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2016
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LEXPERT 5
right now, are very leery just because this is a very
deep downturn in commodity prices that we prob-
ably haven't seen since the 1980s."
On the other hand, a lot of the companies who
would like to sell, he says, just don't have positive
cash flow, so unless the seller has some very unique
assets, and the buyer has the financial strength,
and patience, to take a longer-term view, the deal
isn't getting done.
Still, Zawalsky is seeing several trends in merger
and acquisition activity as buyers and sellers seek
to capitalize on opportunities to find value.
He says, for example, Suncor Energy's acquisi-
tion of Canadian Oil Sands to consolidate their
interest in Syncrude, or Murphy Energy Corpora-
tion undertaking a joint venture with Athabasca
Oil Corporation to develop Athabasca's properties
in a low-commodity price cycle. Or, ARC Finan-
cial Corp. undertaking a going-private transaction
with Boulder Energy Ltd., "a very interesting trend
with these very low prices," says Zawalsky, "provid-
ing an opportunity for private equity to come in
what people think is the bottom of the cycle."
Vince Mercier, an M&A partner with Davies
Ward Phillips & Vineberg LLP in Toronto, says
there's a lot of what he calls "unhappy busy" in the
commodities sector. "is equates to 'we have to
issue equity at prices we don't like, we've got to sell
assets to fix our balance sheet, rather than 'I'm try-
ing to grow the company.' It's about restructuring
the balance sheet and defensive M&A."
Which leads to a disconnect as to what the as-
sets are really worth. Are they being priced based
on the market now, or when the cycle inevitably
changes and oil and gas and base metals are once
again an attractive investment?
Simon Romano, a partner with Stikeman El-
liott LLP, says, "when you're talking about some-
thing like oil and gas or base metals acquisitions,
pricing expectations may not be the same at all; on
the one hand, you've got purchasers looking to get
the deal of a lifetime and, on the other side, ven-
dors are saying, 'hey it's temporary, the market for
our assets is going to come back and you should
pay me a price that reflects the fact that in two
years we'll all forget this ever happened.'"
In comparison, in the non-resource sector, says
Romano, if you have cash, or don't have to borrow
too much, companies can take advantage of some
fantastic opportunities, especially if the targets
are the exporting businesses providing goods or
services from Canada, paying their workforce in
Canadian dollars and receiving US dollars.
Alternatives to high-yield market
Organic company growth is very difficult to get
these days in a weak economy, so the predominant
theme is growth through strategic M&A accord-
ing to Mercier. "However, financing markets are
Anderson, Jean E. Goodmans LLP
(416) 597-4297 janderson@goodmans.ca
Ms. Anderson's practice includes financing and corporate transactions,
alternative finance and P3s. Her experience embraces project and structured
finance, domestic and cross-border financings, asset-based lending
and debt restructuring.
Allard, David A. Lawson Lundell LLP
(604) 631-9108 dallard@lawsonlundell.com
Mr. Allard's mergers and acquisitions and corporate and commercial
law practice focuses on advising private and public companies on purchase
and sale transactions, significant strategic and general corporate commercial
matters and corporate structuring (including through joint ventures
and reorganizations), as well as public company governance
and compliance issues.
Ainley, William M. Davies Ward Phillips
& Vineberg LLP (416) 863-5509 wainley@dwpv.com
Mr. Ainley has acted as lead counsel for bidders, target boards and
independent board committees in many of Canada's largest, most complex
public M&A transactions, and advised foreign purchasers in numerous
acquisitions of major Canadian companies.
Ahmed, Firoz Osler, Hoskin & Harcourt LLP
(416) 862-6696 fahmed@osler.com
Mr. Ahmed, Co-chair of the Tax Group, focuses on M&A, corporate
reorganizations, joint ventures and international taxation. Previously seconded
to the Ruling Directorate of the CRA as a senior rulings officer in the corporate
reorganizations section.
Accursi, Chad Cassels Brock & Blackwell LLP
(416) 860-2937 caccursi@casselsbrock.com
Mr. Accursi represents public mining companies and investment dealers
in a variety of transactions including public and private security offerings,
stock exchange listings, M&A, initial public offerings and general securities
compliance matters.
Abraham, QC, Brian E. Dentons Canada LLP
(604) 443-7134 brian.abraham@dentons.com
Mr. Abraham's practice embraces mining exploration, development,
production and reclamation. He acts domestically and internationally
for explorers, developers, producers, consultants, prospectors,
syndicates and financiers.
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