Amid growing interest on the part of U.S. private equity players in opportunities in Canada, Borden Ladner Gervais (BLG) has lured an experienced transactional lawyer from competitor Blake Cassels & Graydon.
Alfred Buggé, who joins BLG as a partner, will divide his time between the firm’s Toronto and Montréal offices. Buggé advises clients on public and private mergers and acquisitions, financings, and venture capital transactions within Canada and beyond.
In a discussion with IFLR1000, Buggé reflected on the public M&A market in Canada and on one marked trend in particular. This is a surge in shareholder activism and proxy battles, which have led to certain initiatives on the part of regulators. Canada’s securities regulators have recently proposed rule changes with a view to requiring a hostile takeover bid to remain open for 120 days, as opposed the current 35-day period.
“This change would provide target companies with more time to find white knights or to implement other defensive measures against hostile bids. Such regulatory initiative is an indirect result of positions taken by Canadian courts and certain Canadian securities regulators to the effect that a ‘Just Say No’ defense could be a proper exercise of a board’s fiduciary duties under certain circumstances,” Buggé said.
Buggé also commented on private equity trends he has observed in Canada. These include U.S. private equity firms looking actively at acquisition opportunities in a Canadian market characterized by low interest rates and highly favorable currency exchange rates. He identified challenges facing family-owned companies in Canada that do not necessarily have an upcoming generation interested in taking control of the business. This may result in widespread acquisition opportunities, Buggé observed. Yet another trend involves larger private equity firms moving downstream in search of acquisitions below the $100 million mark.
“Trends have also been developing with respect to Canadian institutional investors. The larger Canadian pension funds have been steadily playing in private equity playgrounds as they increasingly take on direct acquisition opportunities and develop robust infrastructure teams. Finally, Canadian institutional investors are increasingly investing significant amounts in global private equity funds considering the diverse portfolio profiles of such funds and the fact that the Canadian market is not providing the deal value opportunities that such investors are seeking,” Buggé continued.
Buggé is on the faculty of the Law Masters’ Program at the Université de Montréal.