Key Takeaways
- Canadian companies are becoming more attractive to foreign buyers due to a weaker dollar and lower interest rates.
- The Canadian government has increased its power to block foreign investments in Canadian companies, citing concerns over national security and economic security.
- Shareholder activism is on the rise in Canada, with companies taking a proactive approach to defend against potential threats.
- Bank of America is growing its Canadian team, with a long-term commitment to the market and a focus on advising clients on defensive strategies.
- Recent deals, such as the sale of Parkland Corp. to Sunoco LP and Rogers Communications Inc.’s sale of a minority stake in its wireless infrastructure, demonstrate the increasing interest in Canadian companies from foreign buyers.
Introduction to the Canadian Market
The Canadian market is becoming increasingly attractive to foreign buyers, driven by a weaker dollar and lower interest rates. According to Deep Khosla, head of Canadian investment banking at Bank of America, Canada was the third-largest target for cross-border merger and acquisition activity last year, behind the United States and Britain. This trend is expected to continue, with Canadian companies becoming more vulnerable to takeover bids from foreign investors. As a result, companies are taking a defensive approach, seeking advice from investment banks like Bank of America to protect themselves against potential threats.
Government Regulations and Foreign Investment
In response to rising geopolitical tensions, the Canadian government has increased its power to block foreign investments in Canadian companies. The new guidelines, introduced in March 2025, determine when a foreign investment could come under a national-security review, including the potential of the investment to undermine Canada’s economic security. This move is seen as a response to the U.S. tariffs on goods from Canada, and is aimed at protecting Canadian companies from "predatory" acquisitions. The government’s decision reflects the growing concern over foreign investment and shareholder activism in Canada, and is likely to have a significant impact on the market.
Shareholder Activism on the Rise
Shareholder activism is becoming more prevalent in Canada, with companies taking a proactive approach to defend against potential threats. According to Mr. Khosla, activism is "very prevalent in the U.S. right now" and is starting to pick up in Canada. As a result, Bank of America is advising its clients to be prepared for potential activist campaigns, and is taking a defensive posture to help them navigate these challenges. This includes advising clients on strategic communications, stakeholder engagement, and governance best practices. By taking a proactive approach, Canadian companies can better protect themselves against potential threats and maintain control over their strategic direction.
Recent Deals and Market Trends
Recent deals, such as the sale of Parkland Corp. to Sunoco LP and Rogers Communications Inc.’s sale of a minority stake in its wireless infrastructure, demonstrate the increasing interest in Canadian companies from foreign buyers. The sale of Parkland Corp., which started as a friendly takeover bid, was valued at US$9.1-billion and marked a significant transaction in the Canadian market. Similarly, Rogers Communications Inc.’s sale of a minority stake in its wireless infrastructure to a consortium led by Blackstone Inc. was a friendly deal that helped the company pay down its debt. These transactions reflect the growing trend of foreign investment in Canadian companies, and highlight the need for companies to be prepared for potential takeover bids.
Bank of America’s Commitment to Canada
Bank of America is one of 16 U.S. lenders that operates in Canada, and has been growing its Canadian team in recent years. With 1,000 employees in offices in Toronto, Montreal, Vancouver, and Calgary, the bank has a significant presence in the market. According to the bank’s Canada president, Drew McDonald, the investment in Canada reflects the bank’s long-term commitment to the country and its confidence in the market. The bank has hired over 140 employees across its business in the past year, and is continuing to expand its operations in Canada. By investing in its Canadian team and operations, Bank of America is well-positioned to advise clients on the increasingly complex landscape of foreign investment and shareholder activism in Canada.
