There were fewer deals in the financial services sector in 2003, but their total value outstripped that in 2002 thanks to a couple of significant announcements, according to Crosbie & Co Inc.’s latest report on merger and acquisition activity.

Crosbie said 76 financial services deals were done in 2003 worth a total of $20.4 billion. That compares with 80 deals worth only $13.1 billion in all of 2002. For all sectors, the total number of announced deals in 2003 declined to 833 from 855 in 2002 and dollar volumes also fell to $83 billion from $91 billion, Crosbie said in its report on activity in the fourth quarter of last year.

Financial services and industrial products were the strongest sectors in terms of transaction value due mainly to Manulife’s $15-billion announced acquisition of John Hancock in September and Alcan’s $6.3-billion purchase of Pechiney SA, respectively. Among the biggest financial services deals in the forth quarter last year was the $500-million acquisition of Provident Life and Accident Insurance Co. by Royal Bank of Canada in November.

There were 183 deals worth a total of $15.5 billion in the industrial products sector last year vs 208 deals worth $7 billion in 2002.


Crosbie noted that momentum in the Canadian M&A market picked up in the last six months of 2003 after a weak performance in the first six months of the year. The total value of announced transactions in the second half of 2003 was $55 billion, nearly double the $28 billion in the first half, on a comparable number of deals.

The second half improvement was driven by the return of the mega-deal (transactions over $1 billion) with eight mega-deals valued at a combined $33 billion. This compares to only 4 mega-deals valued at $6 billion in the first six months, Crosbie said.

Throughout 2003, the market continued to demonstrate strength in the mid-market segment (transactions below $500 million), which recorded 573 deals totaling $36 billion in 2003, a modest increase over the 549 deals totaling $35 billion in 2002, Crosbie says.

“The return of large strategic transactions in the second half of 2003 was a significant shift for an M&A market dominated by smaller divestitures of non-core assets in 2002 and the first half of 2003,” Ian Macdonell, partner at Crosbie said in a statement. “We expect that the positive momentum in M&A will continue into 2004 supported by strong equity markets, a positive outlook for the economy and continued low interest rates.”