Canada's Q2 2026 M&A Landscape

Canada's M&A market has sustained momentum through the first half of 2026, despite a complex global environment characterized by trade tensions, inflationary pressures and evolving geopolitical considerations.

Investors remain cautious amid market volatility, though overall business sentiment remains positive. The confluence of these trends has tempered overall deal volume somewhat and concentrated activity into high-value transactions. Dealmakers are adjusting to uncertainty, with large asset managers and pension funds realigning portfolios and refining stress-test scenarios accordingly. Private equity continues to drive major public acquisitions, particularly in energy and infrastructure markets, while government policies in key sectors provide encouraging signals. As such, dealmaking may accelerate in the second half of this year as investors navigate challenges and seize sector opportunities to unlock deal synergies.

In this quarterly update, we examine: the industries leading Canadian M&A activity; how policy tailwinds are propelling energy transactions; the effects of AI-driven demand on the M&A landscape; and Canadian real estate trends.

Canadian M&A Deal Activity

Following a moderate start to the year, Q2 has surpassed Q1 in total deal value, with US$77 billion in announced and completed Canadian M&A transactions (see Figure 1), up from Q1's deal value of US$62 billion. Deal count, however, remained suppressed at 651 deals, down from 768 deals in the previous quarter. The divergence between deal count and deal value continues to reflect ongoing concentration at the top of the market, with strategic buyers focused on high-quality assets in select sectors, and a reduction in smaller transactions amid tighter financings.

Canadian M&A by Industry (Q2 2026)

Transaction value remained concentrated within energy (at US$23 billion across 28 transactions) and mining (at US$12 billion across 149 transactions), with oil & gas and gold dominating their respective sectors in both deal value and count. Real estate and utilities also made a splash in Q2; despite having fewer than 10 transactions each, both sectors exceeded US$8 billion in deal value. This demonstrates renewed opportunities in these sectors. Indeed, the outlook for activity in the utilities sector is strong, as dealmakers look to unlock transmission networks, energy storage and grid access in support of growing energy demands and infrastructure development. The makeup of top industry deals maintains the story set out in Q1, as Canada's national priorities continue to receive support from the coordinated efforts of government, private capital and industry stakeholders.

Energy Deals Capitalize on Policy Tailwinds

Opportunities abound in the Canadian energy M&A market, as demonstrated by Q2's M&A top performers. In addition to leading transaction value, the first and fifth largest deals of the quarter were also in the energy sector, including Shell's announced agreement to acquire Canadian energy company, ARC Resources Ltd., valued at US$16.5 billion; and the announced acquisition of SECURE Waste Infrastructure by GFL Environmental, valued at US$4.8 billion, with Bennett Jones LLP acting as Canadian competition counsel to SECURE. Throughout 2026, we expect that well‑capitalized buyers will continue to benefit from Canada's focus on strengthening domestic capacity, supporting an overall increase in energy-infrastructure development and dealmaking.

Broadly speaking, Canada's energy market has become more attractive for global investment from large players seeking opportunities to scale within a safe and reliable jurisdiction. In particular, activity in Western Canada's oil & gas patch remains robust throughout 2026, driven in part by the recent global energy crisis and a narrowed investor focus on energy security and supply-chain resiliency. Notable recent deals in this space include the aforementioned ARC Resources Ltd. acquisition, as well as Apollo’s announced acquisition of 40% of Pembina Gas Infrastructure, Ovintiv’s acquisition of NuVista Energy for C$3.8 billion, and the C$1.4 billion acquisition of Kiwetinohk Energy Corp. by Cygnet Energy. Such deal activity underscores the current momentum behind liquefied natural gas (LNG) expansion and the sustained interest in reliable energy sources in the form of oil and gas.

The development of LNG infrastructure capacity in Canada has also benefited from the publication of Canada’s national projects list, which includes two notable LNG projects: the proposed Ksi Lisims floating LNG export facility in northern British Columbia and the LNG Canada Phase 2 expansion of the Kitimat LNG terminal, also in British Columbia. Each of these projects have been designated by the Federal Major Projects Office as a Project of National Interest. In May 2026, the federal and BC governments signed an Enhanced Investment Co-operation Agreement to support a 2026 Final Investment Decision for the Phase 2 expansion, with LNG Canada’s Joint Venture Participants having approved initial funding to complete critical preparatory work. Also in May, Ksi Lisims LNG entered into an agreement with Germany’s Securing Energy for Europe for 1 million tonnes of LNG per year to supply up to 20 years, with additional European investors expressing interest in similar agreements. Investors watching Canada's LNG market will be encouraged as these projects continue to make progress toward a final investment decision, and we expect heightened activity involving LNG deals.

For strategically important sectors like energy, continued regulatory diligence will be key for investors interested in Canadian energy targets. Recent amendments to the Competition Act and Investment Canada Act, as well as a number of policies released in conjunction with Canada's Defence Industrial Strategy and the Spring Economic Outlook 2026 (including proposed updates to the Guidelines on the National Security Review of Investments), demonstrate the government's more active role in reviewing foreign investment and transactions in key sectors. However, project reviews may also be expedited in support of energy and infrastructure projects that further Canada's strategic goals, with the Building Canada Act and Federal Major Projects Office working to streamline project approval and permitting. Further positive policy signals to investors include the increased net benefit thresholds, which were raised to C$1.452 billion for investors controlled in a World Trade Organization country and C$2.179 billion for investors from countries with a free trade agreement with Canada, including the US and the EU. As such, parties to transactions with foreign capital involvement must consider regulatory timelines, along with wider political and commercial factors, much earlier in the transaction process. We expect foreign investment into Canada to increase throughout 2026, as more European, US and Asian investors seek to secure energy supplies amid continued disruptions to global fuel markets.

AI-driven Demand Continues to Fuel Deals

Demand for artificial intelligence (AI) continues to translate into M&A activity, with data centre and supporting digital infrastructure deals gaining momentum throughout the first half of 2026. Notable activity for the quarter included the acquisition of QScale, a leading Canadian data centre platform, by Goldman Sachs Alternatives and Microsoft's announced expansion of Azure Canada Central in Ontario as part of its ongoing C$19 billion commitment to Canadian AI infrastructure. The Government of Canada also continues to progress its sovereign AI initiative, with three proposed large-scale AI data centre projects in British Columbia, in partnership with TELUS. The rapid buildout of data centres presents a long-term investment cycle opportunity for Canada that will straddle multiple sectors.

In addition to the ongoing surge of mining and materials deals in support of mineral-intensive data centres, the current boom is also generating market opportunities in adjacent areas, including carbon-neutral power, grid integration and cooling systems:

• Carbon-neutral power: Power supply limitations present critical challenges to meeting the energy demands of data centres. To meet their power needs, hyperscalers are turning to low-carbon energy sources, with the contracted clean energy capacity of major players (e.g., Amazon.com Inc., Google LLC, Meta Platforms Inc., and Microsoft Corp.) reaching nearly 135 GW as of February 2026, according to a report by S&P Global Energy Horizons. In Canada, data centres are unlocking synergies between renewable platforms and large asset managers, as demonstrated by the US$6.5 billion take-private acquisition of Boralex by Brookfield Asset Management and La Caisse de dépôt et placement du Québec.
• Grid integration: Canada's limited grid capacity and long wait times for grid connection are a major hurdle for data centre development. Regulators are acting swiftly to address these barriers but, in the process, may be imposing additional regulatory requirements for developers. For example, Bill 40 in Ontario proposes to prioritize and approve connection requests from data centre projects, but only if the facilities meet certain conditions before connecting or reconnecting to the grid, including a measurable benefit to the local economy. To address the current disparity between the large amount of proposed data centre capacity versus available power supply and transmission capacity, stakeholders are championing off-grid solutions, including the "bring your own power" model being observed in Alberta. These solutions are driving a surge of interest in battery storage and even small modular reactors, as well as traditional transmission deals, such as the announced US$6 billion sale of Cleco Group LLC in support of future load growth.
• Cooling systems: With AI processors generating as much as 10x more heat per rack than traditional servers, the liquid cooling market is forecasted to expand at a compound annual growth rate of 32.7% from 2025 to 2030. The sale of CoolIT Systems by KKR to Ecolab (in which Bennett Jones acted as counsel to KKR), valued at US$4.75 billion, is illustrative of how the booming AI data centre market can also spur opportunities in supporting infrastructure markets, including water management technology.

The outlook for digital infrastructure M&A in Canada is likely to remain robust throughout 2026, as industry and policy remain aligned on the goal of advancing data centre development in Canada.

Trends in Canadian Real Estate M&A

The Canadian real estate market is in a state of flux, driven by a combination of recent structural shifts, opportunistic capital deployment and persistent valuation challenges. However, while deal count in Q2 was muted at 8 transactions, real estate deal value rose sharply to US$9.6 billion. Deal volume was elevated thanks in large part to the announcement of the C$9.4 billion proposed acquisition of First Capital REIT by KingSett Capital and Choice Properties REIT. Bennett Jones acted for KingSett Capital in this landmark transaction, which is expected to close in the latter half of 2026. Additional deals of note in Q2 include the C$1.1 billion acquisition of Ravelin Properties REIT (via plan of arrangement) by Clarke Inc., with Bennett Jones acting as counsel for Clarke, and the US$44.5 million acquisition by Immostar and Primaris REIT of the North and South commercial complexes of Les Galeries de la Capitale in Québec City.

Transaction patterns continue to shift in the wake of the pandemic, as deal flow has decreased and valuation gaps remain wide. Increasingly, private equity firms and large institutional investors are capitalizing on strategic opportunities to acquire distressed assets, leading to an increase in "go-private" transactions. The aforementioned KingSett Capital deal is the most notable example of this trend, but additional recent deals include the C$2.3 billion take-private transaction of the Minto Apartment REIT by Crestpoint Real Estate Investments and Minto Group and the completed buyout of the European Residential Real Estate Investment Trust by Canadian Apartment Properties REIT (CAPREIT), with an approximate aggregate equity value of C$441 million.

The increase in opportunistic acquisitions by PE firms has been, in part, fueled by the ongoing valuation discrepancies in the broader real estate market. Many assets, ranging from pre-construction condos to large commercial buildings, have seen a decline in market value post-pandemic, creating a mismatch between sellers and buyers, who are unwilling to pay above current market valuations. This divergence is particularly evident in the commercial sector, where ample liquidity exists, but the lack of suitably priced assets stifles transactional volume. While a significant valuation gap persists, better alignment between asset valuations and investor appetite could help narrow the gap, creating a potential turning point for increased activity in the latter half of the year.

Looking Ahead

The first half of 2026 has reflected an active, but more selective and strategically driven M&A environment than in previous years, driven by recent geopolitical developments both spurring deals in strategically important sectors and tempering the market sentiment in other areas. Uncertainty does not seem likely to fully abate in the near term, with investors adjusting their approach accordingly. Yet, a risk-averse landscape may hold a silver lining for Canada, as global investors seek to diversify their risk exposure and turn to Canada for its political and institutional stability. As the Government of Canada continues to roll out initiatives to attract investments in key areas such as energy and digital infrastructure, Canadian M&A activity may increase in the second half of the year.

*All numbers are according to S&P Global Market Intelligence in US dollars for announced or completed deals—where a Canadian company is the acquirer, target or seller—as of June 30, 2026.