Canada M&A emerges from pandemic lows in third quarter; activity seen picking up

(Reuters) - Canadian mergers and acquisitions are set to increase following a modest third-quarter recovery from multi-year lows, as market stability and access to capital give companies the confidence to negotiate and price transactions.

FILE PHOTO: A G4S security van in Loughborough, central England, August 28, 2013. REUTERS/Darren Staples/File Photo

Equity offerings also picked up in the three months through September, as stock market recovery following a tumultuous few months early in the coronavirus pandemic encouraged issuers to tap markets to recapitalize.

Some $40.9 billion worth of M&A deals were announced in the third quarter, the highest since the onset of the coronavirus crisis in late 2019 and a 200% jump from the three months ended in June, Refinitiv data showed. But it was lower than the $50.7 billion worth of transactions from a year ago, the data showed.

“There are clearly indications that we’re in the early stages of recovery, a lot more strategic dialogue going on and private equity is continuing to be very active,” said Emmanuel Pressman, partner at Osler, Hoskin & Harcourt LLP.

Canadian security firm GardaWorld's 2.95 billion pound ($3.8 billion) offer for Britain's G4S GFS.L and cable operator Altice USA Inc's ATUS.N C$10.3 billion ($7.7 billion)proposal to buy Canadian cable company Cogeco Inc CCA.TO were among the deals announced in the past quarter.

“We expect continued growth in M&A volumes in 2021, fueled by reduced volatility, increased market confidence and improved access to capital,” said Dany Beauchemin, co-head, Global Investment Banking and Canadian Corporate Banking at Scotiabank.

A deal frenzy in September led to a record third quarter with more than $1 trillion worth of transactions globally here.

In Canada, total equity linked deals rose 19% in the third quarter to C$10.5 billion from the previous quarter, though it was flat on the year.

“As volatility and COVID-19 concerns subside, we see both private and public corporate issuers continuing to assess the need to recapitalize and strategically access the equity capital markets,” Beauchemin said.

($1 = 1.3301 Canadian dollars)

Reporting by Madhvi Pokhriyal and Noor Zainab Hussain in Bengaluru; Editing by Diane Craft