This should be an outstanding year for mergers and acquisitions, with companies looking to spend trillions of dollars in underused capital and surplus cash in scooping up attractive targets, according to a report released Friday by PwC.
The report by PwC, formerly known as PricewaterhouseCoopers, said Canada will outpace global trends due to its strong financial system, the high loonie and leadership in hot deal sectors like energy, materials and finances.
PwC predicts Canadian companies will do more deals in emerging markets, with foreign deals in the Middle East, Asia and Africa becoming the new norm.
Joint ventures and minority acquisitions will be more popular amid higher regulatory oversight of takeovers, in an effort to reduce the economic or political risks of a deal, the report predicted.
It echoed a similar report released last month by business consultants and auditing firm KPMG that said the high loonie, increasing demand for goods in Asia and companies looking to spend their idle cash will lead to more mergers and takeovers involving Canadian businesses in 2011.
That firm suggested Canadian companies could find major opportunities in Europe.
Canadian mergers and acquisitions were worth $155 billion in 2010, while domestic transactions are expected to outpace the global trend in 2011, the PwC report said.
The company said the total of 3,001 Canadian deals marked a five-year high, and was an increase of more than 30 per cent over 2009.
The report said domestic transactions outpaced the rest of the globe, with the number of transactions and dollar amounts being 25 per cent higher than the previous year.
There was a record number of Chinese acquisitions of Canadian companies last year, but 77 per cent of total acquisitions included Canadian firms acquiring foreign companies.
While we recognize that certain assets in Canada are highly strategic, on the whole our experience suggests M&A has contributed to the growthnot the demiseof corporate Canada, Kristian Knibutat, PwC's national deals leader said in a statement.