Irish M&A outlook promising despite first half decline

M&A activity in Ireland fell in the first half of 2015, according to a new review.

A total of 45 mergers and acquisitions worth €35.1 billion took place in the first six months of the year as against 42 deals with a value of €39.3 billion for the same period a year earlier.

The latest figures from William Fry were skewed by the inclusion of Mylan's €32.6 billion hostile offer for Irish over the counter pharma group Perrigo. That deal is still being resisted but is included in the data on the basis that the approach was made before the end of June.

At the end of the period under review, Mylan itself was facing a rival hostile takeover approach from Teva. Teva has since dropped its interest, having purchased the generics business of Irish headquartered group Allergan, formerly Actavis. That €36.8 billion deal will likely be a standout component of the second-half M&A list.

Iseq heavyweight CRH's purchase of €6.5 billion in building materials assets from Lafarge and Holcim – one of the largest in Irish corporate history – is not included in the data as it was only confirmed on Monday.

Significant Irish deals to take place in the first half included Lone Star's acquisition of the Jurys Inns Group for €911 million, IAG's takeover of Aer Lingus for €811 million, OKPD Health's purchase of EirGen Pharma for €121 million and Global Payments €115 million deal for Realex Payments.

The Realex acquisition was the biggest technology deal to take place in the first half in Ireland.

While Pharma-related M&A’s accounted for the largest share of deal value in the six months under review with 11 per cent of deal volume and 93 per cent of value, technology-related transactions were the most active volume-wise, accounting for 22 per cent of all announced activity.

In the first half of 2015, the level of mid-market activity has remained consistent with 26 deals, 77 per cent of which were valued at €100 million or less. The 20 deals valued at below this sum had a combined value of €386 million, compared to 22 deals worth €376 million for the same period in 2014.

Law firm William Fry, which compiled the figures using underlying data from Mergermarket, said the funding landscape for deals was revealing new trends.

“There has been an increase in availability of debt and equity finance, showing renewed confidence in Ireland’s economy but interestingly the source of this funding is changing. Ireland now has the third largest alternative lender market in the EU, worth €2.9 trillion,” said Shane O’Donnell, head of corporate and M&A.

While the latest figures are not quite as compelling as those of last year’s – when it was revealed that M&A activity was at its strongest since 2008 – Mr O’Donnell said the outlook was still promising.

“Although the overall number of deals and value is slightly down when compared with this time last year, it’s been a steady and positive start to 2015. Ireland’s economic recovery is taking hold across more sectors and this is driving renewed activity at an SME level in the leisure sector and leading to a strong pipeline for the second half of the year. We’ve also recorded some big ticket deals in the usual strong areas of activity such as the pharma, medical and biotech sector,” he added.