Briefing

Canadian M&A drops 22 per cent in the first three quarters of 2019

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Mergers and acquisitions (M&A) activity in Canada hit a five-year low, reaching just US$157 billion, down from US$200.6 billion for the same period of 2018. (Reuters)

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Talking point: The dip coincides with economic uncertainty fuelled by  trade conflicts, which David Rawlings, CEO for Canada at JPMorgan Chase, said has made companies more apprehensive about M&A. A slowdown in cannabis deals also contributed to the overall decline. The industry saw an explosion of M&A in 2018, including Altria’s 45 per cent stake in Cronos for US$1.8 billion and Constellation Brands’ increased stake in Canopy Growth for US$4 billion. Political uncertainty around cannabis legalization in the U.S. has stymied deal activity, according to Jonathan Sherman, a lawyer with Cassels Brock’s cannabis group. Meanwhile, Constellation’s Canopy purchase has yet to pay off. On Thursday, the company reported losses of US$2.77 per share and US$484.4 million total in its latest quarter, weighed down by US$54.7 million in losses from its business with Canopy.