Canadian M&A Perspectives

Private and Public Mergers & Acquisitions | Private Equity

Four Due Diligence Issues in Insurance M&A Transactions

Posted in Private Transactions, Public M&A, Strategy
Ana BadourIan C. Michael

Insurance M&A activity, in both the Canadian market and globally, has been on the rise since the 2008 financial crisis, and is expected to continue to increase. Deloitte recently reported that there were 399 insurance M&A transactions in Canada and the United States during 2014, an increase of 27% over 2013. The consulting firm Optis Partners reported that the first half of 2014 was the most active M&A period since they started tracking transaction information in 2008. In a survey published in 2014 by the professional services firm Towers Watson, over 85% of North American insurance executives said that they expected insurance M&A volume to grow over the next one to three years, and 78% of such executives stated that they were actively considering acquisitions.

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Harnessing Social Media in Proxy Contests: Opportunities and Legal Challenges

Posted in Private Equity, Public M&A, Shareholders, Strategy
Shane C. D'SouzaDeandra SchubertBlake Jones

Social media has very seldom been leveraged in Canadian proxy contests. One reason for this may be the lack of knowledge about its full potential.[1] To address this reason, our first post in this series reviewed social media’s impact on public discourse and proxy contests in the U.S. and Canada.

Another reason for the limited use of social media in Canadian proxy contests is the lack of specific regulatory guidelines. Unlike in the U.S.,[2] in Canada there is no regulatory guidance on the use of social media to communicate with shareholders. This article reviews some legal considerations applicable to the use of social media in Canadian proxy contests.

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Harnessing Social Media in Proxy Contests: Not Just “Social”

Posted in Private Equity, Public M&A, Shareholders, Strategy
Shane C. D'SouzaDeandra SchubertBlake Jones

Social media has revolutionized how stakeholders receive information about companies. An estimated 1.79 billion people used social media in 2014; 2.44 billion will by 2018.[1] Despite such staggering statistics, social media has not been leveraged to its full potential in Canadian proxy contests. According to a 2013 survey,[2] a majority of directors on the boards of Canada’s largest companies acknowledged that they did not know much about social media.

This is the first of two posts about harnessing social media in Canadian proxy contests. It reviews the use of social media to influence public discourse and proxy contests in the U.S. and Canada. Our second post will review some legal considerations applicable to the use of social media in Canadian proxy contests.

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CSA Releases Amendments to the Take-Over Bid Regime

Posted in Private Equity, Public M&A, Shareholders, Strategy

On March 31, 2015, the Canadian Securities Administrators (CSA) published a CSA Notice and Request for Comment with respect to proposed amendments to Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids (MI 62-104) and changes to National Policy 62-203 – Take-Over Bids and Issuer Bids.

The proposed amendments codify and in some cases clarify the concepts previously announced by the CSA in September 2014 and result in some significant changes to the take-over bid regime. Please see our detailed report Amendments to Take-Over Bid Rules Will Deliver More Support to Boards for an in-depth review of some of the key features of the proposed amendments.

Good Faith, Honest Performance and M&A: Top 5 Takeaways Stemming from Bhasin v. Hrynew

Exploring the impact on Canadian mergers and acquisitions of the Supreme Court of Canada’s recent recognition of a new common law duty of honest performance

Posted in Contractual Matters, Private Transactions, Public M&A, Strategy
Heidi Gordon

There’s been a lot of buzz surrounding the Supreme Court of Canada’s recent precedent-setting judgement, Bhasin v. Hrynew, 2014 SCC 71, in which the Court recognized, for the first time, a new common law duty that applies to the performance of contracts throughout Canada. The new common law duty is a duty of honest performance, and is a manifestation of the general organizing principle of good faith. The implication is that parties must perform their contractual duties honestly and reasonably, and that they must have appropriate regard to the legitimate contractual interests of the other parties to the contract. For an overview of the Bhasin decision, click here.

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New 2015 Competition Act Merger Notification Threshold

Posted in Private Equity, Private Transactions, Public M&A
Oliver J. BorgersMichele Siu

The Competition Bureau has announced that the pre-merger notification transaction-size threshold for 2015 will increase to $86 million from the 2014 threshold of $82 million.  The 2015 threshold will come into effect immediately following publication in the Canada Gazette Part 1 (anticipated to occur on February 7, 2015).  As per the indexing mechanism set out in the Competition Act (Act), the pre-merger notification threshold is reviewed annually.

The threshold is based on the book value of assets in Canada of the target (or in the case of an asset purchase, of the assets in Canada being acquired), or the gross revenues from sales “in or from” Canada generated by those assets, calculated in accordance with the Notifiable Transactions Regulations under the Act. The Competition Bureau must generally be given advance notice of proposed transactions when the acquired assets in Canada or revenues generated in or from Canada from such assets exceed $86 million, and when the combined Canadian assets or revenues in, from or into Canada of the parties together with their respective affiliates exceed $400 million.   This amount has not been reviewed and remains the same as in 2014.

5 Corporate Governance Tips to Reduce Risk in the M&A Process

Posted in Private Transactions, Public M&A, Shareholders, Strategy
Nathan Montgomery

Because of the growing risk of litigation by unhappy (or simply opportunistic) shareholders following the sale or acquisition of a company, corporate governance practices during the M&A process face increasing scrutiny.

In a recent article titled “Documenting the Deal: How Quality Control and Candor Can Improve Boardroom Decision-making And Reduce The Litigation Target Zone”, forthcoming in The Business Lawyer, Leo Strine, Chief Justice of the Delaware Supreme Court, sets forth some best practices for directors and legal and financial advisors “to conduct an M&A process in a manner that: i) promotes making better decisions; ii) reduces conflicts of interests and addresses those that exist more effectively; iii) accurately records what happened so that advisors and their clients will be able to recount events in approximately the same way; and iv) as a result reduces the target zone for plaintiffs’ lawyers”.

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New 2015 Investment Canada Act WTO Review Threshold

Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy
Oliver J. BorgersIan C. MichaelLeslie Milroy

Industry Canada has announced that the 2015 Investment Canada Act (“Act”) threshold that applies to most direct acquisitions of Canadian businesses by non-Canadians will be C$369 million.  This is an increase from last year’s $354 million threshold. The threshold applies to the gross book value of the target’s assets. Note that under the Act, a non-Canadian includes a Canadian-incorporated entity that is ultimately controlled outside of Canada.

The existing lower threshold of C$5 million will continue to apply to transactions that relate to cultural businesses or where none of the parties are from a country that is a WTO member. Continue Reading

The 2015 Proxy Season: Glass Lewis and ISS Canadian Proxy Voting Guidelines Updates

Posted in Public M&A, Shareholders, Strategy
Rene SorellJonathan GrantIan C. MichaelMatthew CummingMatthew Griffin

With the 2015 Proxy Season close at hand, Glass, Lewis & Co., LLC (Glass Lewis) and Institutional Shareholder Services Inc. (ISS) recently released their updated Canadian proxy voting guidelines. Changes and clarifications have been made to their guidelines in such areas as advance notice policies and by-laws, shareholder rights plans and majority voting.

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Mini-Tenders 301: Will Such Offers Be Used in Proxy Contests?

Posted in Public M&A, Shareholders, Strategy
Matthew CummingShane C. D'SouzaMatthew Griffin

This is the final article in our mini-tender trilogy. We have previously discussed mini-tender offers from the perspectives of the offeror, and the issuer and shareholders. This article considers how mini-tenders might be strategically used in proxy contests.

As shareholder activism rises, the activists’ toolkit keeps evolving. The strategic use of a mini-tender offer in a recent proxy contest suggests that such offers may increasingly be considered as a means of influencing the outcome of proxy contests.

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