Blakes 2012 M&A Forecast

Blake, Cassels & Graydon LLP — which is touting its spectacular performance in international rankings for 2011 — also published its 2012 M&A forecast, and the firm makes some interesting speculative comments.

For one thing, Blakes is suggesting possible changes to shareholder-rights takeover defences, citing a recent public forum in which the deputy director of the Ontario Securities Commission indicated that it’s considering a change in policy that would allow for a stronger, pre-emptive poison pill, which wouldn’t require case-by-case review.

The firm is generally calling for a rise in M&A this year, but says companies will likely remain gun shy so long as macroeconomic uncertainty (read “European uncertainty”) lingers. Still, Canadian companies are flush with cash and will look to exploit opportunities as soon as they can — particularly in the mid-market arena where leverage plays less of a role.

Foreign investment review also figures prominently in Blakes’ forecast. The firm cites Industry Canada’s involvement in nixing the foreign takeover of Potash Corp. and suggests it could cloud the picture for foreign investment in 2012. The federal government has already stated that clarification for the foreign-investment community is forthcoming, but we haven’t seen it yet. Until then, government relations will be at a premium.

Natural resources, of course, will continue to drive foreign investment activity, and with the dollar hovering at par, Blakes is also calling for the continuing trend towards Canadian takeovers of foreign targets.

There’s also reason to expect heightened activity from the Competition Bureau this year. Strategic merger guidelines were a focus for the bureau in 2011, and it will likely turn its attention to how state-owned enterprises are to be treated under the Competition Act.

David Dias

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