February 24, 2012 / 2:23 PM / in 6 years

Canadian companies turn eyes to global acquisitions

TORONTO (Reuters) - Corporate Canada is on the prowl for opportunities abroad, even though its executives see only muted growth in the world economy in 2012, according to a survey released on Friday.

After a year when, for the first time, there were more Canadian-led takeovers of U.S. companies than U.S.-led deals into Canada, cash-rich domestic companies still see the foreign market as their best bet for future expansion.

“Canadian CEOs are eager to penetrate foreign markets and ‘catch up’ to their global counterparts,” consultant PwC said in its survey of 1,258 executives, including 130 from Canada.

Canadian corporations, bolstered by healthy balance sheets, record levels of liquidity and easy access to debt capital, have become increasingly aggressive global buyers.

Deals in 2011 included Barrick Gold Corp’s (ABX.TO) C$7.3 billion ($7.3 billion) takeover of global miner Equinox Minerals, and Brookfield Asset Management’s (BAMa.TO) acquisition of an additional 11 percent of U.S.-based General Growth Properties (GGP.N) for $1.7 billion in January last year.

“Compared to their global counterparts, Canadian CEOs are more likely to plan for an M&A event, enter into a strategic alliance or joint venture or divest a non core portion of their business in support of restructuring,” PwC said in its report.

“Canadian CEOs also have a stronger appetite for joint ventures and/or strategic alliances than their developed world peers.”

The report said 66 percent of the Canadian executives surveyed plan to alter strategic course this year, and mergers and acquisitions would be their No. 1 path to change.

One quarter of Canadian CEOs plan to engage in M&A this year, compared with 12 percent globally.

The PwC survey showed that most Canadian CEOs don’t expect the global economy to improve in 2012. But 45 percent still plan to spend more time developing foreign operations.

“We believe this is likely a reaction to concerns that CEOs have over a challenging global economy and an acceptance of slower domestic growth,” said PwC Canadian deals leader Kristian Knibutat.

The survey found 73 percent of CEOs surveyed are confident in their ability to finance growth.

Record levels of liquidity on balance sheets are bolstered by access to capital for credit worthy companies, thanks to a strong North American leveraged loan market, a burgeoning high yield market in Canada and low interest rates.

To be sure, a rising number of Canadian CEOs - 42 percent - are concerned about protectionism, which can hurt foreign takeovers, especially in times of elections.

($1 = 0.9973 Canadian dollars)

Editing by Janet Guttsman

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