The volume of Canadian mergers and acquisitions in the third quarter of 2012 was down 17% from the previous quarter, with 599 transactions occurring from July to September, according to a report issued by PricewaterhouseCoopers LLP this morning.
PcW’s Q3 Canadian M&A Deals Quarterly states that although the volume was lower, the total dollar value of all transactions was 23% higher than in the previous quarter, due in large part to one single transaction: the pending acquisition of Nexen Inc. (TSX:NXY, NYSE:NXY) by China National Offshore Oil Company Limited (CNOOC) (SEHK:00883, NYSE:CEO) for $19 billion.
Without the Nexen-CNOOC deal, dollar values would have declined 17% from Q2, and 22% from Q3 2011.
“The drop-off in activity is attributable to an absence of targets in the market, rather than an absence of demand for deals,” said PwC’s Canadian deals leader Nicolas Marcoux. “Well-capitalized corporate and private equity firms continue their hunt for strong middle-market tuck-under deals.”
Transactions involving foreign buyers targeting Canadian companies in Q3 were more than double (235%) the levels in Q2, but once again, this is mostly due to the Nexen-CNOOC transaction, which accounted for over 62% of all inbound deals. However, without this transaction, there would still be an increase of 26% for all inbound transactions over Q2, but a drop of 38% when compared with Q3 2011.
Acquisitions of foreign companies by Canadian buyers were $18.9 billion in Q3, down 13% when compared with Q2 but up 23% from Q3 2011.
Domestic M&A activity was down 47% when compared with Q2 and 50% compared with Q3 2011.
Marcoux said, “Inbound and outbound transaction activity continued to be resilient even in the face of a quiet quarter of domestic M&A activity.”
