Pipeline, utility deals fuel jump in Canadian M&A activity

By John Tilak and Euan Rocha
TORONTO, April 7 (Reuters) - Acquisitions in the utility
sector and a major cross-border pipeline transaction helped
drive the volume of Canadian M&A activity up 48 percent in the
first quarter of 2016, even though the number of deals declined.
Thomson Reuters data released on Thursday showed the overall
number of deals in the period fell 18 percent to 511 from a year
earlier, while the deal value surged to $67.9 billion from $45.9
billion a year ago.
The top three deals in the quarter - TransCanada Corp's
TRP.TO acquisition of Columbia Pipeline Group CPGX.N , Fortis
Inc's FTS.TO buyout of ITC Holdings ITC.N and the merger
between Waste Connections Inc WCN.N and Progressive Waste
Solutions BIN.TO - accounted for nearly half of the total deal
value.
The heightened cross-border deal flow propelled Goldman
Sachs GS.N , Lazard LAZ.N and Wells Fargo (NYSE:WFC) WFC.N to the top
three spots.
"I do think you will continue to see more Canadian companies
looking for growth opportunities in the U.S. market," said Darin
Deschamps, co-head of Wells Fargo Securities Canada.
"And we will continue to see equity investors supporting
management teams in companies that have acquisitions that are on
strategy and drive a company's strategic objectives."
Morgan Stanley (NYSE:MS) MS.N , Bank of Nova Scotia BNS.TO and
Barclays BARC.L rounded out the top six spots in Canada in a
quarter that also saw some significant deals in the retail and
media industries. In the quarter, Lowe's Cos LOW.N struck a
deal to buy Rona Inc RON.TO and Corus Entertainment CJRb.TO
agreed to acquire sister entity Shaw Communications Inc's
SJRb.TO media arm.
The top three law firms in the league tables that advised on
deals with Canadian involvement were Simpson Thacher & Bartlett;
Osler Hoskin & Harcourt LLP; and White & Case LLP.
"We are seeing more and more cross-border deals. The U.S.
economy continues to be solid and a desirable place for foreign
companies to invest, including Canadian companies," said Lee
Meyerson, head of M&A at New York-based Simpson Thacher &
Bartlett, which advised on the the quarter's two biggest deals.
The strong start comes after the second highest-ever level
of Canadian M&A activity in 2015 and a record year globally.
Advisors don't expect 2016 to be as robust.
"M&A activity levels will be more volatile than last year,
and less predictable from month to month, although overall we
expect it to be another strong year," Meyerson said. "Every CEO
and board has to take into account the potential for market
volatility, which could gyrate stock prices, for example, when
planning an acquisition or sale."