U.S.-Canada M&A activity maintained strong numbers in 2011, with over 180 announced deals as of the end of November. The energy, mining and utilities sectors led with, about 30 deals in total. There were more than 40 mid-market deals with consumer, manufacturing and industrials sector participation.
The robust Canadian economy enticed Canadian companies to make acquisitions to expand their business lines. For much of the year the Canadian dollar was either on par or stronger than the U.S. dollar, which had Canadian companies looking south.
Increased demand for iron ore from China led to the CAD 4.9 billion acquisition of Ontario-based Consolidated Thompson Mines by Ohio-based Cliffs Natural Resources. This deal allowed Cliffs to enter a working relationship with Wuhan Iron and Steel, a Chinese state-owned steel maker, which agreed to acquire most of the iron ore produced from Consolidated’s only mine in Labrador.
Other multi-billion dollar deals include Newmont Mining’s purchase of Fronteer Gold for CAD 2.3 billion, Atlantic Power Corporation’s acquisition of Capital Power Income L.P. (CPILP) for CAD 1.1 billion, Brookfield Asset Management’s ten percent stake purchase in General Growth Properties from Fairholme Capital for USD 1.7 billion, and Enbridge’s acquisition of a 50 percent stake in Seaway Crude Pipeline Company for USD 1.15 billion.
Industry experts are expecting an increase in mid-market deals in 2012. However, a weaker Canadian dollar could stall deals until later in the year, as companies wait for parity.