Canadian M&A Perspectives Private and Public Mergers & Acquisitions | Private Equity

Tag Archives: acquisition

Canadian Securities Commissions Consider First Tactical Private Placement Under Canada’s New Take-Over Bid Regime

Earlier today, the Ontario Securities Commission and the British Colombia Securities Commission released their decisions regarding Hecla Mining Co.’s claim that Dolly Varden Silver Corp. had planned to utilize a private placement as an inappropriate defensive tactic.

Posted in Public M&A, Shareholders, Strategy

Since Canada’s new harmonized take-over bid regime (New Bid Regime) came into effect earlier this year, there’s been a lot of talk about whether tactical private placements will become the new poison pills. For more information on the New Bid Regime see our previous article, Canada’s New Take-Over Bid Rules Seek to Level the Playing Field.

A “tactical private placement” occurs when a target company issues securities to a friendly party in response to an unsolicited take-over bid in order to make it more difficult and/or more expensive for the hostile bidder to complete a take-over of the target … Continue Reading

Personal Property Security Estoppel Letters: What Are These and Why Are They Needed?

Posted in Public M&A, Strategy

The concept of an “estoppel letter” (also sometimes referred to as an “acknowledgement”, “waiver” or a “collateral narrowing letter”) in respect of personal property security registrations can be quite puzzling to US clients, as it is a much more common practice to obtain these in Canada than in the United States. However, purchasers in an M&A transaction often rely on estoppel letters for comfort that they are purchasing a target company’s assets free of any liens.

What is an estoppel letter? An estoppel letter is an acknowledgment obtained from a prior secured party (identified through personal property security searches – … Continue Reading

Overseas Financing and Acquisitions: The Increasing Importance of Anti-Corruption Due Diligence

Posted in Private Transactions, Public M&A, Strategy

The recent commitment of the Canadian government to the enforcement of the Corruption of Foreign Public Officials Act marks a new period in foreign investment transactions and necessitates a re-evaluation of the legal due diligence strategies employed by financiers and prospective acquirers alike, as well as by issuers and other companies operating in foreign jurisdictions in general.

Corrupt practices can result in criminal charges, unlimited monetary penalties, reputational consequences, derivative shareholder claims and class actions, and may even undermine the rights and benefits to which a company is entitled in a foreign jurisdiction.

Due diligence conducted in advance of foreign … Continue Reading

Financing the Acquisition of a Canadian Business: Cross-Border Credit Transactions

Posted in Contractual Matters, Private Transactions, Public M&A

The acquisition of a Canadian business by US-based purchasers is often financed by way of a cross-border credit transaction involving a Canadian borrower (such as when the US purchaser sets up a Canadian company to make the acquisition, often for tax reasons), possibly also a US borrower (or as is common when a new Canadian company is set up to make the acquisition, a US guarantor), and some combination of Canadian and foreign lenders. In cross-border credit transactions involving a Canadian borrower, certain particularities of Canadian law should be kept in mind when structuring and negotiating documentation:

  • Bank Act
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Buying a Canadian Business, eh? An Introduction to a Special Series

Posted in Private Transactions, Public M&A

We’re often called upon to provide Canadian legal advice to US-based purchasers contemplating the acquisition of a Canadian business. In many transactions, we act directly for the purchaser; in others we’re asked to provide Canadian support to the acquirer’s US legal counsel. There are many similarities between Canadian and US law but if we had a toonie* for each of the important distinctions, we might have enough to buy a Tim Hortons franchise.

Whether you’re a US purchaser or US legal counsel, there are many differences between the two legal regimes that you’ll want to know before delving into … Continue Reading

Five Considerations for Borrowers Completing a Disposition

Posted in Contractual Matters

In my prior post, Seven Considerations for Borrowers Completing an Acquisition, I described seven key issues that borrowers should consider when completing an acquisition.   Similarly, if your company is considering a disposition (either of assets or of shares) and is a borrower under a credit facility, it is important to consider whether the proposed disposition will result in a breach of any of the provisions of your credit documentation.  Here are five key questions to ask when undertaking a disposition:

  1. Is the disposition permitted under the credit agreement? Many credit agreements contain negative covenants that prohibit dispositions without consent
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Once Sold, D&O Liability Doesn’t Stop

Posted in Private Transactions, Public M&A

When a company is sold in an M&A deal, directors and officers remain exposed to claims with respect to activities pre-acquisition. Therefore, D&Os have a lot to worry about when their company is being sold. To protect themselves, D&Os on target boards should try to negotiate the purchase of a run-off D&O insurance policy with the acquiring company before the sale is complete, while they still have some bargaining power left.

Run-off policies are a one time purchase which last for a set duration (typically six years) and usually cannot be cancelled or amended once purchased. Sometimes D&Os will have … Continue Reading

Seven Considerations for Borrowers Completing an Acquisition

Posted in Contractual Matters

If your company is considering an acquisition, and it also happens to be a borrower under a credit facility, it is important that you review the credit documentation to ensure that the acquisition will not result in a breach of any of the provisions. Here are seven key questions to ask when identifying possible issues under the credit documentation when undertaking an acquisition:

  1. Is the acquisition permitted under the credit agreement? Most credit agreements contain negative covenants that may prohibit acquisitions without consent of the lenders, or may allow only certain types of permitted acquisitions.
  2. Does the credit agreement permit
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Canadian M&A Activity in the United States Reaching Historic Levels in 2011

Posted in Public M&A

Despite continuing economic uncertainty in 2011, the pace of Canadian M&A activity in the United States so far this year has reached historic levels, according to a recent study published by PricewaterhouseCoopers (PwC).

Year to date (up to November 14, 2011), Canadian entities were involved in 385 acquisitions of US firms, representing a total transaction value of US$22 billion and a record pace for transaction volume. US M&A activity accounted for 40 per cent of all cross-border deals by value for Canadian firms, making the United States the most favoured foreign investment jurisdiction (the next closest was Australia, with only … Continue Reading

The Use of Global Depositary Receipts for an Acquisition of a Canadian Public Company – Part 2

Posted in Public M&A

In my previous post, I outlined some of the features of a Global Depositary Receipts (GDRs) program that was utilized by HRT Participações S.A. (HRT), a Brazilian-based and listed exploration and production company, in its acquisition of UNX Energy Corp., a Calgary-based TSXV listed exploration and production company with oil and gas assets located in offshore Namibia. GDRs can be a mechanism to overcome a number of issues that may be encountered in structuring an international public M&A deal. In this post, I will outline some of the potential pitfalls in implementing a GDR structure.

Tax Implications
 
GDR structures … Continue Reading

The Use of Global Depositary Receipts for an Acquisition of a Canadian Public Company – Part 1

Posted in Public M&A

Depositary receipts, which are a type of security that is traded on a stock exchange but which represent an interest in an underlying security that is issued by a publicly traded company in another jurisdiction, have been around since the 1920s in the form of American Depositary Receipts (ADRs), and more recently, in the form of Global Depositary Receipts (GDRs). GDRs are a means for companies to raise their profile with foreign investors, make their shares more easily available to foreign investors and raise new capital outside of a domestic market. Many companies have ADRs listed on the New York … Continue Reading

7 Tips For Hiring the Right Investment Banker

Posted in Public M&A

So you are on the board of a public company that has decided to explore strategic alternatives, including a potential sale of the company. Or perhaps you are the CEO of a company who is looking at a significant strategic acquisition or divestiture of a business unit or division. You have a great team of lawyers at your disposal to advise on legal and structuring matters but you need to find the right investment banker to provide sound financial advice, including potentially a fairness opinion.  Here’s a list of things to look for that I’ve developed with significant input from

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Are You a Target? Protecting Yourself against D&O Liability

Posted in Contractual Matters

Are you a D&O on a board of a company that is or may be an acquisition target?

You may be wondering what happens to your indemnity after the company you act for is acquired. First things first, if you have a contractual indemnification agreement with the company, check it and see what the duration of the agreement is. If there is no language with respect to duration in the contract, or if there is any ambiguity as to coverage following the acquisition, make sure you negotiate a written confirmation or acknowledgement with the acquiror that your indemnity will remain … Continue Reading