Merge ahead

Following two sometimes disastrous sprees of corporate merger and acquisition activity over the past 20 years, North American corporations have largely focused on core business practices. In February, however, shareholders approved a US$6-billion merger of Molson breweries and Coors and, more recently, TD Bank cemented its US$3.8-billion alliance with New England’s Banknorth. Canadian corporations are again rushing to the matrimonial altar.

“Merger mania is back but we can sleep easier.... Record profits, not easy loans, are helping pave the way.”
Toronto Star, in a 1995 article chronicling a new wave of Canadian mergers, including an alliance between Tim Hortons and Wendy’s restaurants

“Compared with the easy-money era of the 1980s takeover boom, the strategic intent behind the acquisitions of the 1990s has been robust.” Kenneth Smith, senior executive with consulting firm Mitchell Madison Group in 1998, arguing potential increased share value and market growth explains the year’s proposed mergers such as Royal Bank and BMO and Seagram and PolyGram

“Obviously this has been a difficult year for M&A.”
Ian MacDonell, partner at Toronto investment banking firm Crosbie & Co. in 2002, when the total value of Canadian M&A deals dropped to $91 billion from $234 billion in 2000 

“Acquisitions don’t pay. Organic growth does.”
Peter Carroll, managing director at US financial services firm Oliver Wyman & Co. in 2002

“Acquisitions are definitely back in vogue. Investment bankers are trotting out their favourite 1+1=3 merger proposals and their audience of CEOs [is] as wide-eyed as ever.”
Douglas Reid, Queen’s University business professor, commenting on corporate marriages earlier this year

Steve Brearton