TORONTO (miningweekly.com) – The Canadian mergers and acquisitions (M&A) sector remained flat for a second year in 2013, reflecting similar numbers from 2012, professional services firm KPMG has found.

The firm last week said the materials segment, under which was counted the mineral resources and mining sectors, also continued to flounder while other market segments showed some growth and promise, as debt market liquidity gained momentum during the calendar year.

Total M&A deals involving Canadian companies were expected to amount to $139-billion in 2013, representing a 7% increase over 2012. Almost 1 800 deals, virtually the same number as 2012, were expected to be completed by December 31, based on data supplied by Thomson Financial.

The materials segment, which included mining and metals, remained in the doldrums. Despite a modest increase in deal value over the last year, materials continued to see a decline in the number of transactions, resulting in a 23% decrease over 2012.

"It was another tough year for the Canadian materials segment in 2013 but others showed signs of growth and strength which we expect to spill over into 2014.  Debt capital markets have been a catalyst for strong valuations and we anticipate that continuing in the year ahead,” KPMG corporate finance president Peter Hatges said.

The cost of debt capital hovered around historic lows in 2013. This allowed debt market liquidity to gain momentum throughout the year and reduce the costs of acquisitions, enticing intergenerational sellers to begin monetising their assets, KPMG said.

Private Canadian companies from coast to coast had also come to market in order to take advantage of strong selling conditions. KPMG said that it expected strong selling conditions to continue in consumer and industrial markets owing, in part, to the strength in automotive sales in North America, coupled with increased consumer spending.

"Whether the buyers are private equity firms or strategic investors, there appears to be an abundance of investment capital that is available, creating the opportunities for increased synergies and penetration into new markets by way of merger or acquisition,” KPMG corporate finance and Quebec corporate finance MD Martin-Pierre Roussel said.

Some of the landmark transactions involving Canadian companies in 2013 included the $19.1-billion acquisition of Calgary oil and gas producer Nexen by Chinese investment holding company CNOOC Limited; the $6-billion acquisition of the American retailer Neiman Marcus by a private equity consortium that included CPP Investment Board; Sobeys' acquisition of Western Canada food retailer Safeway Canada for $5.7-billion; the acquisition of Ally Credit Canada by RBC for $4.1-billion; and Hudson's Bay Company's acquisition of Saks Incorporated for $2.5-billion.