KPMG MSLP

January 03, 2007 08:00 ET

KPMG: Canadian M&A Deals Double in 2006

Significant Liquidity in Capital Markets, Hot Resource Sector

TORONTO, ONTARIO--(CCNMatthews - Jan. 3, 2007) - The value of M&A deals in Canada almost doubled from $89 billion to $173.6 billion (expressed in US dollars) and the number of deals increased by 26 per cent, according to an analysis done by KPMG Corporate Finance, based on data supplied by Thomson Financial Securities Data. Canada's top five deals accounted for $60.5 billion - over one-third of this year's deal value.

The purchase of Falconbridge, a Canadian mining company, by Xstrata plc, based in Switzerland, was the biggest Canadian deal at $18.2 billion. The largest cross-border purchase by a Canadian company was Goldcorp Inc.'s acquisition of Glamis Gold, a US mining company, for $8.7 billion. There were 1,720 Canadian M&A deals that closed in 2006.

"It's frothy with capital out there," said Peter Hatges, a Corporate Finance partner in KPMG's Canadian Advisory Services practice. "The increase in Canadian M&A activity is partly due to significant activity in Canada's mining and resource sector and the high prices of commodities due to buoyant global demand. But that's not the whole story, particularly in the middle market. "

Steve Smith, a Corporate Finance partner in Toronto, said, "Private equity firms continue to be very active, which increases the competition for deals and drives up transaction prices."

KPMG Corporate Finance in Canada saw an increase of over 17 per cent in the number of M&A deals from 2005 to 2006, ranking number three in Canada by number of deals completed. KPMG Corporate Finance practices in KPMG member firms around the world completed over 430 M&A transactions in 2006, reaching the top spot in the Global M&A league tables for the sixth year in a row based on number of deals completed.

TABLE of TOP 5 Canadian Deals



Rank
Value of Target Short
Target Deal Business Date Target Acquiror Acquiror
Name ($mil) Description Effective Nation Name Nation
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Falconbridge Nickel,copper, Xstrata Switzer-
Ltd 18,235.51 cobalt mining 8/25/2006 Canada PLC land
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Cia Vale
Nickel,copper, do Rio
Inco Ltd 18,018.89 cobalt mining 11/3/2006 Canada Doce SA Brazil
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Gold,copper, Barrick
Placer Dome ferroalloy Gold
Inc 10,256.80 mining 3/15/2006 Canada Corp Canada
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Glamis Gold Gold mining United Goldcorp
Ltd 8,710.30 co 11/4/2006 States Inc Canada
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Mnfr,whl Arcelor Luxem-
Dofasco Inc 5,269.57 steel prod 3/7/2006 Canada SA bourg
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Source: Thomson Financial Securities Data


"We continue to see the M&A market globally exhibiting strength given the abundance of available capital and the need for companies to achieve economies of scale in the global marketplace. So we think that these two factors will be a continuing catalyst for M&A activity in 2007," said Peter Hatges.

About KPMG in Canada

KPMG LLP is the Canadian member firm of KPMG, a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 144 countries and have more than 104,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.

KPMG's Canadian Advisory practice offers an integrated suite of services for companies embarking on complex change projects. The practice delivers objective, independent advice focused on operations, transactions, governance, and controls. In the transactions area, KPMG provides strategic advisory and deal management services covering: acquisitions and disposals; mergers and takeovers; valuations and fairness opinions; structured and leveraged financing; private equity strategies; initial and secondary public offerings; joint ventures and transaction alliances.

KPMG Corporate Finance, the firm's global investment banking division, was ranked the number one financial adviser for completing the highest number of transactions globally (429 deals totaling US$ 40,284 million) according to the Thomson Financial Securities Data league tables (4/1/06).

KPMG's Canadian Web site is located at www.kpmg.ca

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