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November 08, 2018 | M&A Reports 

Crosbie & Company Canadian Mergers & Acquisitions Report for Q3 2018

M&A Activity Reaches New Highs - A Huge Quarter for “Made in Canada”

Canadian M&A activity set a new high-water mark in Q3 2018 with a record 881 announced transactions, as activity increased for a third consecutive quarter. Overall activity for the quarter was bolstered by a robust domestic mid-market deal environment. The strength in activity brings the year-to-date number of announced transactions to 2,541, a 15% increase from 2,211 transactions during the same period last year.  Despite the increase in deal activity, aggregate deal value in the third quarter declined slightly to $68B (from $74B in Q2 2018), largely due to a decline in the number of mega-deals.  

“Mid-Market deal announcements jumped this quarter as business owners took advantage of great market conditions to exit at premium valuations” said Colin Walker, Managing Director at Crosbie & Company.  “As well, the number of deals involving both buyer and seller in Canada showed tremendous growth”. In the third quarter, there were 456 of these transactions, which have been steadily increasing since Q1 2017 and have represented a majority of the total activity in each quarter of 2018. Activity involving Canadian buyers of foreign targets increased a more modest 14% to 236 transactions (compared to 207 in Q3 2017).  

There were 11 mega-deals announced in the quarter with a total value of $48B, down from 18 mega-deals valued at $51B in the second quarter and slightly higher than the 9 mega-deals valued at $41B during Q3 2017.  The largest announced transaction was the $13.8B acquisition of Forest City Realty Trust, a publicly traded US real estate company, by Brookfield Asset Management Inc. The second largest announced transaction was the $8.4B acquisition of Randgold Resources by Barrick Gold Corp. If completed, this acquisition will create the world’s largest gold producing company by total output and value. Brookfield Infrastructure Partners announced two large acquisitions of NorthRiver Midstream Inc. and EnerCare Inc. for $4.3B and $4.2B respectively.

During the third quarter, the Canadian M&A market experienced a noticeable decline in large transactions involving financial sponsors (Private Equity and Pension Funds). There were only two announced mega-deal transactions involving financial sponsors compared to 10 in the second quarter. Overall, financial sponsors announced 16 transactions (in excess of $100M) for a combined value of $22.4B. However, financial sponsors were acting as vendor in 12 of these transactions as they took advantage of strong sell-side market conditions. 

The mix of transactions by industry sector changed significantly compared to the same quarter in 2017 when 18 utility deals represented almost half of the value of the announced transactions. In Q3 2018, Real Estate was the most active sector, and had the largest aggregate transaction value. The sector had 122 announced transactions, a 51% increase over the same quarter in 2017. The $22.5B in aggregate deal value was largely comprised of two mega-deals in the quarter, including the previously mentioned Forest City Realty Trust transaction and the $3.8B acquisition of the Investa Office Fund by Oxford Properties Group. Additionally the Industrial sector had one of its most active quarters in recent years with 105 announced transactions, a 64% increase over the same quarter in 2017.


  • Deal activity continues to increase, following a slight retreat in the second quarter
  • Third consecutive quarter with 800+ announced transactions
  • Q3 announcements increased by 23% year over year
  • Total deal value was $68B, down 8% from the second quarter this year, but up 8% from Q3 2017
  • Conditions for M&A remain generally strong:
    • Rising but historically low interest rates support leveraged financing strategies
    • Significant availability of capital - both debt and equity
    • Despite evidence of some pull-back in valuations, still very attractive valuations by historical standards
    • Strong North American economic growth and business confidence levels


  • 11 mega-deals is consistent with the trend over the last 5 quarters, excluding the multi-year high in Q2 2018
  • Represented $48B of total value, a slight decline from Q2 2018
  • Largest announced transaction was the $13.8B purchase of Forest City Realty Trust by Brookfield Asset Management
  • Brookfield owned entities dominated the mega-deal landscape in Q3 with 5 transactions each exceeding $2.5B
  • Only 2 mega-deals involved financial sponsors, perhaps indicating a decline in the acquisition appetite of “Smart Money” investors

Industry Sector Activity

  • Real Estate was the most active sector in the third quarter with 122 transactions, and experienced the most dollar volume with an aggregate transaction value of $22.5B
  • Industrial sector experienced the greatest increase in deal activity (64%) with 105 transactions in the quarter
  • Metals and Mining deal activity remained strong this quarter with 104 transactions, exceeding 100 transactions in each of the last 7 quarters
  • Total transaction value was distributed across several  sectors this quarter, contrasting the high concentration of deal value in Q3 2017 in the utilities sector

Breakdown by Transaction Size

  • 92% of transaction volume in the quarter was from mid-market transactions below $250M (for transactions with disclosed values)
  • Mid-market transactions were valued at $9.4B or approximately 14% of the total M&A value

Domestic Versus Foreign M&A

  • Notably high “Made in Canada” activity
  • Transactions involving Canadian targets increased 28% to 591 transactions, representing 67% of the total
  • Primary driver was Canadian buyers of Canadian targets; 456 deals which is a high-water mark 
  • Notwithstanding the above,  Canadian companies also remained active acquirers abroad with 236 transactions valued at $32.6B

Cross-Border Deals

  • The historical trend of outbound M&A activity outpacing inbound M&A continues, with Canadian companies outspending foreign buyers 2:1
  • Cross-border deals represented 42% of total activity and 71% of total deal value
  • The United States remains our most active M&A partner representing 62% of cross-border activity

Target by Province

  • Ontario remains the most active province this quarter with 218 deals valued at $11.3B
  • BC experienced the largest increase in activity with 133 transactions, up 32% from the same quarter last year
  • Saskatchewan saw total transaction volume exceed $1B for the first time since Q2 2016 due to the management led acquisition of AGT Food Ingredients for $960M

Crosbie & Company Inc.
150 King Street West, 15th Floor, P.O. Box 95, Toronto, Ontario M5H 1J9
Tel: 416.362.7726 | Toll Free: 1-866-873-7002 | Fax: 416.362.3447


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