UPDATE 1-Canadian M&A activity surges in first quarter

Fri Apr 15, 2011 2:44pm EDT

Related Topics

* More than $50 bln in deals announced, up 81 pct

* Private equity forms only 20 pct of deals (Adds PwC comment, details; in U.S. dollars unless noted)

TORONTO, April 15 (Reuters) - Canadian dealmaking is back to pre-crisis levels, led by the powerful resource sector and a reawakening in credit markets, according to a PricewaterhouseCoopers report released on Friday.

Merger and acquisition activity surged 81 percent in the first quarter from a year earlier, with more than $50 billion in deals announced in the past 90 days, PwC said.

That brings activity back in line with the high point reached in the first quarter of 2007 in dollar terms, according to the consultancy's report .

Average deal value was up 31 percent at $136 million in the quarter, although deal volume slipped 8 percent in the same time period.

Major Canadian deals announced so far this year include the London Stock Exchange's (LSE.L) C$3 billion ($3.2 billion) bid for TMX Group (X.TO), Valeant's (VRX.TO) $5.7 billion bid for Cephalon Inc CEPH.O, Target Corp's (TGT.N) acquisition of 220 Zellers store locations from Hudson's Bay Co, and a move by China's Minmetals Resources (MMR) (1208.HK) to buy Equinox Minerals EQN.TO.

The focus in dealmaking has been in Canada's traditional strengths of mining, energy and agricultural commodities, with 49 percent of transactions in these areas.

Despite the rise in the availability of credit and robust capital markets, private equity firms were only involved in 20 percent of Canadian deals, the PwC report said.

Most private equity firms were busy exiting older investments and chasing "bolt-on" acquisitions, according to the study.

The report also noted China's increasing involvement in dealmaking in Canada, and globally, as the Asian giant seeks to own more of the resources it needs to power its ravenous economy.

"Post-crisis, China has been very acquisitive in Canada relative to other western geographies," PwC said in a statement. "Each of these deals was an enabler for the Chinese to grow their domestic economy."

In February, PetroChina (601857.SS) said it planned to buy half of a prolific shale gas project from Canada's Encana Corp (ECA.TO) for C$5.4 billion.

($1=$0.96 Canadian) (Reporting by S. John Tilak; editing by Pav Jordan and Robe Wilson)

FILED UNDER: