mergers and acquisitions
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Merger and acquisition (M&A) activity declined in Canada in 2018 as a result of weaker deal flow in the traditional energy and mining sectors, according to a new report from Mergermarket.

The London-based firm’s report reveals that M&A deal volume and value both dropped last year: there were 596 deals during the year, down from 628 deals in the previous year; and M&A activity totalled US$91.4 billion, down from US$97.5 billion in 2017.

Mergermarket’s report states that 2018 began on a strong note in terms of M&A activity, but the momentum dissipated, with the fourth quarter coming in weakest and recording just 136 deals.

“In 2018, disruptive sectors such as technology were in the spotlight in Canada, while activity in historically dominant as well as more traditional sectors, such as energy, mining and utilities, and industrials and chemicals declined,” the report states.

Combined deal activity in the energy, mining and utilities and industrials and chemicals sectors declined by 15.3% (in terms of value), the report notes. Still, these sectors continued to account for more than half of last year’s total deal activity.

Conversely, the agriculture sector saw its deal activity surge, spurred on by the emerging cannabis industry.

“The sector, led by acquisitions of large cannabis companies, saw its deal value increase more than 10 times and its deal count double from 2017,” the report notes.

Despite the decline in deal activity, Mergermarket reports that cross-border M&A was a bright spot, with Canadian firms making a record number of foreign acquisitions, 391 deals worth US$115.6 billion.

“Large deals were a staple of outbound activity, with seven deals valued at US$5 billion or above, worth a combined US$57.9 billion,” the report states.

The number of Canadian private equity (PE) deals also ramped up in 2018, but the combined value of those deals declined from 2017, the report notes. Last year, there were 85 PE buyout transactions worth a combined US$8.1 billion and 63 PE exits valued at US$9.4 billion.