The Canadian mergers and acquisitions (M&A) market had high expectations for a bounce-back year after transactions in 2013 proved to be “lacklustre.”
But thus far 2014 has been even tougher for B.C. and the rest of the country, according to the latest M&A report from Toronto’s Crosbie investment firm. Just 189 transactions valued at $31.1 billion were announced in 2014’s first quarter. This is the lowest level of activity since 2009’s first quarter, when 169 deals were announced.
It was also a steep decline from the previous quarter when 262 deals worth $35.2 billion were announced.
The value of transactions in real estate, traditionally one of the strongest sectors for M&A activity in both B.C. and across Canada, plummeted 76.6% compared with the same period a year prior.
Just 42 transactions worth $2.9 billion were recorded in the first quarter of 2014. During the first quarter of 2013 there were 85 transactions worth $12.4 billion.
“Real estate’s been very hot for quite a few quarters, and I think we’re in a bit of a readjustment period,” Crosbie managing director Colin Walker told Business In Vancouver.
He added that most of the big deals did not even take place on the West Coast, which is typically a hotbed for real estate activity.
Furthermore, all eight mega-deals – those valued at more than $1 billion – in 2014’s first quarter were cross-border transactions and did not involve Canadian properties. Five of those transactions involved Canadian companies making transactions abroad – the highest level of cross-border activity in Canada since before the financial crisis.
The trend to acquire property from south of the border continued among B.C.-based real estate investment trusts (REIT). The biggest deals to occur in the first quarter did not involve the acquisition of property on the West Coast.
Instead, Nicola Crosby real estate asset management acquired a Wisconsin property for $24 million and an Atlanta-based apartment complex for $49 million.
But Anthem Properties managed to keep its largest acquisition within Canada’s borders when it bought the United Communities Calgary residential development for $182 million.
B.C.’s tech sector accounted for one of the few notable deals made on the West Coast not involving a real estate firm.
Sierra Wireless (TSX: SW) acquired New Westminster’s In Motion Technology for US$21 million.
$31.1b Value of the 189 M&A transactions announced in 2014’s first quarter – the lowest level of activity since 2009’s first quarter, when 169 deals were announced
$35.2b Value of the 262 M&A transactions announced in 2013’s fourth quarter
$2.9b Value of the 42 real estate M&A transactions across Canada in 2014’s first quarter
$12.4b Value of the 85 real estate M&A transactions across Canada in 2013’s first quarter
76.6% Percentage drop in first-quarter 2014 real estate M&A deals compared with the same period a year prior
