of Nexen Inc. by China National Offshore Oil Company Limited (CNOOC).

Without the Nexen deal, values would have declined 17 per cent from the second quarter of 2012 and 22 per cent from the same period last year.

“The drop off in activity is attributable to an absence of targets in the market, rather than an absence of demand for deals,” PwC Canadian deals leader Nicolas Marcoux said in a statement.

“Well capitalized corporate and private equity firms continue their hunt for strong middle market tuck under deals.”

According to Marcoux, inbound transactions—where foreign buyers target Canadian companies—surged 235 per cent over quarter two of 2012, and were up more than 64 per cent compared to a year ago.

Even with the Nexen transaction, PwC says foreign acquisitions of Canadian assets would still have registered a 26 per cent quarter-over-quarter increase, while dropping 38 per cent year-over-year.

Foreign acquisitions by Canadian entities continued to be strong, totaling $18.9-billion in the third quarter of this year, a modest decline of 13 per cent compared to the previous quarter but still 23 per cent ahead of the tally from the same period in 2011.

Domestic M&A activity slumped 47 per cent from the second quarter and 50 per cent 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,” Marcoux said.