Canadian M&A continued its decline in Q1 2013, reaching lows not seen since Q1 2009. According to Crosbie & Company Inc.’s Q1 2013 M&A Report, which compared M&A activity results from Q4 2012 to Q1 2013, the market has declined significantly both in transaction value (51%) and volume (35%). Specifically, while Q4 2012 saw 301 transactions valued at $52.8 billion, Q1 2013 saw 196 transactions valued at $25.9 billion.
PricewaterhouseCoopers (PwC) noted similar trends in their recently released report, Capital Markets Flash: Q1 2013 Canadian M&A Deals Quarterly, including that:
- the decline in Canadian M&A activity was largely due to sector specific issues and a slowdown in Canada’s generally buoyant natural resources sector (which represented only 8.9% of total M&A deal value this quarter). This may be largely attributable to increasing investor caution and declining commodity prices;
- the real estate sector was Canada’s most active sector by deal value (36.6% of total M&A activity). The acquisition of Primaris Retail REIT by H&R REIT for $4.6 billion represented the largest M&A deal of the quarter;
- overseas pension fund acquisitions accounted for three of the largest M&A deals in Q1 2013 and represented over half of the ten capital group transactions;
- cross-border activity accounted for over 40% of announcements in Q1 representing a major driver of activity in the Canadian market. Canadian firms engaged in more acquisitions overseas than their foreign counterparts by a ratio of 2.2:1; and
- there were only three Canadian M&A transactions valued over $1 billion in Q1 2013.
Will the Canadian market see an increase in M&A activity for the remainder of 2013? Mark Jamrozinski, M&A transactions services leader with Deloitte, states: “I don’t think the volume has fallen off a cliff, but I also don’t think it’s going to rebound in some record-setting pace either. And I think the uncertainty in the macro economy is going to continue to cause people to be very cautious, as they approach growth opportunities.”