Corporate Canada Comes Shopping

Cities and towns along the northern U.S. border have long drawn Canadian shoppers seeking lower-priced U.S. goods. Now Canadians are shopping for companies.

Canadian businesses that have the cash are increasingly turning to the U.S. for investment and acquisition opportunities, taking advantage of a strong Canadian dollar and readily available financing while betting on a U.S. rebound.

December and January saw two major cross-border transportation deals, with Canada's TransForce buying Dynamex and Vitran acquiring Milan Express. Both deals secured a broader U.S. footprint for the Canadian trucking firms.

The U.S. market is drawing more than transportation providers south -- Canadian firms are buying up or buying into everything from technology companies (CGI buying Stanley in Arlington, Va.) to real estate (Brookfield Asset Management).

Cross-border mergers and acquisitions helped make the third quarter of last year the strongest quarter for Canadian M&A activity in three years, according to the Financial Post Crosbie: Mergers and Acquisitions in Canada database.

In the first nine months of 2010, Canadian companies acquired 126 U.S. firms, an almost 50 percent increase over the same period in 2009. The U.S. was the top target country of Canadian firms looking beyond their borders for bargains.

These purchases are being powered by an economy that has weathered the global recession much better than the U.S. economy. The Bank of Canada said Wednesday it expects the nation's economy will return to full capacity by the end of 2012.

Potential Canadian buyers also have more access to capital -- the banking industry in Canada largely escaped the financial crisis suffered by U.S. banks. The availability of liquidity helped Canada return to economic growth in the third quarter of 2009.

And don't forget, the U.S. is Canada's biggest export market. The U.S. imported $252.2 billion in Canadian goods last year through November, according to the U.S. Census Bureau, an 11.5 percent increase over the entire previous year.

Those Canadian firms that believe the U.S. recovery is getting stronger -- despite poor employment numbers -- see opportunity in the U.S. market now.

-- Contact William B. Cassidy at wcassidy@joc.com.

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