92 days, 587 deals, $55 billion: PwC's Q3 Canadian M&A roundup

Canadian M&A activity rose sharply in the third quarter of 2013 on a value basis, to US$54.8 billion from US$38.9 billion in Q2, according to PwC's Capital Markets Flash. Volume was actually some 6% down on Q2, the advance has been at the high end of the market where Loblaw's $13B acquisition of Shoppers Drug Mart led the quarter's nine $1B+ deals to account for a whopping two-thirds of the total.
By sector, retail took the top spot with 3 of the largest 5 deals in Q3, the Loblaw/Shoppers deal being accompanied by CPPIB and Ares Management's $8.7B purchase of high-end US retailer, Neiman and Hudson Bay's $2.7B acquisition of Saks. Continuing the trend of the first half of the year, oil and gas and mining sectors remained quiet on a value basis.
Julian Brown, Deals Partner and PwC's Corporate Finance Leader for the Americas says, "Despite political uncertainty in the US, businesses are clearly confident in the recovery of the US consumer market and this is translating into deals in consumer-driven sectors, retail being the most direct beneficiary."
While the near term outlook for M&A in Canada is subject to a lot of uncertainty given the shaky nature of the global recovery, PwC's Capital Markets Flash notes certain areas where the future looks clearer:
Canadian pension funds and real estate players will continue to acquire assets both locally and globally.
The Canadian middle market, which has been a consistent and stable source of deals nationally throughout economic ups and downs, is also poised to continue to fill the domestic deal pipeline.
Economically diverse Canadian regions that have performed well during the slowdown in the natural resources sector will continue to be characterized by steady growth and stability.
The effect of China's appetite for foreign acquisitions, while temporarily absent from the natural resources sector will begin to show itself in other sectors, notably agribusiness, a sector of significant importance to the Canadian economy.
For more information, including a full copy of PwC's Capital Markets Flash, which reviews and discusses Q3 2013 deals and trends more comprehensively, please visit: www.pwc.com/ca/deals

on October 31, 2013