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 6 43 ompanies in Canada's tradi- tional resource sectors will likely be back in play this year as beaten-down firms sell or merge in order to survive, while a new gov- ernment and rule changes for hostile takeovers will become must-watch factors in the already complex merger and acquisition business. While Canada mostly missed out on the hot, pharmaceutical-driven global deal market of 2015, Bay Street lawyers say inbound investment could pick up this year as the weak Canadian dollar turns domestic firms into more tempting targets, especially for a U.S. market that has become increasingly open to the idea of a Canadian deal. Infrastructure and electricity investments could be popu- lar, along with the always-significant mining and energy sectors. Outbound investment, the driving force between many of the 2015 transactions, will stay strong, given the deep pockets and hefty investment appetites of the powerful Canadian pension funds, coupled with interest in out-of-country acquisitions from domestic financial firms, private capital, and other strategic buyers. "I think [the] Canadian M&A mar- ket is oftentimes reflective of how good those key sectors [mining and energy] are, but other sectors can certainly be strong and you could have the lower dollar inducing foreign bidders," says Jeremy Fraiberg, co-chairman of the mergers and acquisitions group at Osler Hoskin & Harcourt LLP. "Mining and oil and gas are areas where I think one might expect to see some deal activity, although commodi- ties are under stress. Maybe the strong will buy the weak or some people will merge together to create synergies. You could also do stock-for-stock deals, so you ride it up and down together. Stock- for-stock mergers, or mergers of equals, tend to be more palatable when you're in a challenging market. If you feel your stock is really undervalued and you take cash, then that's it, whereas if you think you can weather the storm and perhaps combine with a similarly sized company . . . you can perhaps ride it back up when commodities recover." Two things to watch in 2016 are the industrial and takeover policies that the new Liberal government will follow, as well as the promised changes to the rules for hostile takeovers in Canada. The new rules will give a target company a L E G A L R E P O RT \ M & A FAYE ROGERS Watch for new government industrial and takeover policies and hostile takeover rules. By Janet Guttsman Look for mergers uptick in 2016 C

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