Crosbie & Company Canadian Mergers & Acquisitions Report for Q3 2024

Momentum Builds as Canadian Market Gains Steam

Canadian M&A maintained the momentum it built in the first half of 2024 as announced transactions increased for the third straight quarter. Q3 saw 655 deals announced, up 1% from the previous quarter and 13% year-over-year. Announced deal value declined 10% from the prior quarter to $66B, supported by record level mega-deal activity. The third consecutive quarter-over-quarter increase in transactions, along with the prevalence of larger deals, suggests that confidence is returning to the Canadian M&A market. 

“The third quarter saw M&A activity continue to benefit from more stable economic conditions in both Canada and the US as well as a more positive outlook that is reflected in the strong performance of the equity markets,” said Richard Betsalel, Managing Director for Crosbie & Company Inc. “This positive deal psychology is underpinned by record levels of private equity dry powder, an easing interest rate environment, and greater availability of debt capital.”

However, the recent US election could introduce some degree of uncertainty into the market in the near term as President-elect Trump threatens across the board tariffs.  While this could impact many Canadian companies that export to the US as well as cross-border M&A activity more broadly, the effect may be relatively short-lived as both sides have an incentive to resolve the situation quickly. 

Mega-deal transactions (deals valued above $1 billion) hit a decade-high this quarter, with 20 announcements totaling $49 billion in value. 12 of these deals were cross-border transactions, including the largest deal in the quarter, Cleveland-Cliffs $4.7B acquisition of Stelco Holdings. Notable cross-border mega-deals involving Canadian buyers this quarter include Hudson’s Bay Company’s $3.6B acquisition of Neiman Marcus Group strengthening its presence in the luxury retail market, WSP Global’s $2.4B acquisition of POWER Engineers, and Couche-Tard’s $2.2B acquisition of GetGo Café + Markets, a chain of 270 convenience stores.

The mid-market (transactions valued below $250M) remained strong in the third quarter of 2024, dominating the M&A landscape. Transaction volume increased to 277, up 6% from the previous quarter. These 277 announced transactions accounted for 88% of deal activity with disclosed values and 11% of the total deal value for the quarter, which is in line with historical averages.

M&A activity was relatively balanced across all industries, with Real Estate exhibiting the largest rebound in activity (+34) after being depressed for several quarters, likely due to interest rate pressures. Metals and Mining remained the most active sector (91 announced deals and $11B in total value) despite experiencing a marked decrease in deal activity (-34). Sectors with increases in deal activity included Precious Metals (+16), Communication Services (+13), Information Technology (+9), Health Care (+5), and Consumer Staples (+4).

Cross-border M&A, as is typically the case, was a key driver of overall activity, accounting for 43% of transactions and 55% of deal value. Canada-U.S. M&A continued to dominate cross-border activity, representing 65% of transactions and 67% of deal value.

Overview

• Deal activity increased for the third consecutive quarter but remains below activity levels in recent years
• Aggregate deal value ($66B) remained strong, driven by a significant number of mega-deals
• Cross-border announcements represented 43% of total activity and 55% of deal value, in line with historical averages

Mega-Deals 

• Twenty mega-deals (those over $1B) were announced in Q3 2024 representing $49B in value 
• The largest deal on Canadian soil was Cleveland-Cliffs $4.7B acquisition of Hamilton based Stelco Holdings
• In an all-Canadian transaction,  Rogers Communications bought rival BCE’s interest in Maple Leaf Sports & Entertainment (MLSE), the parent company of the Leafs, Raptors, Argos, and Toronto FC for $4.7B

Industry Sector Activity

• Deal count increases were seen in Real Estate (+34); Precious Metals (+16); Communication Services (+13); Information Technology (+9);  Health Care (+6); Consumer Staples (+4); Utilities (+1)
• Sectors with the largest decline in deal count were Metals and Mining (-34); Industrials (-31); Consumer Discretionary (-9)

Breakdown by Transaction Size

• 88% of transaction activity in the quarter was from mid-market transactions below $250M (for transactions with disclosed values)
• Mid-market transactions were valued at $7B, an increase of 11% from the previous quarter, and represented 11% of total deal value for the quarter

Canadian Domiciled versus Foreign M&A Targets

• M&A involving Canadian targets totaled 450 in line with the previous quarter and the trailing 8-quarter average (447) 
• Canadian firms made 475 acquisitions in Q3 2024, of which 323 involved domestic targets totaling $24B, with the remainder representing foreign targets totaling $22B

Cross-Border Deals

• Cross-border transactions represented 43% of overall deal volume and contributed 55% of total deal value in Q3 2024
• Both inbound and outbound activity stayed in line with the previous quarter, as total cross-border activity remained strong
• Canada-U.S. cross-border deals remained a dominant force, making up 65% of total cross-border transactions and 67% of deal value

Deals by Provincial Domicile

• Domestic aggregate deal value increased quarter-over-quarter, driven by multiple mega-deals on Canadian soil
• Ontario, as expected, remains the most active province, with 149 deals valued at $20.7B
• Maritime Canada saw an increase in deal value from the $1.9B acquisition of Nova Scotia-domiciled Chorus Aviation Capital Corp and PEI's BIOVECTRA being acquired for $1.3B