Income trusts, pension plans to figure in Canada M&A

By Pav Jordan

TORONTO (Reuters) - Canada pension funds and private equity are eyeing income trusts with steady earnings and resource companies as homes for cash held over during the economic crisis as acquisitions bubble up again after a recession-induced deep freeze.

"There are a fair number of deals in the works," said Richard Steinberg, who heads mergers and acquisitions at Fasken Martineau, the Canadian law firm that helped put together China's biggest ever overseas acquisition in June, when oil refiner Sinopec bought oil explorer Addax Petroleum Corp for $7.24 billion. "2010 could be a big year."

Pension funds are cautiously opening their wallets, and last week U.S. private equity firm TPG and the Canada Pension Plan (CPPIB) struck the biggest leveraged buyout deal of the year, the $4 billion purchase of prescription drug sales data provider IMS Health Inc (RX.N).

And CPPIB and the Ontario Teachers' Pension Plan Board took a run at Australian toll road operator Transurban Group (TCL.AX), which spurned their $4.4 billion bid.

"The pension plans are starting to get quite active now in M&A," Steinberg said in an interview from his offices overlooking Toronto's financial district.

Steinberg, Fasken Martineau's chief M&A lawyer, said strategic players are seeing opportunities to take over or merge with competitors.

He said Canadian companies came out of the economic downturn quite strong, so many are better positioned as buyers than counterparts in the United States and elsewhere as countries emerge from recession.

TARGET THE TRUSTS