Billion-dollar deals, including Scotiabank’s investment in KeyCorp, top this week’s roundup

Scotiabank to make $3.8 billion minority investment in KeyCorp 

Scotiabank agreed to acquire a 14.9 percent pro-forma ownership stake in KeyCorp, one of the largest bank-based financial services companies in the United States, for approximately $3.8 billion (US$2.8 billion).

Torys is acting as Canadian counsel to Scotiabank with a team that includes (Ricco) A.S. Bhasin (corporate/M&A), Blair Keefe and Eli Monas (bank regulatory) and Omar Wakil (competition/antitrust). Cravath, Swaine & Moore LLP is acting as US counsel to Scotia and Bank of America as financial advisor.

Sullivan & Cromwell LLP is serving as legal counsel, and J.P. Morgan Securities LLC and KeyBanc Capital Markets as financial advisors, to KeyCorp.

Scotiabank will purchase approximately 163 million shares of KeyCorp's common stock in two tranches:

• an initial investment of US$0.8 billion, after which Scotiabank will own 4.9 percent of KeyCorp's common stock, will occur upon expiration of the antitrust waiting period under the Hart-Scott-Rodino (HSR) Act,
• followed by an additional investment of US$2.0 billion, after which Scotiabank will own approximately 14.9 percent of KeyCorp's common stock, upon approval by the Federal Reserve.

“Scotiabank approached us with a unique opportunity to raise capital on attractive terms. While we continue to be comfortable with our current capital position, we determined that the investment enables Key to accelerate our well-communicated capital and earnings improvement while bolstering our strategic position,” said KeyCorp Chairman and CEO Chris Gorman. “Further, this transaction creates greater capacity for growth by enabling additional investments in targeted scale across our franchise and increases Key's strategic agility as we navigate an uncertain environment from a position of strength. We have a proven track record of driving growth in areas such as investment banking, payments, and wealth management, and we expect to leverage our strengthened financial position to lean into these areas more aggressively.”

The initial purchase is expected to be completed by the end of August 2024 and the additional purchase in the first quarter of 2025, subject to customary closing conditions.

Montreal's WSP Global to acquire Power Engineers for $2.44 billion

WSP Global Inc. agreed to acquire Power Engineers, Incorporated (POWER), a prominent U.S. consulting firm in the Power & Energy (P&E) sector, for approximately $2.4 billion (US$1.78 billion).

Stikeman Elliott LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal counsel to WSP. Katten Muchin Rosenman LLP is serving as legal counsel to POWER, with AEC Advisors as the financial advisor.

The acquisition is set to be funded through US$1.78 billion in new term loans and an equity raise of US$1 billion, including a US$500 million public offering and US$500 million in private placements. The deal, unanimously approved by both companies' boards, aims to bolster WSP's P&E services, aligning with its 2022-2024 Global Strategic Action Plan.

“The acquisition will mark a transformative step that will position us at the forefront of the energy transition,” said WSP President and CEO Alexandre L’Heureux. “By uniting WSP’s extensive global network and POWER’s deep technical expertise, we are poised to provide exceptional solutions and service quality to foster significant advancements in the communities we serve. The trust of our shareholders and our commitment to excellence will empower us to influence the future of the energy sector as we plan to expand our reach and power a sustainable future across the globe.”

POWER CEO Jim Haynes said, “POWER and WSP truly are stronger together. By joining forces, we can supercharge our ability to help clients and communities around the world adapt to the changing energy landscape—and provide more opportunities for our team members to work on the most challenging projects.”

The deal is expected to be completed in the early fourth quarter of 2024.

Gold Fields acquires Osisko Mining for $2.16 billion

Gold Fields Limited agreed to acquire all common shares of Osisko Mining for $4.90 per share in an all-cash transaction valued at approximately $2.16 billion (US$1.57 billion).

McCarthy Tétrault LLP is serving as legal counsel, and RBC Capital Markets as the exclusive financial advisor, to Gold Fields.

Bennett Jones LLP is serving as legal counsel to Osisko Mining, with Maxit Capital and Canaccord Genuity as financial advisors. Cassels Brock & Blackwell LLP is serving as legal counsel to Osisko's Special Committee, with Fort Capital as the financial advisor.

Upon deal completion, Gold Fields will gain full control of the Windfall Project in Québec, currently a 50-50 joint venture between the two companies.

“We are pleased to consolidate the remaining 50 percent interest in Windfall and its highly prospective exploration camp,” said Gold Fields CEO Mike Fraser. “Deposits with the scale and quality of Windfall, with a highly prospective exploration camp on top of that, are extremely rare, let alone in a world-class jurisdiction like Québec, Canada. Throughout our joint ownership of the project since May 2023, and the due diligence that preceded it, we have developed a strong understanding of Windfall and its potential and view it as the next long-life cornerstone asset in our portfolio. The acquisition is consistent with our strategy to improve the quality of our portfolio through investment in high-quality, long-life assets, like Windfall. It provides an opportunity to consolidate our presence in Québec, a Tier-1 mining jurisdiction, and apply our experience in greenfields exploration, project development and underground mining.”

This acquisition eliminates Gold Fields' existing $300 million deferred cash payment and $75 million exploration obligation from the May 2023 joint venture agreement with Osisko.

The deal is expected to close by the fourth quarter of 2024, subject to Osisko Mining shareholders’ approval and other customary closing conditions.

Tourmaline Oil acquires Crew Energy in $1.3 billion deal

Tourmaline Oil Corp., Canada's largest and most active natural gas producer, agreed to acquire Calgary-based Crew Energy Inc. in a $1.3 billion all-stock transaction, including Crew's net debt of $240 million.

Torys is acting as counsel to Crew Energy with a team that includes Scott Cochlan, Janan Paskaran, Mike Pedlow and Donald Baker (corporate/M&A), Omar Wakil (competition), Tom Stevenson and Parker Baglole (employment), Craig Maurice and Steve Marshall (tax), Andrew Gray and Gino Bruni (litigation), Tyson Dyck (environmental), Amy Maginley (oil & gas), Chris Bornhorst and Connor Murray (U.S. securities).

“We are excited about this transformative transaction with Tourmaline, which reflects the successful culmination of Crew’s focused efforts to delineate and grow our high-quality Montney asset base, while providing Crew Shareholders continued exposure to the assets, participation in a dividend and the ability to benefit from future growth and value creation,” said Dale Shwed, President and CEO of Crew. “As Canada’s leading natural gas producer and a well-capitalized, investment-grade organization, Tourmaline has a proven track record of developing large-scale and impactful resource projects which will now include Crew’s assets in Groundbirch and the Greater Septimus area, with the financial capacity to do so on an accelerated timeframe.”

The deal is expected to close on or about October 1, 2024, subject to customary closing conditions and regulatory approvals.

CPP Investments acquires stake in US-based Tallgrass Energy for $1.2 billion

Canada Pension Plan Investment Board (CPP Investments) has announced the acquisition of a significant stake in Tallgrass Energy, a US-based energy infrastructure company, in a deal valued at approximately $1.1 billion (US$843 million).

Paul, Weiss advised CPP Investments with a team led by corporate partners Ravi Purohit and Megan Spelman, and includes partner David Tarr and counsel Michael Spirtos and Nathan Mitchell; tax partner Scott Sontag; executive compensation partner Rebecca Coccaro and counsel Lisa Krausz Eisenberg; intellectual property partner Chuck Googe; litigation partner John Carlin and counsel Audrey Paquet; antitrust partner Annie Herdman and counsel Todd Hahn; and environmental counsel William O'Brien.

CPP Investments Managing Director and Global Head of Sustainable Energies Bill Rogers said, “With a business strategy that combines traditional energy and decarbonization solutions, Tallgrass is an attractive investment opportunity because of its dual role in delivering against growing energy needs and increasing decarbonization opportunities.”