Mergers and Acquisitions in Canada Set Quarterly Record for Cross-Border Transactions and Easy Money

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TORONTO (Reuters) – Canadian M&A activity in the first three months of the year hit an all-time high as deals recover from the coronavirus fallout, and bankers point to a healthy pipeline of transactions supported by easy financing conditions.

The novel coronavirus has driven mergers and acquisitions (M&A) to a nine-year low in 2020 as companies shifted to cash flow preservation mode. But the deployment of vaccines and an expected economic recovery are reviving business confidence to strike deals, especially in the United States.

“These are definitely the busiest times I’ve experienced in my 25-year career,” said Grant McGlaughlin, partner at the law firm Fasken. “I don’t think you can keep up with this pace all year round, but hopefully Q2 and Q3.”

The quarterly M&A tally hit a record high of $ 114.91 billion in the first quarter of 2021, according to data from Refinitiv. The companies raised C $ 19 billion ($ 15.2 billion) from the sale of shares in the first three months of the year, the highest since the fourth quarter of 2010.

Mike Boyd, managing director and head of global mergers and acquisitions at CIBC, said he didn’t think he had ever seen capital markets as conducive to mergers and acquisitions as they are today.

“If you look at the debt markets in particular, you have record interest rates, and we also have … a force in the capacity of the market,” to absorb the size of the deal, he said. he declares.

Boyd expects M&A activity to remain high thanks to low interest rates and a strong economic recovery that will remain in place for at least the next two quarters.

RUSH OUT

Bank of America Corp’s BofA Securities Inc, Bank of Montreal’s BMO Capital Markets and Toronto Dominion Bank’s TD Securities Inc were the top three banks for mergers and acquisitions, the data showed.

Topping the list are Canadian Pacific Railway Ltd’s $ 25 billion bid for Kansas City Southern and Rogers Communications Inc’s $ 20 billion Canadian bid for Shaw Communications Inc.

Bill Quinn, head of mergers and acquisitions at Toronto Dominion, said that while Canadian investors looking outside of Canada declined last year due to the pandemic, we are now seeing a “return to normal.”

The first quarter of 2021 saw nearly $ 50 billion in outbound deals, the largest second quarter on record, about half of which came from the CP deal.

“In terms of mergers and acquisitions in Canada, we are seeing stronger growth in our market compared to the United States,” said Sarfraz Visram, head of mergers and acquisitions at BMO Capital Markets.

U.S. M&A activity grew 12.2% to $ 869.35 billion in Q1 2021 from Q4 2020, while mergers and acquisitions in Canada saw sequential growth by 44.4% over the same period, according to data from Refinitiv.

“We have now clearly taken the leap,” said Emmanuel Pressman, partner at Osler law firm. “Part of it is the renewed confidence in cross-border, inbound and outbound M&A flows.

($ 1 = 1.2536 Canadian dollars)

Reporting by Maiya Keidan; Editing by Denny Thomas and Lisa Shumaker

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