Current Agriculture, Food & Resource Issues
D. Sparling and E. van Duren
3. acquisitions of divested Canadian business units or facilities of companies,
which may or may not be owned by Canadian firms. Divestitures are
differentiated by the fact that the entire company is not purchased.
In figure 8, one can see that over the period, Canadian firms acquired predominantly
private companies. U.S. firms tended to purchase divested business units of Canadian
companies, and other international firms showed a preference for Canadian public
companies.
In terms of transaction value, only 76 of 174 transactions reported the value. Reported
value distribution did not show any particular pattern for the five-year period. The
distribution of value over the entire period is shown in figure 9. For those transactions,
cash was definitely the preferred payment option, although 2000 showed a flurry of mixed
deals (figure 10).
Spin-offs are occurring as well.
One of the interesting misconceptions is that mergers and acquisitions are a one-way
street. This is definitely not true. In the United States, in the ten-year period prior to 1998
an average of 50 new companies per year, or roughly 10 percent of IPOs, were carve-outs
from large companies.2 Spin-offs are even more common. In the first nine months of
1998, 300 spin-offs were launched on the U.S. stock market. Many more business units
move between companies. In Canada, for example, Maple Leaf Foods made one bakery
□ Canadian Private □ Canadian Public □ Canadian Divestiture
Figure 8 Nature of the acquired Canadian company or business unit, 1996-2000
Source: Annual Directory of Mergers and Acquisitions in Canada, 1996-2000
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