MERGERS and acquisitions by Irish companies reached new records in 1996 with deals worth over £2.5 billion. This compared with acquisitions of over £1.5 billion in 1995.
A number of Irish companies announced their largest ever acquisitions in 1996. These included: Bank of Ireland, CRH, Independent Newspapers and First National Building Society.
Bank of Ireland announced its biggest ever acquisition, when it revealed a £600 million sterling deal to take over the ninth largest British building society, Bristol and West. While the deal will not be completed until the middle of 1997, it was the largest deal announced by an Irish company in 1996.
This deal significantly boosted the total value of deals by companies in the financial sector. This sector accounted for over £750 million of the total £2.5 billion of acquisitions for the year.
A number of players in the financial sector showed interest in the improving British mortgage market. First National made its biggest ever acquisition when it bought the British mortgage subsidiary of Salomon Brothers, The Mortgage Corporation, for about £53 million sterling.
With securitised mortgages of £1.2 billion sterling the move trebled the building society's business in Britain. It was aimed at giving First National the critical mass for further growth in Britain.
Later in the year, First National added £70 million of sterling mortgage assets to its loan book when it acquired the sole branch in Northern Ireland of the Cheltenham and Gloucester for about £1.5 million.
Irish Permanent made a small acquisition in the British mortgage market when it paid £12.6 million sterling for residential mortgage lender Capital Rome Loans in Britain which has a loan book of £200 million.
AIB concentrated on the US where it bought First Washington Bancorp for £53 million and on Poland where it raised its stake in WBK Bank by 20 per cent for about £38 million.
The construction sector was the most acquisitive sector in 1996. CRH was active on the acquisition front again. It completed its biggest ever acquisition when it bought Tilcon in the US for a net £157 million or a gross £213 million. CRH bought a company with operating profits of £20.4 million on sales of £228 million from British conglomerate BTR. The acquisition was funded out of the group's existing credit facilities but CRH took the opportunity to raise £101 million from the market.
The acquisition makes CRHTilcon the largest construction materials group in the north east and mountain states of the US with over 170 locations in 13 states. In addition to Tilcon, CRH spent about £200 million on a number of bolt of acquisitions in Britain, the US an continental Europe.
In the property sector, Green was active acquiring property in the British market. It bought a Morgan Grenfell portfolio for £68.5 million sterling, a United Friendly properties portfolio for £37 million sterling and other properties for £16.4 million. But the biggest move was made by Treasury Holdings when it paid £90 million for a British portfolio.
Elan Corporation moved towards becoming a fully integrated drugs company with its £406 million acquisition of the US company, Athena Neurosciences, in the first quarter of 1996. The Athlone based company is transforming itself from being a developer of drugs delivery systems into a fully integrated drugs company that discovers, develops and markets its own drugs, the chief executive, Mr Donal Geaney, said at the time. By the end of the decade the company wants one third of its revenue to come from drugs which it has discovered, developed and marketed itself. It also spent £88 million on Advanced Therapeutic Systems.
Independent Newspapers and an O'Reilly family trust raised their joint stake in New Zealand newspaper group Wilson and Horton from 45 per cent to 86 per cent at a cost of £184 million. Building the 86 per cent stake in the New Zealand group has so far cost Independent and the O'Reilly trust £376 million.
Elsewhere, DCC was active mopping up minority stakes in the companies within its portfolio. Its largest move was the £28.5 million it paid for 40 per cent of Flogas. Other purchases included 20 per cent of Oare for £3.8 million, 12.3 per cent of Printech for £3.4 million and 45 per cent of Merits Health for £2 million.
The food companies were in consolidating mode and the number of deals fell. The value of deals in the food, drink and agribusiness sector fell to about £90 million from about £220 million in 1995.
One of the exceptions in the food sector were Kerry's acquisition of Ciprial in France for £54 million. Greencore bought 27 per cent of Imperial Holly in the US for £31 million as well as Williams of Tullamore for £68 million.
In a strong economic environment Irish companies are expected to be active on the acquisition trail again this year.
