Recently, our firm's Calgary office completed a review of
M&A themes and deal terms in the oil and gas sector from
January 1 to December 31, 2014. This study contains a list of oil
and gas M&A transactions over the full year period, a review of
key trends in deal terms, a summary of notable features of each
transaction, an analysis of the timelines and a numerical analysis
of key deal terms. A few key themes emerged from our review.
The period started upbeat, with a rebound in activity confirmed
by almost as many deals announced in H1 2014 as all of 2013. But
the party was short-lived, with eroding market conditions undoing
several transactions late in the year. The announcement of one of
the largest ever domestic Canadian energy deals was perhaps both a
bright spot in the period and a symptom of the market conditions,
with pricing that was widely seen as favouring the purchaser.
Financial buyers were almost totally absent in 2014, which left
room for domestic and international strategics to dominate the
Other notable features included the following:
30 deals were announced in 2014 (18 in H1 and 12 in H2),
compared to 20 in 2013.
Deal size increased significantly, with the number of
transactions over $100M more than doubling from 2013.
Service deals dwindled - only one services deal was completed
in 2014 and it involved the acquisition of a related party.
Financial buyers completed only one transaction.
The number of international deals (involving targets with
assets predominantly located outside of Canada) increased by almost
a factor of four to 12, compared to the three international deals
completed in 2013.
There was some topping activity early in the year, but the
phenomenon vanished in the second half.
Six deals were structured as amalgamations. All of the deals in
2013 were completed by plan of arrangement. Our sense is that this
trend will be short-lived in view of recent judicial practice to
maintain broad access to the arrangement.
Generally, the sales processes were not frantic and involved
the usual mix of stories that unfolded quickly and others that went
on for more than a year.
Shareholder activism and creditor pressure appear to have been
a factor in a handful of deals.
Cash was not king – cash (or cash and shares) went from
comprising the consideration in 68% of deals in 2013 to just 40% in
Deal completion time crept up, with 24% of the deals running
over 70 days, against 18% in 2013, but this was likely a function
of more deals involving assets outside of Canada.
Reverse break fees appeared less often – they were
present in 58% of deals in 2014, compared to 79% in 2013.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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