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Irish M and A deal values up in 2012

Monday, February 25 10:40:35

Ireland's merger and acquisition (M and A) market performed steadily in 2012 with a rise in the overall vale of deals done despite a drop in the actual number of deals.

A total of 82 deals (down from 85 in 2011), with an aggregate value of E17.1bn (up 18pc from E14.5bn in 2011), are recorded in the annual William Fry M and A Review published today.

This performance was driven by Irish companies increasing their market share worldwide, with outbound activity eclipsing both inbound and domestic activity for the first time.

There was a trend towards deals of a larger value in 2012, with four deals each valued at more than E250m taking place. Small and midmarket transactions were not as strong, with only 11 deals in the E5m - E15m range.

Globally, financial services deals are down both in size and number. However, in Ireland, financial services remained buoyant in 2012, accounting for 18pc of overall deal volume and 38pc of deal value at E6.4bn. This sector saw two of the three largest deals with Sumitomo Mitsui Financial Group's E5.7bn purchase of the Royal Bank of Scotland's aviation leasing business, and the E449m purchase of Goldman Sachs hedge fund administration services business by State Street.

For the first time, Irish outbound M and A activity comprised a larger share (41pc with 58 deals) of Irish deal-making than inbound (38pc) and domestic (21pc) M and A.

With the turbulent economic times experienced by Ireland in 2012, the fact there has been no decline in this area highlights the strength of Ireland-based corporates and their ability to compete globally. Their growth overseas will help contribute to a stronger recovery at home, the report said.

2012 saw a continued decline in the level of private equity M and A activity with volume and value decreasing by 20pc and 70pc respectively year on year. However, these numbers belie a strong appetite for Irish assets as the M and A figures do not include loan book and property. In the aftermath of the crisis, loans and commercial properties with distressed pricetags are being acquired by some of the biggest global buyout firms, including Kennedy Wilson, KKR and Apollo Global Management. While this interest did not directly translate into rising buyout activity in 2012, the continued interest from abroad in Irish assets including loans and commercial properties indicates Private Equity activity outside the pure M and A sector throughout 2013.

The technology/software sector was quieter in M and A terms in 2012, but we are seeing ongoing investment in tech companies and it is tipped as an area for growth in 2013 and going forward, given the TMT businesses announced for sale in the last six months. This hints at a new phase of growth in M and A for Ireland's technology sector spurred by the Government's active interest in supporting tech start-ups. While most activity in this sector still takes the form of venture capital funding, larger transactions should soon follow.