Climate change has become a high profile issue that is expected to have significant implications for M&A transactions going forward. As public awareness and scientific understanding of climate change continues to evolve, we are more informed about the climate change-related risks that businesses must grapple with and get ahead of. As a result, businesses need to be especially diligent in their assessment of a range of factors that may be impacted by the changing climate when completing M&A transactions. While the risks that should be considered will, of course, vary between transactions, the following is a list of climate-related factors … Continue Reading
Investors are struggling to price market uncertainties, with widely fluctuating market prices in both the United States and Canada. West Texas Intermediate, a U.S. crude benchmark, slid 2.9% during the first week of September, following a jump of more than 7% in August and has remained turbulent ever since. Meanwhile, Canadian energy stocks have failed to see any gains despite crude oil prices maintaining a nearly nine-week high. The discrepancy in the Canadian market and rapid fluctuations in the American market point to investors trying to make sense of recent changes and uncertainties, including:
1. Emerging market decline: The … Continue Reading
In recent years the Alberta Energy Regulator (AER) has been making changes to its liability management system. In early August, the AER hinted more changes are on the way. In a news release, Jim Ellis, the regulator’s CEO, explains that a gap has been clearly identified in the current liability management system, and that the AER is working to fill it.
But what is this “hole” in the system? Imagine Company A and Company B decide to do a deal. Company A buys a couple of profitable wells along with a lot of unprofitable, unwanted wells from Company B. … Continue Reading
A recent report by Ernst & Young (the Report) has concluded that the power and utilities (P&U) is thriving, as global deal value in the first quarter of 2018 reached an all-time high of US$97 billion. This rise has predominately been driven by mega-deals, with only 15 deals forming 90% of the total global deal value in the P&U sector. Owners of P&U assets can continue to expect premium asset valuations and highly favourable transaction terms as investors compete for a limited amount of attractive investment opportunities within the sector.
The Report identifies the following factors as … Continue Reading
Say you are about to buy, sell, or invest in an Alberta oil and gas company. You are conducting your due diligence, negotiating the transaction documents, pursuing any necessary approvals and are looking forward to closing. Before you can proceed, get ready to add another item to your closing checklist. The Alberta Energy Regulator (AER) has recently made some changes concerning oil and gas licences and approvals that you will need to consider.
Overall merger and acquisition deal value involving Canadian companies totalled $216.3 billion in 2017, which was approximately 14% lower than the $251.88 billion seen in 2016, which was a decade-high level. The fall in overall value was primarily caused by a 25% decline in energy deals, according to a report in Bloomberg, which resulted in the first year-over-year decline in total deal value since 2012-2013. Despite this decline, 2017 stands as one only five years since 1995 when deal value exceeded $200 billion, according to a report in the Wall Street Journal.
Outward bound M&A activity was down … Continue Reading
In a recently released report, the Global Capital Confidence Barometer, EY suggests that M&A intentions in the global oil and gas sector are at an all-time high. Most notably, 69% of the oil and gas executives surveyed indicated that they intend to pursue acquisitions in the next 12 months. This is the highest figure recorded since 2009, when EY first launched the Barometer.
These figures will likely be of particular importance for the Canadian M&A market, given its heavy focus on energy.
The Report: oil & gas M&A findings
The Barometer is a twice-yearly survey compiled of nearly … Continue Reading
PwC’s survey on global power and renewables (P&R) M&A trends for 2017 predicts an investment thrust for the progressive sector.
In 2016, the P&R sector’s total global deal value was the highest that it had been in the current decade, fueled, in particular, by mega deals for North American network infrastructure targets. Both corporate and institutional buyers are vying for the market’s international offerings.
Regionally, the acquisition of regulated assets defines US market growth, with deal momentum slowing and interest rates climbing. Across the water, economic growth in Europe plays out alongside waning acquisitions. However, post-Brexit, restructuring and … Continue Reading
The value of Canadian M&A activity in the first half of 2017 was the highest in a decade, according to a recent report from Bloomberg. The approximately $132 billion in total transaction value is the highest since the first half of 2007, when approximately $156.6 billion in transactions were completed.
According to the report, one of the most significant drivers of deal value was a sell-off of Canadian oil sands investments by foreign energy companies in the wake of declining prices for crude on global markets. Recent examples of such transactions include Royal Dutch Shell’s divestment of its interests … Continue Reading
Competition has increased in the private equity (PE) market. In the US, PE firms paid a 31% premium for acquisitions in 2016, an eight-year high according to Bloomberg data. There are a growing number of market participants chasing after ever scarcer quality businesses thereby causing price appreciation of businesses. In addition, the availability of low interest debt provides players with the financing to pursue these assets.
A competitive advantage
To remain competitive, there is a growing sentiment that PE firms should look to specialize, which many have already been doing. It can be difficult for PE firms … Continue Reading
On April 25, Mergermarket released its Q1 2017 Regional Flash Reports describing the M&A climate, trends and developments throughout the Americas during the first quarter of 2017.
The Canada’s Trend Report indicates that Canadian M&A has remained strong with 111 deals in Q1 2017 worth US$ 35.8bn. This is a robust start for 2017 as compared to the 151 deals in Q1 2016 representing US $17.1bn, and is in line with the trend of higher valuations for fewer deals as seen across the globe. The top Canadian sector for Q1 2017 was Energy, Mining and Utilities (EMU) with … Continue Reading
EY’s review of Q3 2016 deal activity within the power and utilities (P&U) sector shows ongoing stability to be expected into 2017. Highlights from the quarter include ongoing premiums on prices for regulated assets, increased investment in renewables and diversification into disruptive technologies.
Regulated network assets (i.e., transmission and distribution assets) are described as “safe havens” for investment, translating into transactions worth US $23.6 billion in Q3 2016. EY reports that this sum accounted for more than half of the quarter’s overall deal value. Investors view regulated network assets as stable with long-term returns in a … Continue Reading
According to a year-end report on M&A Trends published by Deloitte, corporate and private equity executives surveyed in the last quarter of 2016 anticipated significant M&A activity in 2017. Indeed, three quarters of survey respondents expect deal activity to increase in 2017 relative to 2016, and almost 65% expect deal size to increase. Aside from strategic reasons, the expected increase in the pace and size of transactions may be linked to high stock prices, continued low interest rates, and availability of cash held in reserve by large companies.
In the Canadian context, the Deloitte report suggests that U.S.-based investors … Continue Reading
Canada’s Extractive Sector Transparency Measures Act (ESTMA, or the Act) came into force on June 1, 2015. The Act imposes disclosure obligations on certain Canadian businesses engaged in the commercial development of oil, gas or minerals with respect to payments made to domestic and foreign governmental bodies. As we previously noted, Canadian businesses subject to the Act are currently required to collect information on the payments they make, and the first ESTMA-compliant reports will be due to Natural Resources Canada by May 30, 2017 (for organizations with a December 31 financial year end).
Resource companies currently … Continue Reading
Many in the oil and gas industry expected to see increased levels of M&A activity in the upstream oil and gas sector, and in the broader oil and gas industry, as a result of prolonged depressed oil prices that first began their decline in June of 2014. We have discussed various views regarding this topic on this blog previously both here and here. In previous downturns, depressed prices have led to increased deal activity as distressed exploration and production companies (“E&P companies”) are forced to sell assets to improve cash flow, assets are sold in the course of bankruptcy … Continue Reading
MergerMarket Group recently published its September edition of Monthly M&A Insider which reported on mergers and acquisitions activity around the world for the month of August 2016. More than two thirds into the year, August was no exception to the recent rather sluggish growth in M&A activity, especially compared to the record-breaking year for M&A in 2015.
August saw a total of 946 deals worth US$182.2bn, the lowest-valued August since 2013 (US$152.7bn) and down 34.7% from August 2015’s US$278.9bn. The Energy, Mining & Utilities sector spearheaded activity by contributing 15.8% to the total global market share with 84 … Continue Reading
The power and utilities industry has seen a surge of M&A activity in the first quarter of 2016, according to a recent PWC report. The following highlights reflect an overall positive start to the year for the power and utilities sector:
- Increase in total deal value. Total deal value for Q1 2016 hit $41.4 billion. This is up 260% from the previous quarter, where total deal value was $11.5 billion. Additionally, total deal value is up 508% compared to this time last year.
- Increase in average deal value. The average value per deal reached $1.9 billion in Q1 2016,
Earlier this month, Prime Minister Justin Trudeau enjoyed an official visit to Washington that attracted significant attention and generated positive headlines for Canada-US relations. At the top of the agenda was the common goal shared between the leaders to combat climate change. Although “#Trubama” (the twitter moniker given to the pair) only have until November to work together before the US election, it will be interesting to see what impact a renewed focus on climate change will have on M&A in the oil and gas industry.
2015 was an extraordinary year for global M&A activity. Mergermarket recorded almost 17,000 transactions worth a remarkable US$4.3tn. This topped the previous record set in 2014 by over 30%. The race for top performing sector this year was very close. Energy Mining & Utilities won with US$630bn in deal value; however, the top performers were only separated by US$150bn. The other four sectors in order are: Pharma, Medical and Biotech, Consumer, Financial Services and Industrial Chemicals.
Once again North American markets lead the way with almost 1/3 of global deals and nearly 50% of global deal value. The … Continue Reading
2015 was a huge year for global M&A with deal activity reaching $4.2 trillion by the middle of December. If 2016 continues at the same pace, be prepared for a big year of M&A activity. In order to be well equipped for the upcoming year, ask yourself the following two questions when contemplating an M&A transaction.
Where are the key market opportunities?
According to the publication released by Raconteur entitled M&A Outlook 2016, on a global scale, five sectors are “blazing a trail”: financial services, telecommunications, pharmaceuticals, computer manufacturing, and oil and gas.
- Financial Services – Consolidation is the
The first half of the decade has seen a swift rise in green-house gas (GHG) emissions in Asia. Consequently, China is now the world’s largest emitter of carbon dioxide from the consumption of energy, accounting for over 25% of global emissions. This rapid intensification has also created an active and robust renewable energy market in China and other Asian countries.
According to a report published by Mergermarket, the renewable energy market in the Asia-Pacific is poised for significant increases. In 2014, Asia-Pacific accounted for 23.2% of worldwide deal value in renewables, and in H1 2015 rose … Continue Reading
In its Global M&A Review, for the first nine months of 2015, Thomson Reuters reports healthy global M&A activity leading into the final quarter of fiscal 2015. The study reports increases in both deal value and deal volume across most jurisdictions and industry sectors.
Global increase in both deal volume and deal value
Thomson Reuters reports that global M&A has experienced its strongest first nine months since fiscal 2007. Year-to-date, global M&A topped US$3.2 trillion on just under 32,000 deals. Compared to the same nine month period in 2014, this represents a 32% increase in deal value and a … Continue Reading
Similarly to American M&A in the first half of 2015, the first half of 2015 was remarkably active on the global mergers and acquisitions front. According to a recent Mergermarket report, total deal value topped US$1.7 trillion. This represents an increase of 15.2% over the first six months of 2014, and only 15.4% behind the record-setting first half of 2007, when US$2.1 trillion worth of deals were completed. With 7,136 transactions, it is interesting to note that total deal volume actually decreased by 15.7% compared to the same time period last year, but higher valuations explained the market’s … Continue Reading
A recent Thomson Reuters report indicates the Canadian buyout-private equity market had a record first half of the year in terms of deal volume. With at least two deals valued at over $1 billion, the value of buyout-private equity deals in the first half of 2015 was also the most since 2007, up 69% over the same period last year. The record deal volume also represented a 2% increase of the year prior.
Of particular note is the proportion of overall M&A activity which is now represented by buyout-private equity deal structures. Compared to historical levels four years ago, the … Continue Reading