Canada M&A activity rises in Q3, mining deals ebb

Fri Oct 28, 2011 9:21am EDT
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TORONTO (Reuters) - Merger and acquisition activity edged higher in Canada in the third quarter as a wave of deal-making by pension funds and banks made up for a slowdown in the powerful mining sector, according to a report released on Friday.

Deal volume in the July-September period rose by 8 percent over the third quarter last year, and deal values climbed 1 percent, according to a quarterly report by PwC, a global consultancy that tracks M&A activity.

"A high level of activity by Canadian pension fund deal-making during Q3 2011 sheltered a broader Canadian market downturn," the consultancy said.

Canadian pension funds, either as leads, co-leads or part of buyer/seller consortiums, were involved in deals worth more than $15 billion, PwC said, highlighting a trend of foreign acquisitions by Canadian institutions.

Toronto Dominion Bank (TD.TO: Quote), Canada's No. 2 bank, led the pack with its C$8.5 billion acquisition of the Canadian credit card operations of Bank of America (BAC.N: Quote).

Other notable deals in the quarter included the $6.3 billion acquisition of U.S.-based medical device maker Kinetic Concepts Inc by a consortium including the Canada Pension Plan Investment Board (CPPIB), PSP Investments and Apax Partners.

Also in the quarter Bank of Nova Scotia (BNS.TO: Quote) announced the acquisition of a 19.99 percent stake in China-based Bank of Guangzhou Co., Ltd, for about C$719 million.

Scotiabank, Canada's third-largest lender, is eager to expand its footprint in China, where foreign banks are limited to 20 percent stakes in no more than two Chinese banks.

Scotiabank also holds a 14.8 percent interest in Bank of Xi'an, and will increase that stake to 18.1 percent, pending regulatory approval.   Continued...