Top Ten Deals of 2012: The Short List

canadian flags all over the place

The Top Three

Three deals lead the pack by a mile here, both just by sheer numbers and by the quality of the feedback/arguments on them:

1. Maple/TMX. Or just “Maple.” Maple Group Acquisitions Corp. takes TMX. Finally. LSE deal announced: February 2, 2011. Maple bid announced: May 25, 2011. Closed September 14, 2012.

With something like 60 lawyers from 12+ law firms (did you know there were 12, nay, more law firms in Canada? At some times during this process, I felt there were only three…) weighing in in support of this bid, it’s in, it’s safe, and I don’t think I can even pretend there’s another contender for Deal of the Year.

2. Glencore/Viterra et al. Glencore buys Viterra, with Richardson International Agrium Inc, and CF Industries Holdings Inc. sidecars. Announced March 20, 2012. Value: $6.1 billion. Not fully closed yet, granted, but the essential bits are wrapped up.

“Agriculture is the new mining.” And this deal. Well. From the auction to the sidecars to the Deal of the Year in the World unfolding in the background, it had pretty much everything. Including a purchaser who pre-sold a bunch of the target’s assets…and then re-sold one of them… Plus, the regulatory piece. Plus… well. We like this deal a lot.

3. CP Rail/Pershing. CP Rail/ Pershing Square Capital Management’s proxy fight. Announced (or launched) January 9, 2012. Wrapped up… um depends how you define wrapped up, but let’s say May 17, 2012. Value: Priceless. (But seriously, can we slap a value on this? That would help me…)

There is the “this is not a deal” lobby. But we’re not a purist list, ladies and gentlemen, we’re a list of transactions that turn deal lawyers’ crank. And boy, did this one ever. By pure numbers, second most popular deal in Round Two—even with adjustment for “overrepresentation from personally vested law firms,” comes in at number three.

Where we’re at here: as we finalize the list and take in the last round of feedback, maybe 2 and 3 will change spots… shake things up with 4 below depending on what we do with it… but unless you all completely reverse your positioning to date, this is what the Top 3 deals on the list look like.

The More Contentious Fourth

4. CNOOC/Nexen. Chinese oil producer CNOOC Lt.d bids for Nexen Inc. Announced July 23, 2012. Value: $15.1 billion. Ongoing.

Here’s where you’re at: you’re pretty much unanimous that if this deal closes, it needs to be on the list as one of the most significant deals of the year. You’re divided on what to do with it if it doesn’t close before we need to make the final call—especially given that the regulators and Ottawa have sent a rather loud message that they will kill deals if they are not satisfied.

Here’s where I’m at, and call me hypocritical if you like—I wouldn’t let you have TMX last year or BHP/Potash the year before, and I maintain those were right calls—but we need to have CNOOC on the list. A Chinese SOE making a $15 billion play for the oil sands (yes, there are other assets involved; they don’t matter). A deal that’s dictating Ottawa’s policy going forward on SOE plays. BHP, successful or refused, was a one-time thing. This deal is not. It’s where we cross (or barricade?) the Rubicon.

But. I am but the vessel and the scribe. It’s your list. Tell me I’m wrong. Just be really convincing.

The Lesser 10 (Six to keep, four to shed–raandom order below)

5. Cominar/Canmarc. Cominar REIT’s unsolicited takeover bid for Canmarc REIT. Hostile bid announced November 28, 2011. Value $838.2 million. Value Closed March 1, 2012. Pro: hostile, from Quebec, REITs. Con: REITs, no one in the West ever heard of it.*

6. KGHM/Quadra FNX. KGHM Polska Miedź S.A. buys Quadra FNX Mining Ltd. Announced December 5, 2011. Value $3.4 billion. Closed March 5, 2012. Pro: big, mining deal, West Coast deal. Con: I’m unsold on the Canadian-side excitement at this point, and a number of you think this deal was a yawner. Big deal in Poland. Big deal in Canada how?

7. MLSE. Rogers Communications and Bell Canada buy Maple Leaf Sports and Entertainment from Ontario Teachers’ Pension Plan Board. Announced: December 9, 2011. Value: $1.07 billion. Closed: August 22, 2012. Pro: “Bell and Rogers in bed together. This should be interesting.” Con: much of the pro-argument can be encapsulated thus, “If the fans can’t watch the Leafs lose, then at least let them have a Leafs deal on the list.” Really? Do better.

8. Resolute/Fibrek/Mercer. Resolute Forest Products aka AbitibiBowater Inc. takes Fibrek Inc. Announced Nov. 28, 2011. Value: [$130] million. Closed May 17, 2012/August 1, 2012. Our smallest deal. But arguably one of the five most interesting ones, don’t you think? And definitely the source of your best arguments.

9. Telus/Mason. Telus Corp.’s attempt to collapse its voting-non voting share structure into one class (with no compensation to the voters) and hedge fund Mason Capital’s efforts to stop it. Announced February 21, 2012. Pro: Fight! Con: Didn’t we already make this point with CP Rail and the Perishing Pershing? Do we need this one too?

10. Rio Tinto/Ivanhoe. Rio Tinto secures controlling interest of Ivanhoe Mines and agrees to support US$7.3 billion Financing Plan. Long 2011 back-story. Closed May 24, 2012. Pro: technically and histrionically this is a lawyer’s wet dream. Con: concern about the Can-Con of the deal. Should we check with the CRTC?

11. Q9. Ontario Teachers’ Pension Plan , Providence Equity Partners and Madison Dearborn Partners LLC, and BCE Inc. buy Q9 Networks. Announced June 1, 2012. Value: $1.1 billion. Closed. An almost perfect split here in thumbs up and thumbs up when adjusted for the over-vested. Want me to toss the coin for you?

12. Pembina/Provident. Pembina Pipeline Corp. buys Provident Energy Ltd. Announced January 16, 2012. Value $3.16 billion. Closed April 2, 2012. Pro: pipelines, energy… “it closed!” (ah, what a sad statement on the year). Con: “Couldn’t have been that interesting. Look how easy it was to get done.” (Sometimes, I really worry about how your minds work. Just by-the-by.)

13. Scotiabank/ING. Scotiabank buys ING Bank ofCanada from Netherlands parent. Announced August 29, 2012. Value $3.13 billion. Expected to close in December.

14. Nalcor/Emera/Muskrat Falls. Nalcor Energy, Emera Inc., Gov’t of Nova Scotia and Gov’t of Newfoundland and Labrador ink formal agreement for the development and transmission of hydroelectric power from Muskrat Falls. Ramp up: 50 years. Agreements inked July 31, 2012. $6.2 billion total project value; the Nalcor Emera Project Agreements deal portion valued at $1.8 billion.Pro: We think an Atlantic Canada deal on the list would be so cool. Con: This one? Really?

*And—for all those REIT deal fans out there. Here’s a deal that got accidentally knocked off in round one—it did have support from more than one law firm, my bad:

Starlight/Transglobe. Starlight Investments Ltd. buys TransGlobe Apartment REIT. Value $2.3 billion, Closed June 29. 2012. Now, I’m flagging it for you to give it a fair shake. Confessing REIT don’t excite me much more than office towers changing hands, so you’ve got a bit of a hurdle to overcome here. I’m not formally short-listing this deal, because I did not exactly have a crowd of people berating me for omitting it—but opening the door a crack. Is it in the same class as Cominar? Better? (Should they both be off?)

The Two Culls That Need Justification

a) BCE/Astral. BCE Inc. bid for Astral Media Inc. Announced March 15, 2012. Value: $3.38 billion in cash and stock. It’s dead. If it’s resurrected and redesigned, it will be a 2013 deal. If. And as a failed 2012 deal, it doesn’t make the cut.

b) PETRONAS/Progress. Malaysia’s PETRONAS bid for Progress Energy Corp. Announced June 28, 2012. Value $6 billion. You know what happened. You know I will go to the bat for oil patch deals. But. As one of you put it: “failing to adequately prepare for an Investment Canada review don’t make it a great deal.”

The One That Doesn’t… But Some of You Will Want One

c) Dundee REIT/Scotia Plaza. Dundee REIT and H&R REIT buy Scotia Plaza from Scotiabank. Announced May 22, 2012. Value: $1.266 billion. Closed June 15, 2012. It’s an office tower changing hands. The pro-lobby has done its best… and it has failed. Better luck next year.

How could you cut my deal, you evil woman?

Baby, I tried. I really tried to keep it. Nobody else liked it.

Well, not fully true. When we get to end game, it’s not that nobody liked it—it’s a combo of how many lawyers weighed in on it—and which lawyers—from which firms (I do control for massive overparticipation from Firm X and Y)—and what their arguments pro and for were—all sifted through my patented “is it only the lawyers (and their close partners) who worked the deal who are pushing it, or did it make an impact on the greater landscape” analyzer. (It also goes through the “It’s Firm A’s deal so of course all the lawyers from Firm B hate it” sifter, by the way. I watch your back.)

I want it back on!

Read the next paragraph.

What next?

I need to tell my editors what the Top Ten are by Monday, November 5. I keep on reading everything you send me for the next week. I ask questions. You give answers. I ask more questions. Four more deals are shed. We play with the order. Some of you have sent me pretty detailed “this is what the Top 10 should look like, and in this order” memos; I revisit them. I READ EVERYTHING YOU SEND ME, REPEATEDLY. Because of time constraints, I write the story as we do this final cull—I need to file November 15.

This is also the point at which I start get your marketing folks working on confirming mandates—who acted for whom on what.

It’s sort of a lame list.

You know… you’re right. I’ve had a couple of years in the past nine in which I’ve looked at the end product with disappointment, and this certainly is one of those years. I ache for 2006. But. It’s 2012.

It’d be better if my deal was on it.

I know, baby, I know. But I have this process, see…

Top Ten by Monday, November 5, eh?

Yup. If you’ve got any argument left in you, get it to me by then.

Thank you,

Marzena Czarnecka