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Canada’s investment scene is undergoing a notable transformation as foreign interest in domestic companies rises, driven by a weakened dollar and lower interest rates. According to Deep Khosla, head of Canadian investment banking at Bank of America, there is a growing distinction between friendly and predatory investments, prompting companies to prepare strategically for potential takeover bids.
Rising Interest in Canadian Companies
The Canadian dollar has faced depreciation against the US dollar in recent years, making local firms more appealing to foreign buyers. Concurrently, interest rates in Canada remain relatively low compared to those in other countries, further enhancing the attractiveness of Canadian enterprises. In 2022, Canada ranked as the third-largest target for cross-border mergers and acquisitions, following the United States and the United Kingdom.
Khosla highlighted that Bank of America’s robust advisory business on Bay Street is proactively equipping clients to fend off unwanted takeover attempts. “We’ve been focusing on a defensive posture to ensure our clients are prepared in case an activist investor or a predatory bidder emerges,” he stated during an interview. This approach allows Canadian firms to adopt a more aggressive stance in seeking acquisitions themselves.
Government Response to Foreign Investment
In response to rising geopolitical tensions and concerns over foreign investments, Ottawa has taken significant steps to bolster its regulatory framework. In March 2025, the federal government expanded its authority to block foreign investments in Canadian companies, particularly amid growing tariffs imposed by the United States on Canadian goods. The updated guidelines now specify circumstances under which foreign investments could trigger a national-security review, emphasizing the potential risks to Canada’s economic security.
This shift in policy reflects a broader apprehension within the Canadian government regarding foreign shareholder activism. Khosla observed that while shareholder activism has traditionally been less prevalent in Canada compared to the US, it is beginning to gain traction. “We are committed to being proactive rather than reactive in preparing for potential activist engagements,” he noted.
Notable Transactions Highlighting Market Dynamics
Recent transactions underscore the evolving investment landscape in Canada. Last year, Bank of America provided advisory services to Calgary-based fuel distributor Parkland Corp. during its US$9.1 billion sale to Texas-based Sunoco LP, which commenced as a friendly takeover. This deal also addressed ongoing disputes with Parkland’s largest shareholder, Simpson Oil Ltd.
In another significant development, Rogers Communications Inc. entered into an agreement in June to divest a minority stake in its wireless infrastructure for US$7 billion. The deal, facilitated by a consortium led by Blackstone Inc. alongside several major Canadian pension funds, was described by Khosla as a friendly arrangement that Rogers actively sought.
Bank of America’s Commitment to Canada
As one of the 16 American banks with a presence in Canada, Bank of America has steadily expanded its operations in the country. The Canadian Bankers Association reports that US-based bank subsidiaries and branches collectively manage assets worth approximately CAD 113 billion. The bank’s Canadian workforce has grown to 1,000 employees across major cities including Toronto, Montreal, Vancouver, and Calgary. Last year alone, the firm added over 140 personnel in various sectors, including markets, operations, and technology.
Drew McDonald, president of Bank of America Canada, expressed confidence in the firm’s commitment to the Canadian market. “Our investment in Canada reflects our long-standing belief in the potential of this market,” he stated. “We take pride in our workforce and our continuous growth in hiring.”
Why it Matters
The shifting dynamics of investment in Canada highlight the delicate balance between attracting foreign capital and safeguarding national economic interests. As the Canadian government tightens regulations around foreign investments, companies must navigate a landscape increasingly influenced by geopolitical factors. This evolving scenario not only affects the strategies of Canadian businesses but also shapes the broader financial landscape, potentially positioning Canada as a pivotal player in North American trade amidst global uncertainties.
