The Canadian M&A sector remained flat for a second straight year in 2013, reflecting similar numbers from 2012, according to KPMG. The Materials segment also continued to flounder while other market segments showed some growth and promise as debt market liquidity gained momentum during the calendar year.
Total M&A deals involving Canadian companies are expected to amount to US $139 billion in 2013, representing a seven percent increase over 2012. Almost 1,800 deals, virtually the same number as 2012, are expected to be completed by December 31, 2013 based on data supplied by Thomson Financial.
The Materials segment, which includes Mining and Metals, remained in the doldrums. Despite a modest increase in deal value over last year, Materials continued to see a decline in the number of transactions, resulting in a 23 percent decrease over 2012.
The cost of debt capital hovered around historic lows in 2013. This allowed debt market liquidity to gain momentum throughout the year and reduce the costs of acquisitions, enticing intergenerational sellers to begin monetizing their assets. Private Canadian companies from coast to coast have come to the market in order to take advantage of strong selling conditions. KPMG foresees strong selling conditions continuing in Consumer and Industrial markets due in part to strength in automotive sales in North America coupled with increased consumer spending.
Some of the landmark transactions involving Canadian companies in 2013 include:
- The US $19.1 billion acquisition of Nexen by CNOOC Limited, a Chinese investment holding company
- The US $6 billion acquisition of the American retailer Neiman Marcus by a private equity consortium that included CPP Investment Board
- Sobeys' acquisition of Safeway Canada, a food retailer in Western Canada, for US $5.7 billion
- The acquisition of Ally Credit Canada by RBC for US $4.1 billion
- Hudson's Bay Company's acquisition of Saks Incorporated for US $2.5 billion.
