While takeover traffic never really stopped, Monday's $68-billion (U.S.) bid for drug maker Wyeth by rival Pfizer shows deal makers are looking past the economic downturn and restarting stalled mergers and acquisitions.
So who might step up next, in Canadian markets?
Well, consider what's been playing out in global takeovers. The big deals involve massive bank loans: Five banks will lend $22.5-billion to Pfizer, while Belgium's InBev had $54-billion of firepower when it went hunting for Anheuser-Busch. In the midst of a wicked credit crunch, companies that can still whistle up loans reside in sectors with stable cash flows. Pharmaceutical firms and brewers can still borrow. Commodity plays can't get a dime from the banks, nor can financial services companies.
So if you're looking for traditional, leveraged takeouts, it's easy to name the likely buyers. Only companies in consumer staples and other recession-resistant sectors can wheel and deal. Canada features a few players in this space, most prominently Loblaw and parent George Weston, which has assembled a $5-billion (Canadian) war chest. Cheese marker Saputo has also shown an appetitive for dairy rivals.
That being said, the M&A market promises to be anything but traditional. There will be two themes that stem from this beaten-down market: The strong taking out the weak, and distressed sales of assets.
Look at the slug-fest that's broken out around Certicom. In a consolidating industry, cash-rich Research In Motion and Verisign are vying for the small-cap software maker. Verisign has the upper hand in a $100-million poker game, but a raise is expected from RIM.
What other tech plays could meet a similar fate? All eyes turn to Open Text, a $2-billion company that's the last major independent in enterprise software. Following a $775-million takeover last week by British software maker Autonomy - it took out a company named Interwoven - there's increased speculation that some time soon a dominant player such as SAP, Hewlett Packard or Microsoft will absorb Open Text.
In the oil patch, even a hint of stability on energy prices is likely to bring offers from the global majors - Total, Exxon Mobil and Royal Dutch Shell - for domestic companies. No bank loan is needed for a buyer with Exxon Mobil's cash reserves.
Depending on the properties desired, Nexen or Talisman stand out as the most likely targets. And if a foreign buyer decides the oil sands do have promise, then anything from tiny UTS Energy and OPTI through to domestic giants Canadian Natural Resources and Suncor will be sold.
Mining companies with busted deals - HudBay Minerals and Lundin Mining - are vulnerable, but may be saved by the bleak prospects for base metals. Only a takeover-proof dual share structure keeps coal-heavy Teck off this list of the wounded.
Our final category of pending deals, the distressed sales, will reflect past deals being undone, and the growing impatience of lenders.
Rio Tinto Alcan wants to spin off divisions, and so does Nortel Networks. But these debt-driven plays may find there are no buyers for what they are selling.
There are dozens of orphaned companies owned by private equity plays, where the clock is ticking on debt repayments and the winding down of funds. Some of these assets will be sold, others may well be put into receivership.
Canada's pinstriped M&A bankers will be busier this year than they were in 2008, and the Pfizer purchase shows there are major deals to be done. But the busiest group of all may well be restructuring specialists.
