Takeovers, high-profile court cases and major share price collapses were dominant features of the Irish exchange in 2005, writes Jane O'Sullivan, Markets Correspondent

It has turned out to be a busy year on the Irish stock market, with the Iseq hitting record levels and no shortage of news. Takeovers, acquisitions, high-profile court cases and major share price collapses all featured over the course of the year.

A strong but uneventful start to the year gave way at the end of February to the shock of Elan's second share price collapse in three years.

Shares in the company were decimated after the death of a patient from a rare but generally fatal brain disease and the diagnosis in another of the same illness forced the drug company to suspend sales of its much-vaunted new multiple sclerosis treatment, Tysabri.

The emergence of a further case of the same disease in the following weeks kept the pressure on the stock, which ended the year as one of the market's worst performers.

The other news story that dominated the early part of the year was the High Court battle between Fyffes and DCC and its chief executive Jim Flavin. DCC may have claimed victory when the judgment in the long-running insider trading case finally came last week but the proceedings shed an unflattering light on the inner workings of both companies and other elements in the stock market.

The five-month battle for control of Jurys Doyle, which began in May, deserves the award for takeover saga of the year. Pitting some of the State's leading property developers against one another and against the powerful Doyle clan, the high-octane drama continued all summer before concluding with victory for the family interest in the autumn.

But if the Jurys Doyle deal was eventually done, Eircom was the one that slipped away.

The telecoms group had a busy year as it acquired the State's third mobile phone operator Meteor for €420 million, funding the deal with a rights issue, while Australian investment group Babcock & Brown took a 12.5 per cent stake in the firm.

But 2005 fizzled out for the company when Swisscom's takeover approach petered out in December after the Swiss government, the suitor's controlling shareholder, stepped in to block the plan. The news was doubly unwelcome for the Irish group as it had granted Swisscom exclusivity, clearly indicating that it saw itself now as a takeover play.

Other notable performers in 2005 were drink and snacks group C&C, whose shares surged on the back of the successful rollout of its Magners cider brand in the huge London market.

Kingspan also had a good year as it hit the acquisition trail in spring with the purchase of timberframe house manufacturer Century Homes for close to €100 million.

Meanwhile, exploration and mining stocks were among the market's strongest performers in a year when the global price of commodities hit all-time highs.

The prize for acquisition of the year goes to a company no longer on the market but one many observers believe is likely to return. Although the deal was billed as a merger, Jefferson Smurfit Group's link-up with the Dutch packaging group Kappa saw the Irish firm emerge on top.

Other notable deals included Diageo's purchase of Bushmills from Pernod Ricard for close to €300 million, while CRH remained active on the acquisition trail, spending more than €340 million on three US businesses in November.

The Iseq itself went from strength to strength.

After a brief blip in October, when it was hit by the jitters over higher interest rates that knocked markets across Europe, the Dublin market finished the year strongly after breaching the 7,000 level in early December for the first time.

Building on the gains of 23 per cent and 26 per cent seen in 2003 and 2004 respectively, the share index is poised to finish the year with double-digit gains once again.

Despite some negatives, such as rising euro-zone interest rates and the high price of oil, the outlook for the Irish market remains good. Fund managers and stockbrokers believe that Irish companies should continue to reap the rewards of operating in the strong economy in the euro zone.

Meanwhile, certain stocks such as the banks and those exposed to areas like home improvement and retail spending should receive a further lift as the SSIA funds mature.

Davy Stockbrokers, whose consistently bullish stance on the Irish market has been borne out in recent years, has set an end-2006 target of 8,500 for the Iseq, implying that capital appreciation is in the high teens.

However, while the performance of the market was strong last year, there were no major flotations. The hopes of the Iseq that at least two companies would follow Eircom and C&C by joining the main list were not realised.

The long-awaited launch of the Irish Enterprise Exchange (IEX) did see a number of smaller companies take advantage of its lighter regulations to take a listing, although Dublin still struggled to match the allure of London's AIM market.

Getmobile, the mobile phone group chaired by entrepreneur Pierce Casey, property management group Irish Estates, exploration firm Lapp Plats and security and recruitment group Newcourt, were the new arrivals on the IEX. The exchange also featured eight companies that transferred from the now extant markets for exploration securities and smaller stocks and Donegal Creameries, which joined from the main list.

The stock exchange also launched an exchange traded fund during the year, allowing investors to buy a basket of the 20 top shares on the Irish market. Following its launch in April, at a price of €12.10, the fund performed strongly over the course of the year to beat the overall market performance.

The market also suffered a number of high-profile losses.

Warner Chilcott, the pharmaceutical group formerly known as Galen, officially de-listed in January, followed by Heiton in February after its takeover by Grafton Group.

Cold storage group Norish left the Irish market for London's AIM in March, while the sale of Arcon to Lundin Mining saw the exploration group rescind its listing in May.

Jurys, the last hotel stock on the market following the taking private of Gresham, is due to de-list in January while, having sold off all of its businesses, engineering group Unidare is also set to leave the plc stage.

Question marks hang over the future of a number of the market's smaller stocks such as Joe Moran's household products group IWP, one of the year's worst performers, which has put in place a financial restructuring that will see the group surrender its plc status early in 2006.

The future of troubled luxury goods group Waterford Wedgwood also remains in doubt after further profit warnings, rights issues and management reshuffles saw Sir Anthony O'Reilly and brother-in-law Peter Goulandris end the year with a controlling stake in the group.

Meanwhile, most investors believe Readymix's majority shareholder, Cemex, will eventually move to take outright control of the company, or dispose of its stake altogether. The Mexican group, one of the largest global players in the sector, did move to stem the company's underperformance this year by putting its own people in the key management positions.

But the market is not without a number of potential flotation candidates waiting in the wings. Aside from Smurfit Kappa, which many observers see coming to the market in the not too distant future either in Dublin or New York, Aer Lingus is widely expected to float in the third quarter of next year.

Speculation about NTR, which already trades on a grey market, and divisions such as its alternative energy business, Airtricity, persists while Philip Lynch's One51, formerly the IAWS Co-op,remains one to watch.

Finally, a number of well-known faces departed the scene during 2005.

Neil McCann stepped down from the board of Fyffes, after 55 years with the fruit importer and distributor set up by his father. At Kingspan, Gene Murtagh handed over the day-to-day running of the building materials group to his son, Gene Junior, to move upstairs while another old hand, Martin Rafferty, stepped down from the chair at United Drug.

Meanwhile, it was all change at Paddy Power, which lost both its chief executive, John O'Reilly, and its finance director, Ross Ivers, over the course of the year.