Canada's M&A activity continues to fall
TORONTO Reuters - The fall in Canada's mergers and acquisition activity extended into the third quarter as volatile stock markets and rising borrowing costs spooked sentiment for dealmaking, with equity-linked issues slumping to the lowest in 27 years.
Despite the sharp fall, some bankers are beginning to see opportunities. HSBC Plc's possible sale of its Canada unit, worth up to C $10 billion $7.3 billion, and Dye Durham's A $1.27 billion $815.85 million bid for Link Administration's corporate markets and banking segments is one of the transactions that could keep bankers busy for the rest of the year.
The first nine months of the year, the tally for M&A deals, a drop of 28% from a year ago, has dropped to $37 billion, the lowest since 2020, according to data released by Refinitiv on Thursday. The Canadian M&A volumes dropped in line with the global trend.
The biggest deal last quarter was the $5.7 billion bid for UK-based Micro Focus International PLC, followed by Domtar Corp's $3.2 billion acquisition of Resolute Forest Products Inc.
JPMorgan Chase was the top M&A adviser, working on $34 billion worth of deals in the first nine months, followed by Morgan Stanley and TD Securities.
Canadian equity and equity related issues fell by 77% in the first nine months to C $11 billion, the lowest nine-month tally since 1995, Refinitiv said.
Dealmaking in Canada continues to see lower market sentiment and volumes, similar to other markets around the world, yet we see meaningful opportunities in the current environment, said Alex Graham, head of Rothschild Canada.
The Royal Bank of Canada underwritten roughly C $2 billion in equity deals, which was followed by Scotia Bank and Bank of Montreal in the league table for equity issuance.
Energy and power companies led the equity financing, raising C $3.1 billion in the first nine months of 2022.
John Clifford, chief executive of McMillan LLP, said there was a fair amount of uncertainty about what the next few months will hold.