Lawson Lundell LLP

2020 Canadian Public Energy M&A Review (FINAL)

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Lawson Lundell LLP 7 Key Findings Most energy M&A deals in Canada between 2016 and 2019 were for upstream companies (65% of deals) involving strategic buyers located in Canada (83% of deals) for less than $100 million in target equity value (54% of deals). Approximately two-thirds of deals occurred during rallies in the energy index - which occurred throughout 2016 and the first three quarters of 2018. The market froze over during the fourth quarter of 2018 – the next 5 quarters accounted for only 11% of transactions. The Canadian market in this period was dominated by Canadian purchasers, which comprised 83% of buyers. The remainder were from the US (13%) and other countries (4%). Strategics completed more than 90% of the transactions we surveyed. Financials buyers were involved in less than 10% of deals. The largest deals occurred in the midstream sector, where the total equity value of transactions was more than $13 billion, spread across only 4 deals. Transactions were almost always done on a friendly basis. Only four deals (of the 53 surveyed) were initiated on a hostile basis (and two of those eventually became friendly). Controlling shareholders were active in the market. Just over 25% of deals involved buyers or sellers effectively controlled by a strategic or a financial entity. Cash was not king. Only 25% of deals provided for cash-only consideration (and some of those were either for nominal consideration or were terminated). In just under 20% of all transactions, the purchaser had to call a meeting to approve the large share issuance required to complete the deal. Deals that made the news get done. Only one announced deal was terminated. Every other transaction (including all hostiles) was completed by the original bidder (except in one case).

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