Canada is in the midst of an international mergers & acquisition boom. According to the Globe & Mail, the value of M & A deals in 2005 rose 40% to $ 166 billion and are expected to exceed $ 200 billion in 2006 and go even higher in 2007. The major problem faced by Canadian companies facing a hostile takeover bid, is that Canadian law gives a very short time frame in which to seek out alternative bidders or to prevent the hostile takeover even when it may be in the company's best interest. The OSC has been quick to terminate shareholder rights plans which deprives corporate boards of finding alternatives to the corporate raider. One method of dealing with this situation was the one used by Fairmont - hold discussions with carefully selected companies, hoping to land one as a strategic partner and failing that to hold a full-blown auction. As Fairmont only had 45 days to find a white knight, it used Intralinks software to allow interested parties to facilitate the viewing of large amount confidential information by select parties to all for the auction which ultimately led to a better bid for shareholders.

Dominic D'Alessandro, President and Chief Executive Officer, Manulife Financial Corporation in the closing session of the conference, compared Canadians to boy scouts who trust foreigners to take over our corporations and assets instead of protecting crucial industries such as mining and in particular the case of Inco and Falconbridge. He felt that corporate head offices do matter. John Manly at the luncheon admitted that, "Once a company is put in play by a hostile bid, it will probably be sold" even if the sale is not in the company's best interest. There does appear to be a hallowing out of Canadian Corporations because the value of Canadian corporations being bought by foreigners was greater than the value of foreign corporations being bought by Canadian corporations. The other issue not addressed by this conference was the effect on employment levels for high paying jobs and research and development by mergers and acquisitions.

In view of the foregoing, recommendations to Canadian governments include the following:
1. The shareholder rights should be strengthened to allow Corporate Boards more time
2. Consideration should be given to protecting certain sectors
3. Consideration should be given for a review of the take over of corporation by countries that would not allow a Canadian company to take over its corporation.

For more information on Mergers & Acquisitions, visit the Board's web site by clicking on this page and be sure to check back here for information on the 2008 Conference!

© 2007 G.C. Eyre All Rights Reserved.