(April 25 – 19:45 ET) – The economic slowdown in the last quarter of 2000 hurt Canadian M&A activity the first quarter of 2001, according to new numbers from Crosbie & Co.

The number of announced M&A transactions is down 39% from the same quarter in 2000 to 225. Volume is off 51% to $34 billion, from $69 billion in the year ago quarter. “The record levels of M&A activity have moderated somewhat due to stock market volatility and diminution in valuation, a slowing down of the economy and lack of clarity as to its direction,” observed Mel Margolese a partner at Crosbie. “Indeed the overall cloudy outlook for the economy has resulted in the inability of many companies to provide even near-term guidance as to market conditions for their own entity.”

However, Margolese isn’t sounding the death knell for M&A activity. “Notwithstanding the uncertainty, opportunities remain for companies to take advantage of the times with acquisitions that bring immediate strategic and operational benefits. This was the story with most of the major transactions in the first quarter.”

In cross-border transactions during the first quarter of 2001, Canadian-based companies announced 59 foreign acquisitions, 43 of them in the United States, down 39% from 97 in the previous year. Foreign companies targeted 25 Canadian companies, a decrease of 38% over last year, with 75% of the buyers being U.S. based.

Deal activity was down in every sector except Paper, while the volume of activity was off in about half the sectors. The Industrial Products led the way with 71 announcements, down 49%. Volume was down 80% year over year. The Oil & Gas sector remained active with 34 deals, with dollar volume up 64% to $5.5 billion.

Some of the biggest deals were in the Financial Services sector, with Investors Group’s purchase of Mackenzie Financial, the largest deal of the quarter at $4.15 billion, and Royal Bank’s purchase of Centura Bank not far behind.