Canadian M&A Jumps 28% in Third Quarter, Market Volatility Could Slow Deals

Canadian mergers and acquisitions activity for the third quarter hit its highest since 2016 as historically low interest rates and strong equity markets helped companies to revive transactions that were put on hold due to the pandemic, Reuters reported. Dealmaking rose 27.7% to $76.6 billion in the third quarter of the year, but was significantly down from the record $120.3 billion recorded in the first three months of the year, according the Refinitiv data. Bankers said while factors underpinning M&A exists and pipelines are strong, equity market volatility could slow the deal momentum. "Higher deal flow in the third quarter was driven by a combination of factors including strong equity markets, historically low borrowing costs and market confidence in a gradual COVID-19 recovery," said Jake Lawrence, Group Head and CEO, Global Banking and Markets, Scotiabank. However, he said short term inflationary and supply chain concerns are unlikely to have a material impact on deal flow given investor focus on long-term strategic considerations. Transportation and infrastructure-focused deals led activity in the third quarter, with $33.6 billion in M&A activity, including Brookfield Asset Management's A$9.57 billion ($6.95 billion) bid for Australia's AusNet Services, and Brookfield's $3.4 billion planned takeover of Dexko Global Inc. Read more.