Canadian corporate takeovers that made news
The question of who should control Canada's corporations has long been a matter of passionate debate outside the boardroom. Whether it was bank mergers in the late 1990s, airline mergers in 2000, or the acquisition of Canadian companies by foreign (especially American) multinationals, the Canadian public and the federal government have declared themselves interested parties in what might appear to be purely corporate events.
In the 1970s, the Canadian government responded to growing public concerns about the level of foreign ownership in a number of sectors (especially oil and gas, mining and manufacturing) by setting up the Foreign Investment Review Agency (FIRA). Its job was to determine whether the acquisition of a Canadian company by foreign investors would hurt Canada.
FIRA lasted for 10 years. Ottawa still maintains an oversight role in the mergers and acquisitions department. But these days, the federal concern over foreign domination has increasingly been replaced by competition concerns. This new focus has allowed Ottawa to prevent purely domestic corporate marriages (e.g., the bank mergers of 1998) and regulate foreign ownership in some other industries (like airlines).
That's the government side of things. But most mergers and acquisitions involving Canadian corporations are ultimately decided by management and the company shareholders.
Sometimes companies decide they must grow to survive. Sometimes they put themselves on the auction block after deciding their survival depends on another company buying all or part of them.
Takeovers can be friendly or hostile. But hostile bids can suddenly turn friendly when the offer is sweetened. Deals can be structured as mergers of equals. They can involve more than two companies. And they can be accomplished through cash, stock, share swaps and/or massive borrowing.
Many people think that the typical takeover involves an American multinational swallowing up a smaller Canadian firm. But that's often not the case. Figures from Crosbie & Co. (a firm that tracks Canadian M&A activity) show that Canadian acquisitions of foreign companies outpaced foreign acquisitions of Canadian companies by wide margins in 2002, 2003 and 2004.
But more recently, a spate of high-profile acquisitions of well-known Canadian companies by foreign interests re-ignited the takeover debate.
Here's a list of some of the big-name Canadian companies that have fallen under foreign control in the past two years (or are due to become foreign-owned):
- Falconbridge of Sudbury, Ont., is acquired by Swiss-based Xstrata for $18 billion.
- Houston-based Kinder Morgan Inc. buys Vancouver-based utility company Terasen Inc. for $6.9 billion.
- Hamilton steelmaker Dofasco is bought for $4.7 billion by Luxembourg-based Arcelor SA.
- Graphics chip-maker ATI Technologies of Markham, Ont., is sold to California-based Advanced Micro Devices Inc. for $5.34 billion US.
- The Fairmont Hotel chain (the Chateau Frontenac, the Banff Springs hotel among others) is bought for $3.24 billion by an investors group led by a Saudi prince.
- Intrawest, owner of B.C.'s famed Whistler resort, is sold to a New York firm for $1.8 billion US.
- Vincor, Canada's largest winemaker, sold to N.Y.-based Constellation Brands for $1.1 billion.
- The Hudson's Bay Co., owner of the Bay and Zellers, taken private by South Carolina investor Jerry Zucker for $860 million.
- Sleeman Breweries of Guelph, Ont., bought by Japan's Sapporo Breweries for $400 million.
- Four Seasons Hotels agrees to $3.7-billion US takeover bid from Bill Gates's Cascade Investments and Kingdom Hotels International.
- Facing two competing foreign takeover bids, Inco finally agrees to $19.8-billion offer from Brazil's CVRD.
And Montreal-based paper-maker Domtar has agreed to a $3.3-billion merger with a unit of U.S. paper giant Weyerhaeuser.
Cross-border takeovers go the other way, too. Toronto-based Manulife Financial's $15-billion takeover of Boston-based John Hancock Financial in 2003 and TD Bank's $5-billion acquisition of New England's Banknorth are the biggest recent examples.
Here's a synopsis of newsmaking Canadian mergers and acquisitions since 1998:
2006
January – Colony Capital, LLC and Kingdom Hotels International put in a bid of $3.9 billion US to acquire Fairmont Hotels & Resorts Inc. The Toronto-based company accepts.
February – Glamis Gold Ltd. strikes a $1.2-billion deal to acquire Western Silver Corporation.
March– Zenon Environmental Inc. agrees to be acquired by General Electric Water & Process Technologies. The deal is worth about $760 million Cdn. Oakville-based Zenon develops membranes for water purification, wastewater treatment and water reuse for municipal and industrial customers.
May– Hummingbird Ltd. approves a $465-million US deal to sell the business software company to California-based Symphony Technology Corp.
June – Canada Southern Petroleum Ltd. endorses a friendly offer from Canadian Oil Sands Trust. The total value of the transaction would be about $146 million US, or $163.9 million Cdn, topping a bid from Petro-Canada.
June – Mittal Steel Co. snaps up Luxembourg's Arcelor SA by upping its bid to $33 billion US. If the deal receives shareholder and regulatory approvals, it would create the biggest steelmaker in the world with about 10 per cent of the global market.
The deal may also lead to the sale of Canada's Dofasco Inc. to Germany's Thyssenkrupp. Arcelor bought the Hamilton, Ont., steelmaker earlier in 2006 for $4.7 billion Cdn. But Mittal promised to pass Dofasco on to Thyssenkrupp if its bid for Arcelor was accepted.
June - Canadian mining companies Inco Ltd. and Falconbridge Ltd. reach a three-way deal to merge with Phelps Dodge Corp. of Arizona, the largest takeover in Canadian history. But that deal eventually fell apart. Inco's attempt to take over Falconbridge was scuttled following a successful offer for Falconbridge from Swiss-based Xstrata worth $19 billion. Inco was ultimately acquired by Brazil's CVRD for $19.8 billion.
July - Computer graphics chip-maker ATI Technologies Inc. of Markham, Ont., embraces a $5.4-billion US cash-and-stock takeover offer from Advanced Micro Devices of Sunnyvale, Calif.
July - Bell Globemedia offers $1.7 billion in a friendly takeover of CHUM Ltd.
August - Sleeman Breweries Ltd., Canada's third-largest beer producer, agrees to a $400-million takeover by Japan's Sapporo Breweries Ltd.
August - Montreal-based paper company Domtar announces it will merge with the fine paper unit of Weyerhaeuser in a $3.3-billion US deal.
August - Toronto-based Goldcorp announces $9.5- billion deal to merge with Nevada-based Glamis Gold to create world's third biggest gold miner.
October - Royal Dutch Shell pays $8.7 billion to acquire the chunk of Shell Canada it doesn't already own.
November - Cascade Investments (the investment company of Bill Gates) and Kingdom Hotels International (controlled by Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud) acquires Four Seasons Hotels in a deal worth $3.7 billion US. CEO Isadore Sharp will own 10 per cent of Four Seasons.
November - TD Bank Financial Group is acquiring the rest of TD Banknorth it doesn't already own for $3.2 billion US.
November - Kinross Gold offers $3.2 billion US for Bema Gold.
December - Onex Corp. and Goldman Sachs are paying $1.9 billion to acquire the aircraft business of Raytheon.
December - TransCanada Corp. buys ANR Pipeline Co. from El Paso Corp. for $3.4 billion US.
2005
February - Eastman Kodak spends $1.2 billion to buy graphic communications company Creo
February - Conglomerate Onex Corp. buys three of Boeing's commercial aircraft parts manufacturing plants in the U.S. for $1.5 billion.
March - Canada's oldest mining company, Noranda, snags a $3 billion deal to merge with fellow miner Falconbridge. The move creates one of the largest base-metals mining companies in the world.
March - Bain Capital sells Advertising Directory Solutions to Yellow Pages Group for $2.55 billion, just six months after Bain acquired the assets from Verizon.
March - Vodafone Group acquires the European operations of Telesystem International Wireless for $5.5 billion.
April - As it finally emerged from its lengthy accounting difficulties, Nortel Networks spends $448 million US in cash to acquire a U.S. IT firm, PEC Solutions, that serves the U.S. government. It's the biggest acquisition in more than four years for Nortel, which became famous during the dot-com boom by buying dozens of companies, often by issuing its own shares.
April - The U.S. subsidiaries of EnCana Corp. reach a deal to sell their offshore oil and gas interests in the Gulf of Mexico for about $2 billion US to Norwegian oil producer Statoil.
June - TD Bank sells its TD Waterhouse USA discount brokerage division to Ameritrade for $2.9 billion US. TD Bank will have a 30 per cent stake in a new company, TD Ameritrade.
June - High oil prices prompted Precision Drilling to divest its energy services and international contract drilling divisions to Weatherford International for $2.3 billion US.
June - Two major Canadian movie theatre chains are uniting as Cineplex Galaxy says it will buy Famous Players from Viacom Inc. for $500 million.
July - The Great Atlantic and Pacific Tea Co (A & P) sells its Canadian stores to Metro Inc. for $1.7 billion. The deal makes Metro Canada's third-largest supermarket chain, after Loblaw and Sobeys.
July - TD Bank buys Hudson United Bancorp for $1.9 billion US.
August - French oil and gas company Total makes a friendly $1.35 billion cash offer to buy Deer Creek Energy of Calgary, which has an 84 per cent working interest in the Joslyn Project in the Athabasca oilsands.
August - Houston-based Kinder Morgan Inc. agrees to buy Vancouver-based utility company Terasen Inc. for $6.9 billion. The deal is approved by the B.C. Utilities Commission despite 8,000 letters of protest.
August - China National Petroleum Corp. buys Calgary-based
August - Sears Canada sells its credit card and financial services operations to JP Morgan Chase for $2.2 billion. Four months later, Sears Canada's parent, Sears Roebuck, buys the rest of Sears Canada it doesn't already own for $835 million.
August - TUI AG, the parent company of Hapag-Lloyd Container Line, acquires CP Ships Ltd. in an all-cash transaction worth $2.3 billion US.
September - Acclaim Energy Trust and StarPoint Energy Trust agree to merge in a $4.5 billion deal. The name of the new trust will be Canetic Resources Trust
September - Drug giant GlaxoSmithKline buys Canadian vaccine maker ID Biomedical for $1.8 billion.
September - U.S. liquor giant Constellation Brands offers $1.1 billion for Canada's biggest wine producer, Vincor International, but Vincor shareholders turn it down in a December vote and the takeover attempt is abandoned.
October - Inco strikes a $12 billion friendly takeover of Falconbridge in a move the companies say will create the world's biggest producer of nickel.
October - U.S. investor Jerry Zucker offers $1 billion to acquire Canada's oldest company, Hudson's Bay Co.. HBC calls takeover offer inadequate.
November - German steelmaker ThyssenKrupp AG bids $4.8 billion in cash in a friendly offer for Hamilton-based Dofasco Inc., topping an earlier bid by Arcelor SA of Luxembourg.
November - Industrial Alliance Insurance and Financial Services Inc. wins takeover battle for mutual fund company Clarington Corp. after offering $273 million. The bid tops an offer made Oct. 31 by CI Financial.
December - BCE Inc. proposes a $1.3 billion deal to sell off a huge chunk of its Bell Globemedia media division to Torstar Corp. and the Ontario Teachers' Pension Plan.
December - U.S. billionaire financier Carl Icahn launches a bid for majority control of Fairmont Hotels and Resorts – the owner of many of Canada's most historic hotel properties. Fairmont opposes bid as "coercive" and unfair.
December - Canada's biggest gold miner, Barrick Gold, sweetens October takeover offer for Vancouver-based Placer Dome to $10.4 billion US. Placer accepts.
2004
April - CHUM Ltd. acquires Winnipeg-based Craig Media for $265 million.
April - EnCana pays $3.6 billion to acquire Tom Brown Inc.
April - Quebec-based drugstore chain Jean Coutu Group pays $3.3 billion to acquire 1,549 Eckerd Drugstores from J.C. Penney..
June - Toronto-based Hollinger Inc. sells the British-based Telegraph Group to Press Acquisitions Ltd. for $1.8 billion. A previous deal by Hollinger Inc. subsidiary Hollinger International to sell the Telegraph Group to Britain's Barclay Brothers is blocked by the courts.
July - Molson Inc. announces $4.5-billion merger with U.S.-based brewer Adolph Coors Co. Deal is approved by Molson shareholders in January 2005.
August - TD Bank, blocked from merging with a Canadian bank, looks south and bids $5 billion for Banknorth Group
September - Rogers Wireless trumps Telus with a $1.4-billion bid for Microcell Telecommunications, operator of the Fido cellphone network. The deal makes Rogers Wireless the biggest wireless company in Canada with 5.1 million subscribers.
September - Gold Fields combines with Canada's Iamgold in $2.8 billion deal that will see Gold Fields own 70 per cent of Iamgold.
October - Nexen buys U.K. assets of EnCana for $2.7 billion.
November - Bain Capital pays $1.05 billion for a majority stake in Dollarama, the largest chain of dollar stores in Canada.
December - Goldcorp buys Wheaton River Minerals for $2.4 billion.
December - Glamis Gold makes hostile $3.4 billion US bid for Goldcorp, but takeover attempt ultimately fails.
December - Masonite agrees to be acquired by leveraged buyout firm Kohlberg Kravis Roberts & Co. for $3.1 billion. But Masonite shareholders rejected the offer. KKR then raised its offer by 5 per cent and Masonite shareholders ultimately accepted the takeover.
2003
July - Alcan acquires France's Pechiney for $6.3 billion (see August 1999).
July - Cinram International pays $1.5 billion to acquire the DVD and CD production business of AOL Time Warner
September - Manulife Financial buys Boston-based John Hancock Financial Services in an all-stock transaction worth $15 billion.
November - U.S.-based R.R. Donnelley and Sons buys Moore Wallace for $4.9 billion. Moore Wallace was itself the product of a merger in January between Moore Corp. and Wallace Computer Services
November - CN Rail buys BC Rail for $1 billion.
2002
Quick facts
Percentage of operating revenues of Canadian industries that were from foreign-controlled companies in 2002:
Manufacturing - 51.8%
Oil and gas - 49.9%
Finance and insurance - 23.7%
Source: Statistics Canada
January - Alberta Energy Co. merges in $8.9-billion share swap deal with PanCanadian Energy Corp. to form energy giant EnCana Corp. Company becomes third-largest non-financial corporation in Canada, after Nortel and BCE.
August - BCE sells its telephone directory business for $3 billion to Kohlberg Kravis Roberts and the Ontario Teachers' Pension Plan.
October - A partnership led by Sherritt International, and the Ontario Teachers' Pension Plan launch a hostile bid for the coal assets of Fording Inc. In December, Teck Cominco joins bidding war with its own offer. A month after that, the takeover battle turns friendly when Fording, Sherritt, and Teck announce plans to combine their coal assets into a new income trust known as theFording Canadian Coal Trust
December - Great West Lifeco acquires Canada Life Financial in an all-stock transaction worth $7.3 billion.
2001
May - U-S-.-based Conoco buys Gulf Canada Resources in deal worth $6.7 billion.
June -
November - Denver-based Newmont Mining bids $4.1 billion for Toronto-based gold miner Franco Nevada.
December - Sun Life Financial acquires Clarica Life in all-stock merger worth $7.3 billion. Sun Life becomes the biggest insurance company in Canada with seven million customers. Merger is first consolidation in the Canadian insurance industry since companies "demutualized" and went public in the late 1990s.
2000
Quick facts
Percentage of Canadian economy that was foreign-controlled (by operating revenue):
In 2000: 31.1%
In 1971: 37.6%Source: Statistics Canada
February - France's Alcatel buys Ottawa-based Newbridge Networks for $10.8 billion.
February - BCE buys Teleglobe Inc. for $6.4 billion. BCE finances purchase from spinoff of its stake in Nortel Networks.
July - CanWest Global pays $3.5 billion for the Canadian newspaper and internet assets of Hollinger International
August - Telus bids $6.6 billion for wireless provider Clearnet Communications.
September - Sears Canada buys insolvent T. Eaton Co. for $30 million as consolidation in Canadian department store field continues. Hudson's Bay Co. had previously taken over Simpsons in 1978 and K-Mart's Canadian stores in 1998, converting many of them to Zellers stores. Wal-Mart got its first foothold in Canada in 1994 when it acquired 122 Woolco stores.
September - BCE Inc. and Thomson Corp. announce a $4-billion alliance by creating new multimedia company that will own CTV, the Globe and Mail, Globe Interactive, TSN, and Sympatico, among other properties.
December - Shire Pharmaceuticals Group acquires BioChem Pharma in all-stock deal worth $5.9 billion.
1999
January - JDS Fitel announces $8.9-billion merger with U-S.-based Uniphase to form JDS Uniphase.
January - Canada Post pays $51 million to buy remaining 19 per stake in Purolator Courier that it did not already own from conglomerate Onex Corp.
August - Alcan acquires Alusuisse Group of Switzerland for $6.4 billion. An earlier merger proposal involving a third company, Pechiney of France, falls apart after European regulators block it on competition grounds. But four years later, Alcan manages to acquire Pechiney for $6.3 billion.
August - TD Bank buys Canada Trust Financial Services from British American Tobacco (BAT) for $8 billion. BAT acquired Canada Trust and Shoppers Drug Mart when it took Imasco private earlier in the month. It subsequently divests itself of Shoppers too, selling it to the New York-based buyout firm of Kohlberg Kravis Roberts for $2.5 billion in November.
December - Air Canada wins bitter fight with Onex Corp. for Canadian Airlines after Canadian board accepts Air Canada's $2-a-share offer. Previous offer by Onex for both Canadian and Air Canada had been voided by the courts because no single shareholder can own any more than 10 per cent of Air Canada. Air Canada subsequently files for bankruptcy protection in April 2003 amid heavy debt loads and heavy losses following the Sept. 11, 2001, attacks.
1998
January - Royal Bank and Bank of Montreal announce a $40-billion proposal to merge. That is followed in April with an announcement from CIBC and TD Bank of their desire to combine in what would be a $47-billion merger. The mergers are ultimately scrapped by Ottawa.
January - Nova Corp. and TransCanada Pipelines merge in a $14-billion deal. Nova Chemicals is spun off to shareholders.
January - Union Pacific Resources Group acquires Calgary-based Norcen Energy Resources for $3.7 billion.
May - Seagram buys Polygram of the Netherlands for $15 billion as it shifts its core business towards entertainment. Two years later, Seagram was itself acquired for $41.7 billion by Vivendi of France to form Vivendi Universal.
May - Nortel buys Bay Networks for $9.9 billion. In the following two years, Brampton, Ont.-based Nortel goes on a buying frenzy, acquiring Qtera in 1999 for up to $5 billion and Alteon WebSystems in 2000 for $11.5 billion, just to name a couple of its deals. Nortel usually acquires its targets by using its own stock. By 2005, Nortel has more than four billion shares outstanding and has had to take major accounting writedowns to reflect that the companies it bought in the heyday of the tech boom are now worth just a fraction of their purchase price.
July - Alliance Communications and Atlantis Communications join forces to form new company called Alliance Atlantis
October - The month of the grocery chain mergers. Sobeys buys certain assets of the Oshawa Group (like IGA and Price Choppers) for $1.5 billion. Loblaw also buys Quebec-based Provigo for $2 billion.
Sources: Statistics Canada, Industry Canada, Crosbie & Co., CBC.ca archives.
MENU
- Main Page
- The urge to merge
- Cerberus
- What next for the beast that swallowed Chrysler?
- KKR
- The leveraged buyout kings look to Canada
- BCE in play
- Some possible scenarios
- Is corporate Canada being 'hollowed out'?