Wed, Oct 10, 2018

Canadian M&A Insights - Fall 2018

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Canadian M&A activity remained strong in 1H 2018 as low financing costs and continued North American economic growth fueled a robust M&A environment. In 1H 2018, 518 Canadian companies were sold, a 7% increase over the first half of 2017, with disclosed enterprise values totaling $51 billion (118% YOY 1H 2017). Of the transactions completed, 73% were domestic acquisitions, which is in line with historical averages. 

The number of megadeals1 decreased from 21 in 1H 2017 to 19 in 1H 2018, as did the average enterprise value, with 1H 2018 averaging $4.1 billion compared to $5.1 billion the year prior. The largest deal involving a Canadian buyer or seller in 1H 2018 was Nutrien’s (formerly PotashCorp) acquisition of Agrium for $24.5 billion (Total Enterprise Value [“TEV”]). The Agrium acquisition was first proposed in 2016, working its way through a series of shareholder and regulatory approvals before becoming official on January 2, 2018. The combined entity is now one of the world’s leading agriculture businesses. Major pension funds also remained active on the acquisition front.

The Canadian M&A market experienced an uptick in both the number of announced deals (518 in 1H 2018 versus 484 in 1H 2017) and median deal value ($10 million in 1H 2018 versus $9 million in 1H 2017). The increased number of deals over $50 million led to this increase in median deal value. Although megadeals represent only 9% of all transactions, they represented 80% of total deal value. It should be noted that since the values of many smaller transactions are not disclosed, the actual median is likely lower. 

1 S&P Global Market Intelligence as of June 30, 2018; Kroll analysis. All publicly disclosed transaction information available in S&P Global Market Intelligence. Deals involving a Canadian company as the buyer or seller with an implied enterprise value of $500 million or more.

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