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Value of M&A activity up 10.5% at $210B in 2012 despite fewer deals: PwC

January 29, 2013 9:15 AM
BOE Report Staff

 

Toronto – There were fewer merger and acquisition deals in Canada last year but their dollar value climbed to the highest level since the market peak in 2007 — a trend that’s expected to continue in 2013, PwC Canada said Tuesday.

The business consultancy said that despite a 9.6 per cent decline in the number of deals, the value of M&A activity rose 10.5 per cent in 2012 to $210 billion.

“The key driver behind this growth has been a resurgence of activity in deals valued at over $1 billion,” said Nicolas Marcoux, PwC’s Canadian deals leader.

“These mega-deals accounted for $123 billion in 2012, an increase of some $30 billion over 2011, which compensated a modest decrease in the aggregate value of sub-$1 billion M&A activity.”

The energy sector accounted for 29 per cent of published M&A transactions, led by the whopping $15.1-billion Nexen Inc. (TSX:NXY.TO – News) takeover by CNOOC and the $6-billion takeover of Progress Energy (TSX:PRQ.TO – News) by Malaysia’s state-owned Petronas, among others.

The real estate sector represented 15 per cent of target activity in Canadian M&A.

“With real yields on treasuries at or below zero, investors are scrambling to find other classes of yield assets and real estate M&A is a clear beneficiary of this,” says Marcoux.

In third place was the metals and mining sector, representing 11 per cent of the value of all M&A target activity, with the announced hostile takeover by First Quantum Minerals of Inmet Mining a key transaction.

Meanwhile, Marcoux said prospects are good for sustained growth in the Canadian M&A market “thanks to low interest rates, a surplus of cash both on corporate balance sheets and in the hands of pension and private equity funds, and plenty of liquidity in the debt market.”

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