Corporate dealmaking enjoys late ‘surge’ as Covid fears receded

There was a "surge" in corporate dealmaking in the latter stages of the year as the shock initially caused by the coronavirus pandemic started to recede, according to Investec.

There have been 291 mergers and acquisitions involving Irish companies in 2020, according to an M&A tracker maintained by the bank’s corporate finance department. This is down by 29 on the number of deals in 2019.

The majority of deals, however, were completed later in 2020, with a 25 per cent increase in volumes in the second half of the year.

The €8.5 billion disclosed value of deals in 2020 was down by more than half on the values disclosed last year, according to Investec. Up to 55 per cent of deals did not publicly disclose a value, however.

Of those that did, about 55 per cent, or €4.6 billion worth, took place in the final three months of the year. This compares to €1 billion worth of deals that closed in the first quarter of 2020.

The biggest deal by far was the €3.4 billion acquisition by Flutter Entertainment (formerly Paddy Power Betfair) of a 37.2 per cent stake in US group FanDuel. This deal closed in December, which skewed the value metrics for the final quarter.

Foreign operator

The second-largest 2020 deal also involved an Irish-headquartered company buying a foreign operator – Greencoat Capital’s €729 million buyout in November of the Humber Gateway wind farm in the UK. However, all eight of the remaining top 10 deals were buyouts of Irish companies by overseas bidders.

Overall in 2020, Irish companies bought about 100 foreign operators, while 87 Irish companies were bought out from abroad.

The sector with the most buyout activity was telecoms and IT, with almost a quarter of all deals by volume. Major transactions in the sector included US group Phoenix Tower’s €300 million buyout in may of Eir’s Emerald Tower, which owns a network of masts. There were 30 deals worth €1.5 billion in the industrials sector, including Madison Dearborn’s €624 million acquisition of IPL Plastics in July.

Investec said that if the current 2020 run rate of deals was maintained into 2021, it would be “an acceptable level of activity all round”.

“We would expect the second half of 2021 to see more deal activity as there may yet be a final negative 2020 pandemic impact, with less deals having commenced during the middle part of 2020 such that ordinarily they would be on track to complete in early 2021,” said Investec.