Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m F e b r u A r y 2 0 1 5 45 Even an apparently straightforward foreign takeover, Burger King's $12.5-bil- lion deal to acquire Tim Hortons, found itself under serious scrutiny from Industry Canada in the fall of 2014 after clearing the Competition Bureau. Patricia Olasker, the Davies Ward Phillips & Vineberg LLP partner who acted for Burger King on the deal, says government relations were "thoughtfully managed from the get-go." The undertakings eventually agreed to by the purchasers included commitments to support franchisees and charities previ- ously supported by Tim Hortons. "I think it does come as a bit of a surprise initially to foreign acquirers how much focus is on government relations," Olasker says. "But nobody takes Industry Canada for granted anymore. It's a key transaction risk that has to be managed." According to Wright, the maturing activist shareholder field will continue to play a large role in M&A transactions. He says management teams are becoming more open about their M&A plans with shareholders in an effort to test the water before launching into a deal. "Investors are getting more engaged and less defer- ential to board and management teams all the time, and they're prone to react badly if they feel the deal is not good for the company. That means the management feels a greater need to discuss the role of M&A in their overall strategy, sometimes including specific sectors and assets," says Wright. Pressman says activist shareholders are much more influential than they can appear to the public, who can only go by the small number of proxy battles playing out in the public realm. However, just because battles don't end in a "big blow- out," doesn't mean they are not occurring. "For every proxy contest that has been made public or went to a meeting, we've seen two or three times as many that are settling behind the scenes," he says. Pressman's firm, Oslers, was counsel to Valeant Pharmaceuticals International Inc. in one of the most striking instances of activism in 2014, as the pharmaceutical company teamed up with Bill Ackman's U.S.-based activist hedge fund Pershing Square to make a joint offer for Allergan Inc. Pressman says strategic acquirers may be less inclined to join with activists here because of the more bidder-friendly regime in Canada. However, one trend he thinks may well make its way north of the border this year is the growth of the spinoff deal. In 2014, eBay announced plans to separate PayPal, its payment-processing brand, from the main business. U.S. computer giant Hewlett-Packard joined the party by spinning off its services operations, as well as Procter & Gamble, which plans to spin off Duracell as a standalone business. "Whether it's the consequence of activism or corporate strategy, I expect to see more of that in Canada," says Pressman. Olasker agrees, noting there is a his- tory of the practice in Canada: Encana Corp. raised $1.5 billion in 2014 when it spun off its energy royalty business PrairieSky Royalty Ltd. TransCanada Corp. has also faced recent pressure from hedge-fund activists to spin off part of its power business. "It's fairly well estab- lished in the U.S., and I think it ought to be here," Olasker says. Canada's leading in-house counsel explore their challenges for the year ahead BROUGHT TO YOU BY 2 0 1 5 VIEW COMING TO www.canadianlawyermag.com/canadianlawyer-tv/InHouse Rob Hemstock Enmax Corp. February 2 Roger Fulton Linamar Corp. February 16 February 23 Our View 2015 panel share their top challenges for the year Barbara Munroe WestJet January 26 Mary Martin Metrolinx February 9 Untitled-2 1 2015-01-15 2:20 PM

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