M&A activity to increase in 2011: report

Canada's economy grabbed a lot of positive attention while much of the rest of the world lingered in recession. So now international companies want a piece of the good life. It will lead to an increase in mergers and acquisitions activity in 2011, lawyers at Stikeman Elliott LLP write in a report looking at likely trends in the M&A market.

The report’s authors, Richard E. Clark and Curtis A. Cusinato, say Canada remains open for business internationally, despite all the hype generated by the government intervention that stopped the takeover of Potash Corp. of Saskatchewan by Australia’s BHP Billiton, citing concern for Canadian national interests.

“In spite of the publicity generated by the Potash case, we believe that the situation was an anomaly rarely to be repeated,” the authors write. “Canada remains open for business in 2011. It will be business as usual for most foreign acquisitions of control of Canadian businesses.”

Stikemans’ M&A team was directly involved in the case, as it worked with Potash Corp. in defence of the BHP unsolicited take-over bid.

The report looks at 11 trends in the M&A market for 2011, which include:

•    Investment Canada: Business as usual for foreign investors in 2011
•    Canadian poison pills gain strength: Just saying no may be getting easier
•    The commodities sector: No end in sight to foreign demand
•    Financing and valuation: Techniques for bridging the gaps
•    Hedge funds, pension funds and other pools of capital
•    Growth of a domestic high-yield debt market: A positive result of low interest rates
•    Going with the (cash) flow in valuations
•    Income tax: Recent developments generally positive for M&A
•    Structuring investments in M&A transactions: Bilateral investment treaties
•    Infrastructure: One of the hottest M&A tickets for 2011
•    Deal terms in Canada and the U.S.: Similarities and differences

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