Canadian takeover deals down sharply in third quarter, while corporate fundraising soars

Corporate takeovers involving Canadian companies collapsed in the most recent quarter, while fundraising efforts by domestic businesses soared to near-record highs.

Just 401 transactions involving a Canadian buyer or seller were announced during the third quarter, according to a report from LSEG Data & Analytics released Wednesday. That is less than half the historical average and a substantial drop from the 460 reported in the second quarter, which was already the lowest deal count for any three-month period since at least 2005.

Peter Castiel, the chair of Stikeman Elliott LLP, the top legal adviser for mergers and acquisitions in Canada for the first nine months of 2026, attributed the slowdown to U.S. President Donald Trump’s continuing trade war.

“For manufacturing, services, goods, that has for sure put a damper on the volume of transactions because, with that uncertainty, buyers and sellers try and figure out the discount on that,” Mr. Castiel said.

“So I think people are holding their breath. They want to see what happens post-Trump and ‘Should we wait or not wait?’”

Despite fewer deals overall, the ones getting done tend to be much larger. The third quarter saw roughly US$68.6-billion in transactions involving Canadian companies, a 16-per-cent increase relative to the latest 10-year third-quarter average.

H&R Real Estate Investment Trust’s $3.4-billion asset sale, CSA Group divesting its testing and certification business for $2.1-billion and the acquisition of Jamieson Wellness Inc. for $2.5-billion are just a few of the multibillion-dollar deals announced between early July and late September. That trend has continued into the early days of the fourth quarter, with Halifax-based Emera Inc. proposing a $14-billion merger with Calgary-based Canadian Utilities Ltd. and its parent company, ATCO Ltd., early Tuesday.

Fundraising, meanwhile, has been going on at a furious pace. Stock sales in particular, which just two years ago were at their lowest level since 1998, have rebounded dramatically.

Canadian companies issued $11.6-billion in equity during the third quarter, more than tripling equity issuance levels from the same period in 2025 and nearly doubling the most recent 10-year average.

“Investors have prioritized growth with strong conviction for the past couple of quarters,” said Nitin Babbar, global head of equity capital markets at RBC Capital Markets, which was the No. 2 investment bank for stock sales in the first nine months of 2026.

“Canada has participated meaningfully in this growth wave. We’re seeing strong momentum around Canadian independence and the ‘Build Canada’ framework. While this isn’t necessarily evidenced in specific deals, the overall market activity in the last couple of weeks reflects enthusiasm in the investor community about the opportunity for Canada.”

Jackie Nixon, the head of Canadian equity capital markets at RBC, said the “outsized volumes this quarter are driven by a few large offerings,” including a $1.2-billion bought deal from MDA Space Ltd. in July and a $4.8-billion equity offering from Celestica Inc. in August.

Corporate borrowing rates have also remained robust, with Canadian companies issuing $32.9-billion in bonds during the third quarter. That is 71 per cent above the most recent 10-year average and does not include loonie-denominated corporate bonds issued by non-Canadian companies, also known as maple bonds.

There have been several massive maple deals in Canada this year, most notably from hyperscalers such as Amazon.com Inc. and Google parent Alphabet Inc. looking to raise huge sums to build data centres. When maple deals are included, according to RBC data, Canadian corporate bond issuance in 2026 has already surpassed the total for 2025, hitting a record-breaking $165-billion.

“We are going gangbusters here,” said Patrick MacDonald, co-head of Canadian debt capital markets at RBC Capital Markets, the top investment bank for debt deals during the first nine months of the year. “It just seems so profound.”

But Rob Brown, who co-leads RBC’s Canadian debt team with Mr. MacDonald, said there are storm clouds overhead in the form of rising interest rates that “right now are producing maybe a drizzle,” though “there’s concern there might be a downpour at some point in the future.”

There is still a chance Canadian corporate bond issuance could hit $200-billion this year, he said, but unease surrounding next month’s midterm elections in the U.S., more rate hikes on the horizon and continuing tariff-related uncertainty could rattle both investors and issuers.

As for M&A, Stikeman’s Mr. Castiel said anyone assuming a major change after Mr. Trump’s time in the White House is complete is not being realistic.

“People are, I think, planning on this being a new normal and maybe discounting pricing,” he said. “That is what we are seeing.”