01/20/2012 09:51 EST | Updated 03/21/2012 05:12 EDT

Takeovers in Canada hit record high in 2011

Canadian companies and investors had a record year for mergers and acquisitions in 2011, according to a report released Friday by PwC.

The management consulting firm said the number of deals reached an all-time high of 3,173, with a total value of $189 billion.

The values of mergers and acquisitions rose by 22 per cent from last year and doubled the 2009 number, but were still well below the peak in 2007.

Many Canadian firms and investment funds shopped outside the country, with the percentage of domestic targets dropping to 51 per cent, down from a high of 81 per cent in 2006.

"Canada is coming off a strong year, despite a number of economic setbacks globally,” says Kristian Knibutat, PwC's Canadian Deals Leader.

“As a country we stepped onto the world stage and have established a level of credibility that we view as extremely noteworthy.”

In another first, Canadian acquisitions of U.S. targets outpaced those led by U.S. buyers in this country, by value.

Large investors buying more assets

The report also shows that Canadian deals represented 10 per cent of the global mergers and acquisitions market in 2011, up from seven per cent in the 2007 peak.

Deals in oil and gas and mining have typically accounted for more than half of the total of Canadian takeovers, but that margin fell as activity picked up in other sectors.

The report predicted the trend will continue.

"We anticipate Canadian M&A to outpace global M&A growth rates and end the year in line or moderately below the 2011 domestic tempo."

The PwC report attributed the increase in Canadian activity to several trends.

Large investors, such as pension funds, are buying up assets to make up for lower earnings from bonds as interest rates fall, it said. As well, government spending cuts mean more privatization, stock market volatility is making private deal-making more attractive and retiring baby boomers are selling out businesses.