The border between Canada and the United States is virtually invisible in the world of mergers and acquisitions, with M&A activity between the two countries fuelled by economic, political and geographical drivers. Canada is a relatively appealing source of target companies for U.S. companies because of its physical proximity, cultural and regulatory similarity, minimal geopolitical risk and wealth of natural resources. At the same time, Canadian companies wishing to be global players – or otherwise grow significantly – naturally look for acquisition opportunities in the much larger U.S. market.
This guide focuses on cross-border transactions structured as takeover bids in Canada or tender offers in the United States. Takeover bids and tender offers involve an acquiror making an offer to target shareholders to acquire some or all of their shares. In a hostile situation, a takeover bid or tender offer is the only way to acquire a Canadian or U.S. target company. In a friendly situation, many variables will influence whether this is the best way to acquire a target, compared with a merger (in the United States) or an amalgamation or plan of arrangement (in Canada). The best form of transaction will often become apparent during planning or negotiations and will depend on how quickly the acquiror wants to gain control of the target, the tax implications of the transaction, the available methods of financing the transaction, regulatory hurdles such as antitrust review, and various other factors.
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