M&A Activity in Ireland Valued at €70.9bn in First Half of 2018

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M&A Activity in Ireland Valued at €70.9bn in First Half of 2018

August 10, 2018

Despite some global uncertainty, the first six months of 2018 were notably buoyant for Ireland’s merger and acquisition (M&A) market in a continuation of the active market that was evident in 2017. This is according to the William Fry Mid-year M&A Review 2018, produced in association with Mergermarket, which was published today.

Key findings from the first half of 2018 include:

Record half-year deal value with 76 deals with a combined value of €70.9bn
41 outbound transactions with a deal value of €3.5bn, up from €717m in H1 2017
92% of total deals were in the mid-market (€5m-€250m) bracket
55 international deals worth €70.7bn, remaining stable with H1 2017 (56)
17 private equity deals with a value of €1bn

Shane O’Donnell, Head of Corporate/M&A at William Fry, commented that, “following on from the levels of activity experienced last year, the first six months of 2018 have been notably buoyant for the Irish M&A market. 76 deals worth €70.9bn targeting Irish firms gave rise to a record half-year deal value. Mid-market activity continues to be the engine of M&A in Ireland with over 90% of deal.”

Stephen Keogh, Corporate Partner, looking forward noted, “Ireland remains an active M&A market. Although talk of trade wars and Brexit pose uncertainty, there is much to suggest that both foreign and domestic buyers will still be active in the Irish M&A market in addition to Irish buyers continuing to look further afield for attractive acquisitions.”

Inbound drivers

Ireland reinforced its credentials as an attractive jurisdiction for international dealmakers in H1 2018, with a total of 55 deals worth €70.7bn announced over the first half of the year remaining stable with H1 2017 (56). The most actively-targeted sectors in terms of deal volume were TMT (25%), Business Services (22%) and Pharma, Medical & Biotech (16%). The Trump administration’s reduction in corporate tax rates – cutting the federal rate from 35% to 21% – as well as speaking out against US companies investing capital abroad, has not yet impacted on outbound US deal flow.

Outbound M&A activity

Irish PLCs continue to look overseas for M&A opportunities. Outbound M&A activity in H1 2018 was up in terms of value on the equivalent period in 2017. While in volume terms the 41 transactions were down by two on the first half of last year, outbound deal value jumped sharply to €3.5bn, up from €717m in H1 2017. Smurfit Kappa, an Irish leader in paper-based packaging, acquired Dutch paper and recycling business Reparenco for €460m, pointing to the continued international influence of Irish companies in Europe and their commitment to growth opportunities on the continent.

Sectoral M&A Activity

Business Services and Technology, Media, and Telecom (TMT) both saw clear increases in their share in overall Irish M&A volume year-on-year, accounting for 21% and 20% of overall activity respectively. In terms of M&A values, the pharmaceuticals sector clearly dominated as a result of the milestone Takeda/Shire deal.

TMT

Ireland’s TMT sector continues to attract global interest and has become the global technology hub of choice when it comes to attracting the strategic business activities of ICT companies. The first half of 2018 saw some major developments. In June, AWS, a subsidiary of online group Amazon, said it would create 1,000 jobs in Ireland over the next two years while Facebook revealed plans for a new €300m data centre in Meath. In May, Google announced a €150m expansion at its Dublin data centre, taking its total investments in Ireland to €1bn.

Private equity

H1 2018 saw 17 private equity transactions with a deal value of €1bn, on a relative par with the 21 deals seen in the same period last year. Notable 2018 deals include Oaktree capital management’s €250m buyout of shopping centre manager Indego, and Insight Venture Partners, Highland Europe and Ireland Strategic Investment Fund’s €100m purchase of an undisclosed stake in AMCS Group. Brookfield Asset management’s €120m buyout of telecommunications firm Imagine Communications was another sizeable PE deal that took place in H1 2018.

Outlook for 2018 and beyond

Looking ahead, Ireland’s stable economic environment continues to attract investment capital, particularly from PLCs with strong balance sheets and readily-available capital. As such, the financing climate for M&A is set to remain healthy. With a wealth of new entrants to the market place, whether PLCs, institutional investors or PE buyers, these will be seeking new ways to deploy their capital effectively.

Ireland remains an active M&A market and the confluence of a handful of mega-mergers, and a brimming pipeline of mid-market transactions should deliver more of the same in H2 2018. The TMT sector, one of Ireland’s strongest suits, will also continue to attract the interest of acquisition minded tech companies. With these trends underpinning the deal market, Irish M&A looks set for another busy year ahead.