‘Flood’ of M&A Activity Expected After Market Rebounds in Q3

Author: Tyler Orton

Mergers and acquisitions (M&A) picked up throughout Canada during the third quarter of 2015 following four straight quarters of declines.

But the 673 announced deals valued at $92 billion trails the 708 deals made during the same period a year prior, according to a report released Thursday (May 22) from Crosbie and Company.

B.C. was home to the most vibrant M&A landscape after Ontario during Q3 as 97 deals worth $3.1 billion were made.
Ontario, meanwhile, accounted for 146 deals worth $10.1 billion.

Big declines in Alberta’s economy were the main causes behind dropping M&A activity over the past year, the report said, as 90 deals worth $11.3 billion a year ago in the energy sector fell to just 44 deals worth $1.3 billion in Q3 2015.

This was offset with big gains in utilities this year, which grew from 15 deals worth $112 million in Q3 2014 to 16 deals worth $14 billion during Q3 2015.

Information technology deals also jumped over the past year, rising from 76 deals worth $1.9 billion a year ago to 91 deals worth $3.4 billion during the latest quarter.

“Although we are still well off the recent high in M&A activity, it is encouraging to see some positive indications of a recovery, even as weakness continues in the resource sectors,” said Crosbie director Richard Betsalel wrote in the report.

“With commodity prices at cyclical lows, the balance sheets of many resource companies and their suppliers are becoming stressed. We are hearing that lenders are seeking to reduce their exposure in these sectors and we expect that to eventually result in a flood of M&A activity as borrowers without refinancing options seek opportunistic buyers with strong balance sheets.”

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