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Distressed M&A in Canada

Monday 16 March, 2009

I had lunch with Canadians down from the great white north for this panel discussion Distressed M&A in Canada .  Here are the presentations they made.  Contact information for the presenters is included with the presenations if you want to follow-up with them.  Here’s what wasn’t included in their presentations:

Restructuring & Insolvency-M&A transactions totaled only $14B in January in Canada, but bankruptcies have risen from 4% to 9% in the past year.  Canada’s deficit of $35B is just 1 tranche to Citibank.  Automotive troubles hit Canada hard because Ontario produces more cars than Michigan.  Buying opportunities are not there because financial holding companies don’t want to call in defaults yet.  The C$ is taking a beating because of commodity & oil prices.  Walmart has shut down Sam’s Clubs in Canada & the print media industry is in the same condition as in the US.  In insolvency proceedings, judges in Canada are concerned with saving jobs.

Tax-he pretty much just read the presentation, so look for the info there.

Anti-trust/foreign investment–  the Minister of Industry must approve foreign acquisitions, so there has to be net benefits to Canada in terms of jobs & capital expenditures in 3-5 years.  This is a very political topic, especially when national security is concerned.  There are implications on harmonized timing that will align better with the US but perhaps take a little longer & create a little less certainty.  Be proactive & anticipate requests to speed-up the process.

There was only time for a little Q&A-It’s been advocated that foreign ownership rules, especially in telecom, be relaxed, but again it’s a hot political topic.

My take-M&A is hot everywhere, Canada included, so give it a look, ifyou can find the financing.  Given Canada’s economy is doing better than that of the US, it would be interesting to talk about Canadians acquiring US firms, but given the size discrepancy, there will always be more US firms looking to buy Canadian firms than the reverse.  Also, it’s beyond the scope of the presenters because Blakes “opened our Chicago office in 2004 to assist our U.S.-based clients with Canadian components of cross-border transactions…As we do not practise U.S. law, we will work closely with your U.S. law firm to assist with your cross-border legal needs.”

Andrew Busch, Global FX Market Strategist for BMO Capital Markets’ Investment Banking Division in Chicago & former McCain advisor gave his take on the curent financial crisis.

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