Big deals take centre stage as M&A rebounds in Q2

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Big deals take centre stage as M&A market rebounds in Q2: PwC

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Deals up in both value and volume after slow start to 2014

TORONTO, July 24, 2014 — After a quiet first quarter, M&A activity in Canada accelerated in Q2, according to PwC’s Capital Markets Flash. The second quarter saw 748 deals with a total value of $45.8 billion in 91 days. This translated into a 10% increase in both value and volume from Q1, and a 20% jump from Q2 2013.

Additional Q2 highlights include:

  • Big deals (>US$1 billion) saw the biggest increase, up 10% year over year in volume and a massive 39% in value.  The mid-market (US$100-500) also experienced significant growth, with 30% sequential growth in volume and 20% growth in value.
  • Cross-border deals were prevalent, with a 35% increase in inbound deal value and 26% in outbound deal value from Q1 2014. The domestic deals picture told a different story, however, as these declined by 28% in value from Q1.
  • By sector, commodities took the lead in both value (energy) and volume (mining). However, the quarter’s largest deal came from the consumer discretionary sector (Blackstone’s US$7.3 billion acquisition of Pinafore Holdings).    

Also in this quarter’s Capital Markets Flash:

  • Energy supply wars: Russia’s 30-year supply deal with China has added a new layer to international competition for LNG projects and increases the urgency for new technology to lower the cost of production. Canada will need to move quickly if it wants to be seen as a major player in the market.

  • Medical marijuana, Canada’s ‘budding’ sector: On April 4, Tweed Inc. became Canada’s first publically traded medicinal marijuana (“MMJ”) company, representing a new and rapidly growing industry, aided by regulatory and legislative reform. In 2014, there have been some 30 M&A transactions in the MMJ space in the US and Canada.

  • Deals in the trucking industry: After several slow years, M&A is on the rise again in the Canadian trucking industry. Big companies are getting bigger, while many mid-sized companies are either being acquired or are struggling.

Quotes: Nicolas Marcoux, National Deals Leader, PwC

“We’re seeing companies become increasingly aggressive, not taking no for an answer as hostile activity heats up.”

“Valuation is high in a ‘risk-on’ environment, as corporate and private equity buyers search for growth and value creation opportunities.”

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