Canadian companies are increasingly discerning between friendly and predatory investment as a weaker dollar and lower rates make domestic companies more attractive to foreign buyers, according to Bank of America’s head of Canadian investment banking.
The Canadian dollar has weakened against its U.S. counterpart in recent years, and interest rates are relatively low compared with global peers, spurring interest in takeovers of domestic companies. Last year, Canada was the third-largest target for cross-border merger and acquisition activity, behind the United States and Britain, according to Deep Khosla, head of Canadian investment banking at Bank of America.
The bank’s large defensive advisory business on Bay Street is helping clients “to be ready if there’s an activist or anybody trying to make an opportunistic bid for a company,” Mr. Khosla said in an interview.
“That’s something that we’ve been spending a lot of time on and taking that defensive posture and making sure that’s covered so our clients can go on offence and start to be more of the acquirers.”
At the same time, rising geopolitical tension has triggered alarm bells in Ottawa over foreign investment and shareholder activism.
Ottawa changes foreign-investment rules to guard against ‘predatory’ acquisitions amid tariff battle
In March, 2025, the federal government increased its power to block foreign investments in Canadian companies. The decision followed a move from the U.S. to enact sweeping tariffs on goods from Canada.
The new guidelines determine when a foreign investment could come under a national-security review. They were updated to include “the potential of the investment to undermine Canada’s economic security.”
Last year, Canadian companies attracted some major U.S. investors. Mr. Khosla said shareholder activism has started edging higher in Canada.
“Activism is very prevalent in the U.S. right now. It has not been as frequent in Canada, but it’s picking up and so we’re all about not being reactive, but proactively getting ready in case that call comes,” Mr. Khosla said.
Last year, Bank of America advised Calgary fuel distributor Parkland Corp. on its sale to Dallas-based Sunoco LP valued at US$9.1-billion, which started as a friendly takeover bid. The deal also ended a battle with Parkland’s largest shareholder, Simpson Oil Ltd.
Rogers sells minority stake in wireless infrastructure for $7-billion
To help pay down its debt, Rogers Communications Inc. closed a deal in June to sell a minority stake in its wireless infrastructure for $7-billion to a consortium led by New York-based Blackstone Inc. that includes four of Canada’s largest pension plans. Mr. Khosla said the transaction was a friendly deal that Rogers actively sought out.
Bank of America is one of 16 U.S. lenders that operates in Canada. U.S.-based bank subsidiaries and branches in Canada collectively hold about $113-billion in assets, according to the Canadian Bankers Association.
The bank has been growing its Canadian team, with 1,000 employees in offices in Toronto, Montreal, Vancouver and Calgary. Last year, it hired more than 140 employees across its business, including markets, operations and technology.
“The investment that Bank of America makes in Canada is representative of our view of the Canadian market,” the bank’s Canada president, Drew McDonald, said in an interview. “It shows our long commitment to the country and we’re proud of our employee base and the fact that we regularly expand and hire a lot of people.”