The Energy sector leads Canadian M&A, but the overall slowdown continued, said mergermarket...
By Militza Richard
Although overall value figures remain low, the fourth quarter saw an 81 percent increase in merger and acquisitions volumes in Canada.
Mergermarket, a subsidiary of The Mergermarket Group, reported that the slowdown in Canadian M&A continued in 2009 with overall values decreasing by 20.8 percent and volume by 14.2 percent. However, Q4 was the one bright spot with 118 announced transactions, increasing from 65 in Q1.
The sharp increase in the number of deals was lead by the Energy sector. With 99 announced deals, the sector represented a quarter of Canadian M&A volume for 2009 and revealed consolidation in the Energy sector as the driving force of Canadian M&A. Several major transactions including Suncor Energy’s acquisition of Petro-Canada
and the Sinopec - Addax Petroleum deal, lifted the overall acquisition values in the sector to an all time high of US $51.9 billion for 2009, an overall increase of 19 percent compared to 2008.
Additionally, most of these acquisitions (84 percent) were domestic, indicating that the market is moving toward increased consolidation. While foreign acquisitions were low compared to previous years, there was a steady rise in the trend throughout the year. US based companies continue to inject capital into the country, but UK and Chinese companies have also shown interest.
Energy is expected to continue to be a driving force in 2010. As the global economy begins to recover, interest in commodities are expected to increase. Meanwhile, the Canadian energy and mining sectors are already off to a strong start with the announcement of PetroBakken Energy’s all-cash US $222 million offer for Berens Energy coupled with the announcement by Suncor Energy of plans to start divesting US $3.5 billion worth of non-core natural gas assets within the year.
For more information on the Canadian M&A market, please visit: Canada M&A Year End Round-up 2009