CORRECTION FROM SOURCE-KPMG: Canadian M&A Deal Value Falls by 50 Percent

Canadian companies were the acquirers in 6 of the top 10 Canadian deals this year.

• Press Release
• Source: KPMG
• On 10:14 am EST, Monday January 12, 2009

TORONTO, ONTARIO--(MARKET WIRE)--Jan 12, 2009 -- Attention: business editors, finance reporters

A correction from source is issued with respect to the news release that was disseminated for KPMG on January 12, 2009 at 7:30 am ET. The subheading has been revised, where "North American," now reads, "Canadian". The corrected release is as follows.

In 2008 the total value of mergers and acquisitions completed by Canadian companies fell by 50 percent from 2007. Canadian company M&A deal value amounted to US$131.5 billion, according to an analysis conducted by KPMG Corporate Finance based on data supplied by Thomson Financial. There were 1,972 deals in 2008, representing a modest decline from 2,098 in 2007, but a dramatic decrease in total value from the US$269 billion recorded in 2007. Metals, mining, and oil and gas sectors dominated Canadian M&A activity, accounting for approximately 55 percent of the 2008 deal value for Canadian companies.

Tight credit markets and the significant downturn in global equity values in the latter part of the year had a significant adverse impact on the M&A market. The lack of available debt capital--a big catalyst in previous M&A cycles--has made acquisitions far more equity intensive from a financing point of view. Global M&A deal value was down by approximately 33 percent from 2007, but the fall off was more severe in North America and parts of Europe.

"The economic outlook and associated profitability concerns are the number one issues facing companies today, making deal pricing very difficult in this market. We expect that a significant amount of M&A activity in the immediate term will be of a defensive or opportunistic nature," said Peter Hatges of KPMG Corporate Finance.

"We expect companies to seek out merger partners in order to strengthen balance sheets and realize cost savings and other synergies. The objectives may be different, but the name of the game has not changed. Like every other cycle, a strong period of expansion is followed by rationalization and consolidation.

Canadian companies kept up a reasonable pace of foreign acquisitions with 416 foreign takeovers valued at US$29.9 billion. The number of foreign takeovers of Canadian companies amounted to 440 deals for a value of $37 billion, representing 28 percent of total Canadian M&A deal value. The bulk of the M&A activity continues to be Canadian companies buying other Canadian companies, including Canada's largest deal of the year: Teck Cominco's acquisition of Fording Coal valued at US$13.6 billion. TD Bank's acquisition of Commerce Bancorp of New Jersey was the second largest Canadian M&A deal valued at US$8.6 billion. Canadian companies were the acquirers in 6 of the top 10 deals this year. The top 10 Canadian M&A deals are summarized below.

 

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Target Name                  Target         Acquirer      Acquirer  Value
                             Nation         Name          Nation       of
                                                                   Trans-
                                                                   action
                                                                    ($mil)
--------------------------------------------------------------------------
Fording Canadian Coal Trust  Canada         Teck Cominco  Canada   13,599
                                             Ltd
--------------------------------------------------------------------------
Commerce Bancorp, New        United States  Toronto-      Canada    8,638
 Jersey                                      Dominion
                                             Bank
--------------------------------------------------------------------------
Duvernay Oil Corp            Canada         Shell Canada  Canada    5,454
                                             Ltd
--------------------------------------------------------------------------
Cognos Inc                   Canada         IBM Corp      United    4,964
                                                           States
--------------------------------------------------------------------------
IPSCO Inc-Canadian Tubular   Canada         Evraz Group   Russian   4,025
 Op                                          SA            Fed
--------------------------------------------------------------------------
PrimeWest Energy Trust       Canada         TAQA          Utd       3,964
                                                           Arab
                                                           Em
--------------------------------------------------------------------------
Canetic Resources Trust      Canada         Penn West     Canada    3,816
                                             Energy
                                             Trust
--------------------------------------------------------------------------
National Grid PLC-Ravenswood United States  TransCanada   Canada    2,800
                                             Corp
--------------------------------------------------------------------------
UAP Holding Corp             United States  Agrium Inc    Canada    2,624
--------------------------------------------------------------------------
RBTT Financial Holdings Ltd  Trinidad & Tob Royal Bank    Canada    2,235
                                             of Canada
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