Canada: Mergers & Acquisitions: Trends To Watch In 2015


Canadian M&A activity increased notably in 2014, reflecting the strengthening of the global economy, particularly in the U.S. The total value of Canadian announced deals to date (all numbers as of December 1, 2014) has been C$245.7-billion, which on an annualized basis reflects a 40.4-per-cent increase over 2013, which had been the weakest year in Canadian M&A since 2009.

There have been to date 51 "mega-deals" over US$1-billion announced in 2014 having an aggregate value of C$150.1-billion, which is a 107.9-per-cent increase as of the same date in 2013.

Canadian companies' outbound M&A strengthened relative to inbound acquisitions and the U.S. was again the most popular target. Over 61 per cent of Canadian outbound M&A to date in 2014 involved U.S. targets.

Headline-making deals in 2014 included: 

  • Encana's US$7.1-billion acquisition of Texas-based Athalon
  • Burger King's pending C$14.6-billion acquisition of Tim Hortons, structured as a corporate inversion
  • Apollo Global Management's purchase of Encana's Bighorn assets for US$1.9-billion through Jupiter Resources
  • Grupo Bimbo's C$1.83-billion acquisition from Maple Leaf Foods of a 90-per-cent stake in Canada Bread
  • Yamana Gold and Agnico Eagle Mines's C$3.9-billion acquisition of Osisko Mining 

There are a number of compelling reasons to be bullish on M&A activity levels in 2015. With commodity prices at their lowest level in years, opportunistic buyers may look to scoop up resource deals at a discount. The extended low interest environment may breathe new life into real estate-driven M&A, particularly among REITs and other commercial real estate vehicles. Overall, stronger economic activity is adding to the already flush cash reserves of companies in Canada and the U.S., who will need to deploy their capital. With the Canadian dollar in decline over the past 12 months, U.S. and international buyers may take advantage of the structural discount on Canadian acquisition prices.

Here are some of the developments and trends we see impacting Canadian M&A in 2015.


While Europe may have been the most frequent destination for U.S. companies contemplating "inversions" or similar cross-border transactions with tax benefits, U.S. companies looked north as well—with the deal causing the biggest stir being the pending C$14.6-billion transaction between Burger King and Tim Hortons. The U.S. reaction to the BK/Timmy's deal was particularly interesting given that the transaction is arguably not a traditional "inversion" deal like recent examples in Europe where the driving purpose is to reduce U.S. tax. While there may be some tax advantages in moving the combined BK/Timmy's head office to Canada, it has been widely noted that Canada's Timmy's was already the much larger of the two companies, and the decision to merge would have been driven heavily by operational synergies.

The subsequent announcement by the U.S. Department of the Treasury and the Internal Revenue Service of their intention to curb true inversions by reducing the tax benefits may slow the volume of these deals. However, U.S. companies may still benefit from inversion transactions with Canadian entities given Canada's favorable corporate tax regime which, unlike the U.S., effectively does not tax the repatriation of offshore business income.


After almost two years of discussion, the Canadian Securities Administrators (CSA) and Quebec's Autorité des marchés financiers (AMF) have compromised on their desired approach to the regulation of shareholder rights plans. Canada's securities regulators have reached agreement on a harmonized approach to updating the takeover bid rules and will be proposing amendments in 2015. The amendments will require that all bids: (i) be subject to a minimum 50-per-cent tender condition; (ii) remain open for at least 120 days, unless the target board waives that minimum in favor of a shorter period (not less than 35 days); and (iii) be extended for 10 days after the minimum tender condition has been met.

Until the CSA's proposed amendments are implemented (likely mid-2015 at the earliest), it should be business as usual for takeover bids. For example, an unsolicited bidder will continue to apply to the relevant securities regulatory authority for an order cease-trading the target's shareholder rights plan in order to permit its bid to proceed.

The progress made by the CSA to date may however be derailed in 2015 by the proposed cooperative capital markets regulatory system (Cooperative System), and in particular the draft Provincial Capital Markets Act (PCMA), released for comment in December. The PCMA, if brought into force, would replace the securities legislation in British Columbia, New Brunswick, Ontario, Prince Edward Island and Saskatchewan, and introduce sweeping and untested new changes to the regulation of capital markets in those provinces.


2014 saw a rise in secondary market transactions in the infrastructure sector, a trend that we expect will continue. With a growing number of privately financed infrastructure projects having reached substantial completion of construction and entering into the operating phase, an equity exit is less complicated and often contemplated by the project agreements. These types of projects with long-term, stable cash flows backed by governments are attractive investments for equity players like pension funds that have substantial sums of cash to deploy. We expect sponsor-backed investors will continue to monetize their holdings and the secondary market to develop and mature. With the growing role of private finance in infrastructure projects in recent years, there will be continued investment opportunities brought to the secondary market as more projects reach construction completion.


Private equity firms are increasingly looking to the Canadian energy industry for investment opportunities, and more recently bargains, which we expect will gather additional steam in 2015. While certain funds have been active in the Canadian energy sector for a number of years, more firms are following suit and established players are expanding their presence. 2014 saw KKR open its Calgary office and Apollo purchase nearly C$2-billion worth of energy assets from Encana. With renewed focus on LNG and opportunities in oilfield services, all signs point to PE increasing its presence in the Canadian energy sector.


A number of decisions in 2014 clarified the role of fairness opinions in M&A transactions undertaken by way of plan of arrangement. Following some uncertainty created by the decision in Champion Iron Mines Limited (Re), which suggested that fairness opinions must be in a form that meets the court's onerous standards for admissible expert evidence, the more recent decisions affirmed that a court can consider the fact that a fairness opinion was obtained by the target, as distinct from the contents of that fairness opinion, as a factor in its decision that an arrangement meets the requisite test of being fair and reasonable.

In our upcoming 2015 edition of the Blakes Public M&A Deal Study, we determined 100 per cent of the transactions we reviewed over a 12-month period included at least one fairness opinion and 18 per cent included two or more fairness opinions:


"Like many pension funds, we are somewhat Canada-heavy, but we are more than willing to participate in attractive domestic opportunities. However, Canada is a small part of the international asset market and global diversification is key to earning high long-term return on investment risk for our clients," says Leo de Bever, Chief Executive Officer, Alberta Investment Management Corporation (AIMCo).

With their continued focus on active investments and healthier returns, Canadian pension funds are actively looking for more opportunities outside of Canada, particularly in the real estate and infrastructure sectors. 2014 saw Canada's largest p-funds make investments across the globe, from airports in the United Kingdom to real estate in Brazil. With limited domestic opportunities in which to deploy capital and significant anticipated growth in emerging markets, we expect the p-funds to continue expanding their global asset portfolios.


Two years after the federal government enacted policies governing investments into Canada by state-owned enterprises (SOEs), the Alberta government is hoping to have some of the rules either revisited or clarified in an effort to spur foreign investment. Alberta believes that the SOE rules, enacted in response to a few high-profile, high-dollar value investments by Asian SOEs, have caused confusion and hesitation amongst other foreign sources of capital who are unclear whether the rules apply to them. This is especially true in jurisdictions like China, where the line between a stand-alone commercial entity and SOE is complex.


While still lagging behind Europe and the United States, the use of rep & warranty insurance in Canada has picked up steam and is expected to continue. There are numerous instances in private acquisitions where rep & warranty insurance may be helpful, including to a buyer seeking to differentiate its bid in a competitive auction or to a private equity-backed vendor looking for a clean exit without trailing indemnity commitments or escrowed proceeds. More Canadian transactions will utilize rep & warranty insurance in 2015 to get the deal done.


2014 saw an upswing in Canadian issuers accessing the high-yield markets. While some companies have included high-yield as one aspect of an overall corporate finance program, others have been financing acquisitions both at home and abroad with the debt. Notably, 2014 saw some of Canada's largest M&A transactions funded, at least in part, from proceeds of high yield-debt offerings, including Baytex Energy's acquisition of Aurora Oil & Gas, Jupiter Resources's acquisition of assets from Encana and Yamana Gold's acquisition of Osisko Mining. Given the continuance of historically low interest rates, we expect more Canadian issuers to access the debt markets for acquisition financing in 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Jan 2018, Seminar, Toronto, Canada

We invite you to join members of our National Restructuring & Insolvency Group as they review key restructuring and insolvency developments and trends across Canada in 2017.

31 Jan 2018, Seminar, Toronto, Canada

The Supreme Court of Canada and the Alberta Court of Appeal issued a number of decisions over the past five years that have significantly impacted businesses and commercial disputes.

7 Feb 2018, Seminar, Toronto, Canada

The past year has seen a number of developments in corporate governance and shareholder activism as well as some notable proxy contests.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions