Financial resilience and wealth of natural resources make Canada an attractive target

Partners at leading Canadian law firms are predicting further tie-ups between local firms and international outfits in the wake of Norton Rose and Ogilvy Renault's merger earlier this month.

Senior partners at some of the country's top firms have come out in favour of the union, which will see Ogilvy formally join the Norton Rose Group alongside South Africa's Deneys Reitz on 1 June 2011.

Norton Rose group chief executive Peter Martyr said both mergers had been targeted because of the firms' strength in energy and financial institutions work, as well as Ogilvy's life sciences practice.

Partners in Canada argue that the country's resource-rich status, combined with its resilience during the downturn, will make further tie-ups attractive to UK and international firms. Meanwhile, for Canadian firms the incentive will be the ability to expand beyond a heavily-lawyered domestic market.

High-profile deals in the region include mining giant BHP Billiton's bid to take over Canadian fertiliser group Potash for a reported $38.6bn (£23.7bn) earlier this year, which was blocked by the Canadian Government.

Ogilvy's London head Peter Noble said: "The market is not getting any bigger, so a lot of people have been looking at strategic alliances, which is why, when we were approached by Norton Rose, we considered it the right move as we were already looking at what the best way forward was for us. I expect there are going to be more Canadian firms considering similar moves to ours in the near future."

Fasken Martineau Ontario-region managing partner Walter Palmer said: "The recent tie-up is the first of this magnitude in the Canadian market, and when there is something of this size happening in the market it does have an impact and people have to think about it. Natural resources are becoming more and more important and the country's financial resilience through the crisis has caused non-Canadians to take greater notice of our market."

Firms rumoured to be looking in Canada include DLA Piper, which already held talks about a potential tie-up with Fasken in 2008.

However, many in the market are ruling out a merger with any of Canada's leading 'seven sisters' firms – Blake Cassels & Graydon, Davies Ward Phillips & Vineberg, Goodmans, McCarthy Tetrault, Osler Hoskin & Harcourt, Stikeman Elliott and Torys – due to the US referral work that would likely be lost through a tie-up.

Blake Cassels & Graydon chair Brock Gibson said: "We were not surprised to hear about the Ogilvy and Norton Rose tie-up as many firms are reviewing their strategies. However, many Canadian firms have strong US relationships that could be impacted with a tie up with a UK firm that has US capability or ambitions."

McCarthy Tetrault Calgary managing partner Greg Turnbull added: "With most international markets either flat or depressed firms are looking to place themselves where the dealflow is, which Canada is able to provide, as one of the world's resource hubs for oil and gas and mining. I would be surprised, however, if the top-tier Canadian firms decided to pursue this route."

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