As the Globe and Mail reports, Thomson Reuters has recently released figures for Canadian mergers and acquisitions in the third quarter of 2017.
The figures show that while the volume of deals involving Canadian companies in the third quarter was higher than a year ago, the total value of those deals declined. 672 mergers or acquisitions were announced in the third quarter in 2017, while 605 mergers or acquisitions were announced in the third quarter a year ago. This 11% increase in the total number of deals is tempered by the fact that the value of deals fell from $105.3 billion (U.S.) in 2016 to $37.8 billion in 2017.
The decline in deal value can, in part, be explained by the disproportionate effect of the $43.1 billion takeover of Spectra Energy Corp by Enbridge Inc. in the third quarter of 2016. The Globe further explains that while on the one hand a surging loonie translates into more currency in the pockets of buyers, the increase in purchasing power may be moderated by uncertainty surrounding the North American free-trade agreement, tax reform and high valuations.
Nonetheless, the M&A market and Canada’s economy overall remain fundamentally strong. The Globe notes that the slow-down has had a knock-on effect in the equity markets, which are closely tied to merger activity. Fewer public offerings have been required to raise money for deals. Nonetheless, indicators suggest that the IPO market, which came out of the gates flying in January, is set to end the year on a high note. The Report points to the recent Roots Corp. filing to raise $200 million (CAD), as well as multiple new IPOs in the offing in the metals and mining sector, as indicators that the IPO market could be in for a busy fourth quarter to end the year with a bang.
The author would like to thank Peter Valente, articling student, for his assistance in preparing this legal update.
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