IFLR 1000
The Guide to the World's Leading Financial Law Firms

M&A activity began picking up in Canada at the end of 2009, following the financial crisis. By the first quarter of 2011, consulting company PricewaterhouseCoopers reported an 81% surge over the previous year, bringing the market back to pre-crisis levels. Most of the deals took place at the mid-market level, primarily in traditional sectors such as mining, energy, agriculture, technology and real estate.

The mining sector has been particularly busy, with "an enormous amount of activity from both home-grown Canadians and foreign investors," according to one attorney. Commodity-hungry Chinese investors are particularly interested in Canada's natural resources. "A few years ago, the Chinese weren't even on our radar," the attorney notes. "Now they are."

The market is being driven by unusually high commodity prices, partly created by the difficulty of finding new mineral deposits around the world. "Gold, copper, nickel, iron ore, every commodity you can think of in the mining space is trading at an unprecedented level," one partner observes.

Junior mining companies are growing into mid-tier and then senior mid-tier companies, before spinning off into new private companies. Whilst this has always taken place, it is a trend that has begun to accelerate in recent years. Junior mining companies tend to focus on exploration rather than production and therefore have the potential for huge profits. "It's happening all over the place," another attorney notes.

In what would have been the biggest transaction of 2010, BHP Billiton's attempt to acquire $38.6 billion in shares of the Potash Corporation of Saskatchewan, one of the world's largest fertilizing companies, was blocked by the Canadian government, which decided the transaction would not be in Canada's national interest. The action sent shock waves through the M&A industry, as it was only the second time in 25 years that a proposed foreign acquisition had been rejected, and the first time a public take-over bid has been rejected.

However, a promising sign came in 2010 with the return of the Canadian 'megadeal' (over $1 billion). Examples included Valeant's $5.7 billion bid for Cephalon, and the Target acquisition of 220 Zellers store locations from the Hudson Bay Company. Six megadeals were reported for the first quarter of 2011, including the LSE's failed $3.7 billion bid for the Toronto Stock Exchange.

A number of amendments to Canada's Income Tax Act in the March 2010 budget are expected to have a positive impact on cross-border M&A activity. These include the repeal of Section 116, which will affect foreign investors holding shares of Canadian companies, making it easier for them to sell and reducing administrative hurdles for new foreign investors.

Also expected to have an impact is a TSX mandate issued at the end of 2009. The mandate requires companies listed on the TSX to obtain buy-side shareholder approval for public company acquisitions that would result in the issuance of more than 25% of the issued and outstanding shares. There is speculation that this could dampen takeover bids and prevent transactions. However, one partner predicts that, "More likely, it will change the way deals are done."

Blake Cassels & Graydon maintains market dominance for its busy M&A practice, boasting an impressive roster of high-profile deals which have impressed competitors and clients. One client calls Blakes' M&A attorneys "a responsive, timely, thoughtful group of people", while another says: "They have significant bench strength for whatever we need." A competitor notes, "They belong in the top tier."

In what was probably the most highly publicised M&A deal of 2010, Blakes acted for BHP Billiton, the world's largest diversified natural resources company, in its failed attempt to acquire $38.6 billion in shares from the Potash Corporation of Saskatcehwan, a fertilizer giant. The deal, led by David Jackson, Jeff Lloyd and Mike Gans, was blocked by the Canadian government under the Investment Canada Act. It would have been the largest M&A transaction of the year.

Blakes also represented Cliffs Natural Resources, one of the largest mining and natural resource companies in North America, on its all-cash C$4.9 billion ($5.1 million) acquisition of Consolidated Thompson Iron Mines. The acquisition was completed in May 2011.

In the first major transaction in the anticipated gold sector consolidation, Blakes acted for the Vancouver-based, West African-focused Red Back Mining on its $7.3 billion acquisition by Canadian based Kinross Gold. Upon completion of the transaction, former Kinross shareholders held approximately 63% of the combined entity while the former Red Back shareholders held 37%.

Goodmans maintains its top-tier M&A status this year. Under Stephen Halperin, the firm has worked on significant cross-border transactions involving Canadian targets and foreign investors/acquirers, and in many high-profile domestic M&A transactions. Its prominent lawyers include Jonathan Lampe, a former general counsel of the Ontario Securities Commission and past chair of the Commission's Securities Advisory Committee. A competitor refers to Halperin and Lampe as "two very good M&A lawyers".

In 2011, Goodmans represented Newmont Mining in its acquisition of all of the outstanding shares of Fronteer Gold for $2.3 billion. The deal was done through a court-approved plan of arrangement, which expanded Newmont Gold's presence in North America. The assets acquired included Fronteer's interests in the Northumberland and Sandman projects in Nevada.

Goodmans also represented BMO Capital Markets and Bank of America Merrill Lynch, the joint lead financial advisers to TMX Group, which owns the Toronto Stock Exchange, in connection with the LSE's $3.7 billion merger bid. The bid failed because it could not get two-thirds shareholder support from TMX.

With offices around Canada and a presence in New York, London and Sydney, Stikeman Elliott is one of Canada's most internationally-orientated law firms.

"They go above and beyond the call of duty to come up with innovative solutions," reports one client of the M&A team, who notes that the firm is "very proactive in maintaining our relationship". William Brathwaite, a senior partner in the firm's Toronto office, has been consistently named by competitors as one of the top M&A attorneys in Canada. Partner Eric Bremermann joined Stikeman's M&A team in October 2010, and partner David Lefebvre left the firm's Calgary office in January 2011.

Among its high-profile deals last year, Stikeman represented the Potash Corporation of Saskatchewan, in its defence of BHP Billiton's $38.6 billion unsolicited take-over bid, which was withdrawn after being rejected in a historic decision under the Investment Canada Act.

In another high-profile deal, Stikeman acted for the Ontario Teachers' Pension Plan on BCE's $3.2 billion acquisition of CTV globemedia from Teachers', The Woodbridge Company and Torstar Corporation, and the related $200 million acquisition by Woodbridge of the Globe & Mail assets from CTV globemedia.

Davies Ward Phillips & Vineberg's M&A practice was hit this year by the early 2011 departure of M&A partner William Gula, who left the practice to become managing director at investment boutique Morrison Park Advisors.

The firm was especially busy with clients in the mining sector over the past year, including work for Chinese state-owned mining company Minmetals Resources in its attempted $6.5 billion hostile takeover bid for the Canadian copper mining company Equinox Minerals. The deal fell through in June 2011, when Barrick Gold made a friendly bid of $7.6 billion. In February 2011, Davies acted for Fronteer Gold in connection with its $2.3 billion acquisition by Newmont Mining. The deal provides for spin-off shares of a new company holding exploration assets to Fronteer Gold shareholders.

Davies also acted for Shaw Communications in its C$2 billion ($2.1 billion) acquisition of all of the broadcasting assets of Canwest Global Communications. The deal was approved by the Canadian Radio-television and Telecommunications Commission in October 2010.

The last few years have been a period of change for McCarthy Tétrault's M&A group, with the retirements of partners Edward Kerwin in 2009,who has subsequently been appointed commissioner of the Ontario Securities Commission, and Richard Shaw in 2010.

McCarthy utilised its credit card and regulatory expertise in its representation of CIBC in its $2 billion acquisition of Citigroup's Canadian MasterCard portfolio. The deal, which closed in September 2010, was led on by partner David Woollcombe, and was McCarthy's first M&A transaction for CIBC.

In October that year, McCarthy represented Shaw Communications in its acquisition of Canwest's broadcasting assets for approximately C$2 billion ($2.1 billion), which included $709 million in funds managed by Goldman. The acquisition involved a plan of compromise, arrangement and reorganisation under the Companies' Creditors Arrangement Act and the Canada Business Corporations Act.

In June 2011, Norton Rose merged with Canadian outfit Ogilvy Renault and South African firm Deneys Reitz, creating a massive legal practice with 2500 lawyers in 38 offices worldwide. The merger represented Norton Rose's first move into the Americas, and follows a similar consolidation with an Australian law firm.

One competitor notes that the 450-strong Ogilvy had "a strong franchise in Montreal", with well-known lawyers including senior partner Brian Mulroney, a former Prime Minister of Canada. Clients are responding positively to the merger, as one says, "From our perspective, I don't think much changes for international clients. It's favourable; they'll be able to facilitate discussions with the UK, for example, but we'll be able to deal with the same lawyers."

The enlarged group will offer increased resources and expertise, particularly in the areas of mining, energy and natural resources, and infrastructure and transportation, as well as corporate finance, banking litigation, international arbitration, intellectual property and employment.

In one of Canada's biggest deals of the year, Ogilvy acted as Canadian counsel to Valeant Pharmaceuticals in its $3.2 billion merger with Biovail, Canada's largest publicly-traded pharmaceutical company. The combined company is based in Canada and listed on the New York and Toronto stock exchanges.

The firm also acted as counsel to Canada's fifth-largest independent oil and gas producer, Nexen, in the sale of its heavy oil assets to Northern Blizzard Resource for approximately $975 million. The properties are located in the Cold Lake portion of the oil sands, stretching from Saskatchewan into Alberta, and include 750 wells.

Osler's M&A practice has had an impressive year, reporting several high-profile deals with big-name clients. One competitor identifies Clay Horner, chair of the firm, and Brian Levitt, who is now counsel but was previously co-chair, as leading lights. Partners Emmanuel Pressman and Ward Sellers co-chair Osler's M&A specialty group.

Horner is also singled out as "the finest M&A lawyer in Canada," by a long-term client. "He knows the law ice cold," the patron says. "He's a statesman when appropriate, but you'd also want him on your side if you were in a street brawl. He could be the head of M&A at any law firm anywhere."

Horner joined Jeremy Fraiberg and Donald Gilchrist as counsel to the Toronto Stock Exchange for the much publicised, but ultimately unsuccessful, proposed merger between the London and Toronto Stock Exchanges, valued at $3.7 billion. The deal fell through when two-thirds shareholder approval could not be reached.

Osler also represented Kinross Gold in another big case, its $7.3 billion acquisition by Red Back Mining, which was the largest completed M&A deal of the year. And in a $3.3 billion deal that closed in April 2011, Osler represented Walter Energy in its acquisition of Western Coal though a statutory plan of arrangement, following the acquisition of a strategic 19.8% of Audley Capital.

In early 2011, the firm opened a new office in Calgary designed to better serve clients interested in doing business or investing in Alberta or in the energy sector overseas. The Calgary office adds to the firm's base in Toronto and its New York office, and has been staffed with partners recruited from Canada's top firms including Scott Cochlan and Janan Paskaran from Blakes, Harold Huber from McCarthy Tétrault, and Neville Jugnauth from MacLeod Dixon.

In one of the largest integrated media deals in Canada in 2010, Torys represented The Woodbridge Company and CTVglobemedia in connection with BCE's acquisition of CTV and Woodbridge's Acquisition of The Globe and Mail. BCE, Canada's top integrated media company, acquired 100% of CTV, one of Canada's largest national television stations, including its media assets. As part of the transaction, The Woodbridge Company acquired direct ownership of Canada's national newspaper, The Globe and Mail.

The firm also represented the TMX Group in connection with the Toronto Stock Exchange's proposed merger with the LSE, valued at $3.7 billion. The transaction fell through because it could not get the required two-thirds of shareholder approval.

The FMC M&A team led by William Jenkins and Laurence Geringer is focused mainly on mining and natural resources based work.

Sander Grieve was the firm's most active partner last year, advising on two notable mining acquisitions. In one he advised Consolidated Thompson Iron Mines on its acquisition of Cliffs Natural Resources. The $4.9 billion deal was one of the largest completed in the Canadian market last year. On the sell side, Grieve also acted as Candian counsel to Andrean resources on its proposed acquisition by Goldcorp.

In the energy sector, Jeff Scobie took the lead as the firm acted for the Sasol Group on its agreement to acquire a 50% stake in Talisman Farrell Creek's shale gas assets in Montney.

Aware from its core area, the team also advised Teledyne Telecommunications on its acquisition of DALSA by a plan of arrangement.