Canada’s deal activity accelerates in Q2 amid trade war confusion

In the second quarter, Canadian companies engaged in M&A transactions worth almost US$82 billion, which represents an 84 percent increase compared to the same period in 2024. This surge in activity occurred amidst a trade environment filled with uncertainty due to tariff threats from the United States. The M&A landscape witnessed numerous significant deals, including Parkland Corp.’s $7.7 billion sale to Sunoco LP, Strathcona Resources Ltd.’s $5.9 billion bid for MEG Energy Corp., Andlauer Healthcare Group Inc.’s $2.2 billion deal with United Parcel Service Inc., Definity’s $3.3 billion acquisition of the Canadian branch of Travelers, and a $2 billion insider offer for InterRent Real Estate Investment Trust.

Peter Castiel, the chair of Stikeman Elliott LLP, commented that M&A deal activity has been notably “segment and industry focused” in the first half of the year. Key areas of focus included infrastructure, energy, opportunistic real estate, software, synthetic financings, and restructurings. Castiel observed that large companies have been actively seeking opportunities in the market by taking advantage of low valuations.

Equity markets demonstrated resilience as stock sales amounted to $6.85 billion in the second quarter, marking a 33 percent increase from the previous year. While this figure remains below the 10-year average for the second quarter, there are indications of a positive upward trend. Jackie Nixon, head of Canadian equity capital markets at RBC Capital Markets, reported that investor engagement was overwhelmingly positive for stock sales and that both deals performed well after their initial offering.

RBC Capital Markets led two significant deals in June, including a $385 million private placement for Definity Financial Corp. and a $2 billion bought deal for Keyera Corp. Nixon noted a resurgence of interest in public markets and highlighted the increased dialogue with private companies. Toronto-Dominion Bank secured third place for Canadian stock underwriting in the first half of the year, and globally, TD was the sole Canadian bank in Dealogic’s top 10 for equity issuance.

Sante Corona, TD Securities’ global head of equity capital markets, attributed this success to the bank’s acquisition of Cowen Inc. in 2022. Corona pointed to notable deals such as TD’s $20 billion stake sale in Charles Schwab Corp. and its role as the sole bookrunner in GameStop Corp.’s US$2.7 billion convertible debt offering in June. Although debt issuance experienced a decline, with corporate borrowing totaling $22.6 billion in the quarter, a one-third drop from the previous year, confidence quickly rebounded after initial setbacks following US President Donald Trump’s tariff announcements in April. Patrick MacDonald from RBC indicated that the months of May and June were described as “extremely active,” signaling a positive shift after the challenges faced in April.