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North America claims 56 percent of worldwide merger, acquisition deals
In passing the US$10 billion mark, merger and acquisition deals in Canada claimed almost 16 percent of worldwide deal-making in 2004, says a report by John S. Herold and Harrison Lovegrove & Co.
Transactions in the United States hit $28 billion, 50 percent above 2003, with just over half related to the Rocky Mountain region.
That gave North America 56 percent of the global value compared with a five-year average of 43 percent. The 2005 Global Upstream M&A Review reported that worldwide transactions increased by 50 percent from 2003 to exceed $68 billion, but lagged behind turn-of-the-century records when a rash of mega-mergers occurred. Investors expect more than cash accumulation However, the current period of high commodity prices means that investors expect companies to do more than accumulate a pile of cash, said Michael Bridden, research director at Harrison Lovegrove.
What has startled researchers is that multinationals and the largest producers now have more cash on hand than debt.
Bridden said major companies may be tempted to sell once-marginal reserves that have gained rapidly in value, but they will likely retain those properties until commodity prices make a turnaround.
The review said that overall weighted average North American implied reserves (excluding heavy oil and bitumen) ended 2004 at $10.25 per barrel of oil equivalent, compared with just $3.91 elsewhere in the world.
Once oil sands and bitumen were factored in, the North American value dipped to $6.26 and $1.49 outside North America.
Canadian income trusts were the third-largest group of asset buyers, coming independent producers and European integrateds.
—Gary Park
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