Topic: Infrastructure, mining and commodities

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Diamond In The Rough: Mining as a potential bright spot in M&A

The mining sector has been one of the few bright spots in Canadian M&A since the COVID-19 pandemic drastically changed the landscape for transactions, with several large deals announced and continuing despite the pandemic.

As with other business sectors, mining has been significantly impacted by regulations and the economic slowdown caused by the pandemic. However M&A opportunities for Canadian mining companies have persisted despite these issues.

One of the first significant deals announced during the COVID-19 pandemic was Endeavor Mining Corporation’s combination with SEMAFO Inc., which valued SEMAFO at $1 billion. Other recent deals include Shandong Gold Group acquiring Canadian-based … Continue Reading

Ready to rock! 2019 may see increased M&A activity among Canadian mining companies

2018 was a difficult year for Canadian mining companies. The aggregate valuation of TSX-listed miners declined by 12.7%, while equity capital raised by these companies declined by 36% from the previous year’s total. In this environment, new financings and deals have been scarce, but there is reason to believe that this trend might change in 2019, according to a recent publication by PwC.

A number of factors support the general prediction of increased M&A activity among TSX-listed mining companies. These factors include:

  • Increasing commodities prices. Spot prices for based and precious metals decreased across the board in 2018. However,
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Beware the zombie invasion (stock exchange edition)

On September 18, Deloitte released a new report which outlines a roadmap for the competitive business climate in Canada. Included in the report is a warning that “Canada may have a zombie problem.” Luckily, Deloitte isn’t raising concern about hordes of flesh-eating undead, but rather the relatively large number of “zombie companies” that exist on Canadian stock exchanges. The report identifies “zombie companies” as those who do not have enough earnings to cover their interest payments and found that out of the 2,274 companies listed on the Toronto Stock Exchange and the TSX Venture Exchange, 16% could be considered “zombies” … Continue Reading

Note to investors: tariffs and opportunities abound in metals and manufacturing

Global trade tensions continue to be a source of uncertainty. The role of the United States as one of the most influential economies across the globe has presented limitations on the ability of many business sectors to easily absorb the trickle down effects of recent trade tariffs implemented by the Trump Administration. While this seems to present a problem for most companies that rely on international trade and distribution of products as the crux of their business, tariffs, at least if kept in place only temporarily, could create opportunities for distressed investors.

Two examples of the industries directly impacted are … Continue Reading

Q1 review: major deals lead the mining resurgence

Our 2018 Mining M&A forecast predicted that there would be an increase in Canadian mining M&A activity in 2018. It appears that our prediction may be correct: industry reports suggest an 86% increase in the value of the transactions in the first quarter of 2018 (Q1 2018), as compared to the first quarter of 2017 (Q1 2017). The increased value in deals was not accompanied by an increase in volume, however. The deal volume decreased by 16% in Q1 2018 compared to Q1 2017. While this does not perfectly follow the “small is beautiful” gold mining acquisition trend, … Continue Reading

Q1 2018 review: record deal values for the power and utilities sector

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

Signs of optimism for mining, oil-and-gas M&A activity in 2018

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

Trend report: increased M&A deal values across the Americas for Q1 2017

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

The Canada Infrastructure Bank: big plans for big projects

Last month’s federal budget reaffirmed the government’s plans to establish a new Canada Infrastructure Bank (the Infrastructure Bank) and vest it with the responsibility of spending at least $35 billion in infrastructure over 11 years. The Infrastructure Bank is intended to pool public funds with private investments for infrastructure projects. Along the way, the Infrastructure Bank will build up expertise in packaging, financing and managing projects, so as to attract institutional investors and investment funds.

The Infrastructure Bank goes hand in hand with Prime Minister Trudeau’s desire to attract investments into Canadian infrastructure projects. In the fall of 2016Continue Reading

M&A considerations for resource issuers: Canada’s Extractive Sector Transparency Measures Act

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

Mining M&A for 2016: digging deeper into the numbers

As discussed in our latest update on M&A activity in the mining industry, there has been a recent and substantial rise in deal volume and value in the industry. This is exciting news for mining companies that have suffered from a sustained downward trend in M&A activity as a result of low and volatile commodity prices in addition to political and business-related barriers.

A recent report (the Report) by KPMG elaborates on this recent surge in activity, focusing on each commodity, geographical region and asset (according to their stage of development) most impacted from this increase. Certain of the … Continue Reading

A global overview of M&A activity: August 2016

World MapMergerMarket 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.

Global M&A

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

An overview of global M&A activity: 2015 into 2016

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.

North America

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

Canadian Mining Eye Index looking up in Q2

According to an Ernst and Young report released on August 24, 2015, the Canadian Mining Eye index experienced a 4% gain in Q2 2015, as compared to a 1% loss in Q1 2015. This increase was the first quarterly gain for the index since Q2 2014. While the quarterly results in the sector reported by EY were not all positive, the gain is certainly a welcome development.

EY’s Canadian Mining Eye index tracks the performance of 100 TSX and TSX Venture mid-tier and junior companies with market caps generally between CDN$100m and CDN$1.7bn. Q2 saw the Canadian Mining Eye index … Continue Reading

Global M&A in the first half of 2015

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

M&A in Canada: industry revenue and profits

Expanding growth in nearly all sectors

Norton Rose Fulbright focuses its services on 6 key industry sectors and, according to a study released recently by the Globe and Mail on Canadian corporations, almost all of these sectors have seen an expansion in revenue and most have seen growth in profits during the period from 2011 to 2015. While such expansion does not on its own drive M&A activity, it is important factor for identifying trends. Industries with the greatest growth may see increased M&A activity in the future; likewise industries with prolonged under-performance may be primed for consolidation.

Banking

1

The … Continue Reading

Canadian mining M&A in Q1 2015

The M&A results and in and they are decidedly mixed in respect of the Canadian mining industry for Q1 2015. Although total M&A transactions and financing was down worldwide, Canadian companies were the dominant players in those M&A transactions which did take place during the quarter, and Canadian companies also had a dominant position in the raising of capital during Q1.

  • During the first quarter of 2015, the global mining industry recorded its lowest number of M&A transactions in many years, only 14. This represented a drop of 46% compared to the number of transactions last quarter and a
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Mid-market deals dominate in Canadian M&A in Q1 2015

Crosbie & Company’s quarterly Canadian M&A Report has indicated an overall decline in activity for the first quarter of 2015, with total deal volume down 7% and total value down 46% from the previous quarter.

Deal size

Accounting for the decrease in deal value is the fact that the majority of transactions this quarter took place in the mid-market segment. While mid-market deals (under $250 million) represented 90% of all transactions this quarter, they accounted for only $9 billion, or 20% of total deal value.  Mega-deals (over $1 billion), on the other hand, accounted for $26 billion in value, with … Continue Reading

M&A in Canada’s clean tech and energy innovation sector

The decrease in the price of oil and resulting available capital may create a surge of investment in cleantech, renewable energy and electricity in Ontario, and Queen’s Park appears to be doing all that it can to aid this East-bound capital flight.

The Liberal government’s much publicized plan to liberalize the electricity sector and privatize 10% – 15% of Ontario Hydro, the Province’s transmission giant, is an attempt to both finance long-term infrastructure projects and take advantage of US investors looking to capitalize on an undervalued asset. The depreciated price for a non-controlling interest in a multi-billion dollar asset will … Continue Reading

M&A in Q1 2015: the results are in

The Mergermarket Group has published its Monthly M&A Insider – April 2015 report outlining trends and developments in M&A activity worldwide for the first quarter of 2015.

In North America, M&A activity continued on the upward trend set in 2014. The first quarter saw 1,116 deals valued at US $338.8 billion, which was a 11% increase compared to the first quarter of 2014. This increase was in no small part driven by the Heinz/Kraft deal, valued at $54.4 billion. The Pharmaceutical, Medical and Biotech industry was also a significant driver in the first quarter of 2015, which saw 122 deals … Continue Reading

Oilpatch volatility may generate deal-making opportunities

According to some commentators, ongoing volatility in oil prices may result in increased M&A activity in the Canadian oilpatch. As recently reported in the Financial Post, John Chambers, CEO of Calgary-based investment boutique FirstEnergy Capital Corp., believes a revaluation of assets in the oil and gas sector may attract cross-border M&A activity from oil majors who may use the “once in a very long time opportunity” to make acquisitions.  If this view is correct, then the recent acquisition of Talisman Energy Inc. by Spain’s Repsol SA for $8.3 billion may be a sign of things to come.

Mr. Chambers … Continue Reading

Metals sector: a year in review and forecast for 2015

With Q4 2014 results in for the mining sector, industry focus can shift to what lies ahead in 2015. PwC recently released a report, “Metals Deals: Forging Ahead 2015 outlook and 2014 review” (the PwC Report) which includes a look back at the metals deal statistics in 2014 and provides some insight into what we can expect to see in 2015 in the global metals sector.

Unsurprisingly, the 2014 metals deal analysis was discouraging, with global deal value dropping 52%, from US$34.8bn in 2013 to US$16.8bn in 2014. To put this figure further into perspective, the PwC Report states … Continue Reading

M&A trend summary: H2 2014

MergerMarket Group recently published its January edition of Monthly M&A Insider which reported on mergers and acquisitions activity around the world during the second half of 2014. Among other things, the report explains why 2014 was so hospitable to M&A activity, citing an improving economy, large cash reserves, low interest rates, and cheap financing as contributing factors.

M&A worldwide

Overall, there were 16,588 reported deals in the second half of 2014 worldwide, worth roughly $3.2 trillion; this surpasses the previous record, in the second half of 2007, of 16,060 transactions, worth roughly $3.7 trillion. Just under half of the total … Continue Reading

Barrels of opportunity: M&A revival in oil and gas

Globally, the oil and gas sector is seeing an uptick in M&A activity. This could point to a significant rebound for the deal market, despite looming uncertainty owing to recent volatility in commodity prices. According to a recent Deloitte Oil & Gas Mergers and Acquisitions Report, the value of global oil and gas deals increased by 38% in H1 2014 over the same period in 2013, achieving a global deal value of $141 billion, with over 60% of this being contributed by Canada and the United States.

North America rebounds?

North American shale continues to lead the deal market. … Continue Reading

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