THE value of acquisitions by indigenous companies for the first half of this down by Pounds l00million on the equivalent period in 1996, according to a survey carried out by Chapman Flood Corporate Finance.

Acquisition activity is recorded at Pounds 1.25 billion for 59 deals, compared to Pounds 1.35 billion for 76 deals in first half of 1996.

Chapman Flood says this is due to a period of consolidation by "the more active 1996 players". Last year was the best for first-half acquisitions since 1988.

But Ireland continues to experience the "fertile elements" of steady growth, low inflation and interest rates which lead to merger and acquisition activity.

"Irish companies continue to take 'strategic risks' in related and foreign businesses and the first six months of 1997 is quite pronounced in this regard. We have recorded 10 such initial strategic investments in the first six months to end-June 1997," the Chapman Flood report says.

AIB's purchase of Dauphin Deposit Corporation in the US for Pounds 840 million dominated the acquisitions for the half-year, with Musgrave's purchase of 21 Wellworth outlets for Pounds 67 million in Northern Ireland coming second. AIB also bought the WBK bank in Poland for Pounds 43.5 million.

The report predicts that the financial services sector will outperform other sectors in value consideration by the year's end. But a Waterford Foods and Avonmore merger would considerably increase the food, drink and agribusiness sector's performance, worth Pounds 73 million so far this year.

Of the 59 acquisitions, 23 took place within Ireland, with the United Kingdom also registering 23, "the first time in recent years that the UK has equalled, in activity terms, the Republic of Ireland... it is now probable that the United Kingdom, excluding management buy-outs, may surpass the Republic of Ireland as the preferred location of acquisitions", the report says.

There were four acquisitions each in other European counties and the US, and five in the rest of the world, including Nigeria, Russia, Kazakhstan and Argentina.

Among the top 12 acquisitions were the 80 per cent stake made by Smurfit Group plc into two Argentine companies - Celulosa de Coronel Suarez and Asindus - for an estimated total of Pounds l7 million.

A low level of activity - eight deals - was recorded in the construction and property sector, "largely accounted for by the relative absence of CRH plc in the 'acquisition market' during this six-month period'.

The number of management buy-outs stood at three, continuing last year's disappointing performance on 1995. "This is surprising given the favourable economic climate that currently exists when considered with the present tendency for businesses to dispose of non-core activities, to say nothing of the availability of funds from venture capitalists to back good investment opportunities," says the report.

The Interim Acquisition Survey was compiled in association with M&A International (Ireland) Ltd.