Crosbie & Company Canadian Mergers & Acquisitions Report for Q1 2025

Caution Lights Flashing Due to Global Shifts 

After a strong rebound in M&A activity through 2024, the market moderated in the first quarter of 2025 as dealmakers navigate a rapidly changing landscape amid growing tariff and macroeconomic uncertainty. Announced deals totaled 615 (10% decline from the last quarter), and total deal value fell 16% to $63B.   

As the quarter progressed and global trade tensions escalated, many dealmakers adopted a more cautious approach which has slowed down many deal processes.  While it varies by company and sector, tariff uncertainty has made it more challenging to forecast the future performance of some companies.   This is less of an impact for those that are able to support their business case, but for some, it can result in challenges in assessing value and obtaining financing.  High-quality assets continue to attract strong interest, while competitive processes remain active and produce good results where the strategic rationale is clear.

“Notwithstanding the attention being paid to potential tariff impacts, many sale processes continue to move forward and valuations are decent where buyer concerns can be well addressed,” said Ian Macdonell, Managing Director at Crosbie & Company Inc. “Despite a lot of noise, there are still some good fundamentals underpinning the M&A market, including a broad and active buyer landscape, good financing, and opportunities for strategic realignment.”

There were 10 mega-deal transactions (deals valued above $1B) announced in the first quarter, totalling $50B in value. Two transactions surpassed a $10B value; the largest was the $13.5B acquisition of Nova Chemicals by Borouge Group International, a new entity formed from the merger of the petrochemical businesses of Abu Dhabi National Oil Company and Austria’s OMV. The second largest was Caisse de dépôt et placement du Québec’s $10.2B acquisition of Innergex Renewable Energy Inc. Other notable transactions include Whitecap Resources Inc.’s acquisition of Veren Inc. for $9B, Welltower Inc. acquiring Amica Senior Lifestyles from Ontario Teachers' Pension Plan for $5B, and Kontoor Brands' $1.3B acquisition of Helly Hansen AS from Canadian Tire Corporation.

Mid-market transactions (valued below $250M) accounted for 88% of deals with disclosed values. Activity in this segment softened compared to the previous quarter, with 193 deals announced, down from 263 in Q4 2024. Despite its dominance in volume, the mid-market contributed just 7% of total deal value, which is slightly below historical averages.

Sector-level deal activity reflected the shifting priority of deal makers, with the Information Technology industry experiencing the largest rise in deal count (+15), leading all sectors with a total of 117 transactions. In contrast, several of the capital-intensive and traditionally active sectors experienced significant pullbacks, including Precious Metals (-23 deals), Metals and Mining (-20), Real Estate (-17), and Materials (-10). This divergence suggests a change toward asset-light, innovation-driven sectors amid macroeconomic uncertainty and volatility.

Cross-border M&A remained a key driver for overall M&A activity, representing 46% of transactions and 51% of deal value. While global trade tensions and U.S. tariff policies may pose increasing headwinds in future quarters, Canada-U.S. deal flow remained active, comprising 63% of cross-border transactions.

Overview

• Deal activity fell for the first time in five quarters, a decrease of 10% compared to Q4 2024
• Aggregate deal value ($63B) was down 16%, driven by a decrease of 3 mega-deals compared to Q4’24
• Cross-border M&A activity also decreased by 8% to 280 transactions representing $32B in value (51% of aggregate deal value)

Mega-Deals 

• There were 10 mega-deals (those over $1B) announced in Q1 2025 representing $50B in value 
• The largest deal this quarter was the $13.5B acquisition of Nova Chemicals in an international merger primarily between Austria-based OMV and Abu Dhabi National Oil Company in the UAE
• Driven by growing interest for renewables, Utilities was an active mega-deal space with Caisse de dépôt et placement du Québec’s $10.2B acquisition of the Innergex Renewable Energy Inc. and Brookfield Asset Management Ltd.’s $2.5B acquisition of the National Grid Renewables, LLC

Industry Sector Activity

• Material deal count increases were only seen in Information Technology (+15), as overall deal volume softened for the quarter
• Sectors experiencing the largest decline from the previous quarter include Precious Metals (-23), Metals and Mining (-20), Real Estate (-17), and Materials (-10)
• Materials and Utilities generated the largest deal volume at $13.5B and $12.7B, respectively, as a result of several large transactions

Breakdown by Transaction Size

• Disclosed mid-market transactions (deal value below $250M) accounted for 88% of deal count and 7% of deal value
• Mid-market deal value fell 33% quarter-over-quarter, while the broader market fell 16%

Canadian Domiciled versus Foreign M&A Targets

• M&A activity involving Canadian-domiciled targets dropped to 377 deals in Q1 2025, down from 444 in Q4 2024
• 282 of these transactions (75%) were made by Canadian companies, and 95 (25%) were made by foreign buyers
• The cumulative value of domestic deals increased to $47.5B (from $23B in Q4 2024)
• Canadian firms made 467 total announcements, including 185 with targets outside of Canada

Cross-Border Deals

• Cross-border deals represented 46% of overall deal activity and contributed to 51% of total deal value in Q1 2025
• While the outbound-to-inbound ratio for deal count rose, the outbound-to-inbound ratio for deal values saw a significant decrease, falling to 0.44 (from 2.93 in Q4 2024)
• Despite tariff concerns Canada-U.S. cross-border deals remained a key driver, making up 63% of total cross-border transactions and 43% of deal value 

Deals by Provincial Domicile

• Domestic aggregate deal count saw a significant drop from the previous quarter, however, due to Canadian domicile mega-deals, the total value of deals has doubled since last quarter
• Ontario was the most active province by deal count (147), representing 47% of all transaction value for Canadian-domiciled targets
• Alberta experienced the largest increase in deals (40), totalling $23B. The rest of the provinces and territories, excluding British Columbia, remained consistent with the previous quarter