Canada's banking sector faces further consolidation with National Bank, Canadian Western merger

McCarthy Tetrault, Torys, Fasken, Davies, Blakes, BD&P legal advisors this week

Canada's banking sector faces further consolidation with National Bank, Canadian Western merger

Deal: National Bank to expand geographic reach with Canadian Western Bank acquisition

Value: $5 billion

McCarthy Tetrault and Torys are serving as counsel in the $5 billion merger agreement between National Bank and Canadian Western Bank. Also in this week’s deals roundup are Fasken, Davies, Blakes, and BD&P as legal advisors

National Bank to merge with Canadian Western Bank in $5 billion deal 

Canada’s banking market is facing further consolidation as two of the country’s biggest lenders, the National Bank of Canada and Canadian Western Bank (CWB), have agreed to merge in a deal valued at $5 billion. The deal comes just months after RBC closed its $13.5 billion acquisition of HSBC.

Once the deal is completed, Quebec-focused National Bank will take over Canadian Western’s operations, expanding its geographic reach to Alberta and British Columbia.

McCarthy Tétrault LLP and Mayer Brown LLP are acting as legal counsel to National Bank, while NBF is acting as lead financial advisor. Jefferies Securities, Inc. provided a fairness opinion to the board of National Bank.

Torys LLP is acting as legal counsel to CWB, while J.P. Morgan is acting as the exclusive financial advisor to CWB and is providing a fairness opinion to the board of directors of CWB.

Following the announcement of National Bank’s bid to buy CWB at a $5-billion valuation, CWB shares surged up 68.3 percent, closing at $41.89 per share on the Toronto Stock Exchange on June 12.

“This transaction is about growth and brings together two great banks with a complementary footprint in personal and commercial banking, and supports our objectives in Western Canada and across the country,” said National Bank CEO and President Laurent Ferreira. “CWB has developed an attractive banking franchise with a reputation for exceptional service with deep customer relationships across a number of priority industries and service lines. This combination will provide customers with access to a broader range of services, expertise and products, along with the benefits of supporting technological investment and innovation.”

“Together, we can offer Canadians more choice by combining CWB’s four-decade legacy of serving business owners and their families with National Bank’s scale, complementary market expertise and the technological capabilities necessary to accelerate our growth,” said CWB CEO Chris Fowler. “Our two organizations share similar values grounded in an unwavering commitment to our clients, a deep history of entrepreneurship and a commitment to giving back in the communities we serve.”

The deal is expected to be completed by the end of 2025, subject to approval by CWB shareholders and receipt of required regulatory approvals.

CDPQ becomes second largest National Bank shareholder following $500 million investment

The Caisse de dépôt et placement du Québec (CDPQ) is investing $500 million in the National Bank of Canada to support its $5 billion acquisition bid for Canadian Western Bank (CWB). Following the investment, CDPQ became the second largest shareholder of National Bank.

Fasken Martineau DuMoulin LLP is acting as legal counsel to CDPQ. McCarthy Tétrault LLP and Mayer Brown LLP are acting as legal counsel to National Bank, while NBF is acting as lead financial advisor. Jefferies Securities, Inc. provided a fairness opinion to the board of National Bank. Torys LLP is acting as legal counsel to CWB, while J.P. Morgan is acting as the exclusive financial advisor to CWB and is providing a fairness opinion to the board of directors of CWB.

CDPQ Executive Vice-President and Head of Liquid Markets Vincent Delisle said, “This investment is perfectly aligned with our strategy to expand the reach of Quebec companies in order to consolidate their leadership positions in their sectors.”

Northern Canada’s largest telecoms provider Northwestel to sell to Indigenous group for $1 billion

Sixty North Unity, a consortium of Indigenous communities from the Yukon, the Northwest Territories, and Nunavut, announced a landmark deal to acquire Northwestel, the largest telecommunications service provider in Northern Canada, from Bell Canada in a deal valued at $1 billion. Once the deal is completed, Northwestel is set to become the largest telecommunications company worldwide with full Indigenous ownership.

Davies Ward Phillips & Vineberg LLP is acting as legal counsel to Sixty North Unity, with TD Securities as financial advisor.

Blake, Cassels & Graydon LLP is acting as legal counsel to Northwestel and Bell Canada, with RBC Capital Markets as financial advisor.

Tiffany Eckert-Maret from Sixty North Unity (Yukon) said, “As Indigenous people, we have long believed we are best placed to make the necessary decisions affecting services in our communities. The acquisition of Northwestel will give us the autonomy to make those investments and choices to serve our telecommunications needs into the future.”

Darrell Beaulieu from Sixty North Unity (Northwest Territories) said, “This collaboration across all three territories will allow us to own and operate a leader in northern telecommunications services and is the next logical step in the development and growth of our businesses. Bell has provided us the support necessary to realize this important opportunity.”

David Omilgoitok from Sixty North Unity (Nunavut) said, “This acquisition allows us to take the lead in continuing to address the critical gap in telecommunications services in our northern communities. Expanded investments in fibre and Low Earth Orbit (LEO) infrastructure have the ability to transform the North and put us on equal footing with the rest of Canada.”

Northwestel President Curtis Shaw said, “This monumental step towards economic reconciliation will see direct benefits stay in northern Indigenous communities. We're grateful for the leadership and support we've received from Bell Canada over the past 36 years and are excited to embark on this new chapter with Sixty North Unity.”

"This historic transaction embodies Bell's ongoing commitment to walking the path of reconciliation to build a more inclusive, connected Canada,” said BCE Inc. and Bell Canada President and CEO Mirko Bibic. “I congratulate Sixty North Unity and Northwestel on this visionary partnership to advance economic reconciliation through Indigenous ownership of critical telecommunications infrastructure in their communities.”

Northwestel’s management, led by President Curtis Shaw, will remain, with plans to increase Indigenous workforce representation through training and mentorship programs. The corporate headquarters will stay in Whitehorse, with operational headquarters in Yellowknife and a regional office in Iqaluit.

Calgary-based Advantage Energy to acquire Charlie Lake/Montney assets for $450 million

Calgary-based Advantage Energy Ltd. has agreed to acquire oil and gas assets in Charlie Lake and Montney for $450 million from an undisclosed private seller.

The deal will add 163 net sections of Charlie Lake rights in the Charlie Lake oil-producing fairway, 37 net sections of Montney rights in the Alberta Montney, and 33 net sections of Montney rights in Northeast British Columbia.

Burnet, Duckworth & Palmer LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as Canadian and US legal counsel, respectively, to Advantage.  Blake, Cassels & Graydon LLP is acting as Canadian legal counsel to the underwriters.  

To finance the acquisition, Advantage will utilize a combination of common equity, convertible debentures, and an expanded credit facility. The corporation secured $65 million from subscription receipts and $125 million from extendible convertible unsecured subordinated debentures through a bought deal, with TD Securities Inc. and Scotiabank as joint bookrunners. An upsized $650 million revolving credit facility led by Scotiabank, National Bank of Canada, and RBC Capital Markets will further support the purchase.

The deal is anticipated to be completed by the end of June 2024, subject to customary closing conditions and regulatory approvals.

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