October 18, 2012 / 6:56 PM / 6 years ago

Canada M&A deals drop 17 percent in third-quarter, but CNOOC bid lifts value

TORONTO (Reuters) - The number of mergers and acquisition proposals in Canada fell 17 percent in the third quarter from the second, but a blockbuster bid by China’s CNOOC Ltd (0883.HK) for oil producer Nexen Inc NXY.TO helped push the value up 23 percent, a report showed on Thursday.

There were 599 M&A deals worth C$58.6 billion ($59.7 billion) in the third quarter, according to PricewaterhouseCoopers (PwC) Canada’s quarterly report on mergers and acquisitions.

The volume of deals was down 21 percent from the third quarter of 2011, but on a value basis M&As were up 23 percent from the second quarter and up 16 percent from a year earlier, due entirely to CNOOC’s Nexen bid, which the report gave a total enterprise value of C$19 billion.

Excluding that deal, the value would have declined 17 percent from the second quarter and 22 percent from the same period last year, PwC said.

“The drop-off in activity is attributable to an absence of targets in the market, rather than an absence of demand for deals,” Nicolas Marcoux, PwC’s Canadian deals leader, said in a statement. “Well-capitalized corporate and private equity firms continue their hunt for strong middle market tuck under deals.”

The value of inbound transactions, where foreign buyers target Canadian companies, climbed 235 percent over the second quarter and was up more than 64 percent from a year earlier.

The data was skewed by the CNOOC bid, which accounted for more than 62 percent of the inbound dollar value. Excluding that deal, foreign acquisitions of Canadian assets were up 26 percent from the second quarter, but down 38 percent from a year earlier.

Foreign acquisitions by Canadian companies fell 13 percent to C$18.9 billion from the second quarter but were 23 percent higher than a year earlier.

Domestic M&A activity fell 47 percent from the second quarter and was down 50 percent year over year.

The CNOOC deal pushed energy to the top of the five most targeted industries, while media made an appearance in the top five on the strength of the Canada Pension Plan Investment Board’s consortium purchase of Suddenlink Communications and Cogeco Cable Inc’s (CCA.TO) acquisition of Atlantic Broadband.

($1=$0.98 Canadian)

Reporting By Andrea Hopkins; Editing by Peter Galloway

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