September 12, 2018

Canadian M&A: Reefer Madness!

This Norton Rose Fulbright blog says that Canadian dealmakers are crazy for “The Chronic.” Here’s the intro:

The Canadian market has seen a surge in M&A activity since 2017 and it looks as though 2018 will follow suit. According to a PwC Canada 2018 M&A mid-year review, in the first half of 2018 alone, Canada hit CAD$93 billion in M&A activity and outbound deals increased by 8% as compared to the first half of 2017, largely due to a surge in cannabis sector deals. While we have noted this increase previously, recent legislative changes regarding cannabis warrant another look to determine the robustness of this trend. For example, in health-care, overall deal value and deal volume have increased by 233% and 48%, respectively, which is significant given that cannabis falls into this category.

Earlier this summer, Canada enacted legislation legalizing the recreational use of marijuana throughout the nation. The blog says that this action, coupled with Ontario’s subsequent decision to privatize retail channels for sales of the drug, are the likely drivers of the boom.

It’s worth noting that US investors have their own case of reefer madness – British Columbia based cannabis producer Tilray has been this year’s best performing IPO. Yesterday, it closed at $95.79 per share, more than 500% over its $17 July IPO price.

John Jenkins