Posthaste: Big company CEOs look to M&A for growth

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Chief executives at major Canadian companies are looking to mergers and acquisitions for growth, according to a recent survey from KPMG International Ltd.

Its annual CEO outlook said 41 per cent of Canadian CEOs are likely to make an acquisition that would significantly impact their operations. Only nine per cent are unlikely to make an acquisition at all.

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Nine in 10 chief executives of large corporations have a high to moderate desire to acquire when the timeline is broadened to three years, and 40 per cent are mulling major deals.

A similar survey of small and midsized businesses (SMBs) said just 34 per cent of them are looking at acquisitions.

“As the cost of capital eases, investors and corporates are becoming more confident about making acquisitions, so we expect to see dealmaking activity pick up; in fact, 2025 could be one of the busiest years for M&A in quite some time,” John Cho, KPMG Canada’s national leader of its deal advisory practice, said in the report. “As economic headwinds begin to ease, businesses and institutional investors will naturally become more acquisitive.”

Cho said more acquisitions will come as the economy improves and more companies jump off the sidelines.

“The supply of acquisition targets will likely increase as well, as more private equity funds exit their investments after years of cautiously sitting tight,” he said. “As the economy starts to improve, more small and midsized businesses will be looking for funding to help support their next stage of growth. All these factors point to a busier M&A market.”

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Canadian businesses have already made some major acquisitions this year. Indeed, there were 952 such deals in the first five months of 2024, according to a report in June by PricewaterhouseCoopers International Ltd., which predicted an even larger uptick of deals to come as interest rate cuts begin.

Since the PwC report, Chevron Corp. has sold its Canadian operations to Canadian Natural Resources Ltd. for US$6.5 billion, more than doubling the dollar amount of M&A activity in the Canadian oilsands so far this year.

In August, Tourmaline Oil Corp. acquired Crew Energy Inc. for $1.3 billion.

The biggest deals might still be to come.

Alimentation Couche-Tard Inc. is aggressively pushing to acquire Seven & i Holdings Co. Ltd., the owners of 7-Eleven, having recently sweetened the offer to US$47.2 billion, a 20 per cent premium from a previous offer.

With files from Meghan Potkins

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Canada’s unemployment rate dipped to 6.5 per cent in September as the country added 46,700 new jobs in the month.

This marks the first time since January that Canada’s unemployment rate has fallen as 112,000 new full-time positions led the growth.

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The data shows the Bank of Canada can continue to slowly ease interest rates in its bid to tame inflation without putting the economy into a recession.

• Today’s data: Consumer Price Index for September, Wholesale trade for August, Vehicle sales for August, MLS Home Price Index for September
• Earnings: Johnson & Johnson, Bank of America Corp., Goldman Sachs Group Inc., Rio Tinto Plc, United Airlines Holdings Inc.
  

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Today’s Posthaste was written by Ben Cousins, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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