Irish M&A activity ‘buoyant’ despite Brexit fears, says William Fry

Irish-based companies were involved in the 76 deals worth €70.9 billion in the first half of the year, according to a study of mergers and acquisitions activity by corporate law firm William Fry.

The record overall value, however, was skewed by the €67.1 billion deal agreed in May between Japanese drugmaker Takeda and Shire.

The volume of transaction involving Irish-based companies – a better barometer of activity given the impact of high-value deals such as Takeda/Shire – held up well compared to the same period last year, when there were 80 deals.

According to William Fry’s Mid-year M&A Review, produced in association with Mergermarket, about €3.5 billion of the total involved 41 outbound deals, where Irish companies made acquisitions abroad.

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This was up from €717 million in the first half of 2017. Major outbound deals agreed in the first half of the year included Smurfit Kappa’s €460 million acquisition of Dutch recycling business Reparenco.

Aside from the proposed Takeda transaction, notable inbound deals included Nomad’s €226 million acquisition of Green Isle Foods.

Private equity firms were involved in €1 billion worth of deals with an Irish dimension over the period, according to William Fry. This included Brookfield Asset Management’s €120 million buyout of Imagine Communications.

The overwhelming majority of transactions – more than nine out of every 10 – were agreed within the €5 million to €250 million mid-market range, William Fry said.

Pharmaceuticals

The pharmaceuticals sector dominated overall deal value, by dint of the Takeda deal. However, the tech/telecoms and media sector was also prominent, accounting for up to a fifth of Irish deals in terms of volume.

William Fry said the figures show that Irish M&A activity remains "notably buoyant" despite the threats on the horizon from Brexit, and also the re-emergence of US protectionism encapsulated in the stated policies of US president Donald Trump.

"Irish M&A has been remarkably stable, despite the headwinds," said Stephen Keogh, a partner in William Fry's M&A department. "It is holding up well and this gives us grounds for cautious optimism."

William Fry said Brexit, scheduled for March 2019, has “prompted some strategic plays in Ireland”, especially among British financial services firms looking towards acquiring a presence in Ireland to ensure access to the European Union, once Britain exits.

“As [Britain’s] departure point nears, the expectation is that [such] deals will be more commonplace,” William Fry said.

Mr Keogh highlighted that Ireland “is not just a refuge for English firms”.

He said there is increasing interest in acquiring Irish companies from non-EU companies that want to enter the EU market, and that would otherwise have done so by entering via the UK.

In the outbound sphere, Mr Keogh said that many Irish food companies were looking at acquiring positions in the UK market, to protect exports to Britain.