The 2014 M&A market in Ireland has shown promising signs of growth and recovery to date. Continuing the prevailing trends of 2013, the biggest deals of the year have all involved foreign acquirers, notably from the United States. According to recently compiled figures, nine out of the top 20 deals in Ireland involved overseas corporates but 31 percent of all recorded M&A deals were domestic, up from 27 percent for the whole of 2013.
Figures from Experian for the first half of the year reveal that the total cash value of deals (including M&A and ECM deals) announced for that period was €98bn, increased from just €14.8bn in H1 2013. While the volume growth in deals was seen as “steady progress” the rise in deal value ranked as the highest half-yearly total recorded in Ireland since the survey was inaugurated in the early 1990s. Transactions originating in Ireland accounted for 17.7 percent of the total value of European transactions, largely driven up by a few high profile M&A deals.
There were 22 large deals (over €120m) announced in H1 2014, up by 83.3 percent on H1 2013. Mid-market deals, or ones in the €12-120mprice bracket, rose from 26 to 35. There was also a 63.2 percent increase in the number of small deals (those with a value of less than €12m).
The largest deals were all in the life sciences sector. Actavis, a Dublin based firm, completed an €18bn takeover of US company Forest Laboratories.
Medical device giant Medtronic became the largest company to relocate its headquarters from the US to Ireland after its €31.6bn acquisition of Dublin-headquartered Covidien. This deal was listed by Mergermarket as one of the top 5 global deals of H1 2014 and marks the latest ‘inversion’ by US companies. Inversions are transactions that, structured properly, enable a US corporation to re-incorporate and change its tax domicile to Ireland without triggering US anti-inversion rules. This follows three large inversion transactions in 2013: Actavis/Warner Chilcott, Perrigo/Elan Corporation and Endo Health/Paladin Labs.
In another noted inversion deal, Salix Pharmaceuticals Limited agreed in July to buy patents to three gastrointestinal drugs from Cosmo Pharmaceuticals SpA for about $2.7bn in stock. Salix will merge with an Irish unit of Cosmo and the combined company is to be based in Ireland. Cosmo’s shares surged on the news.
As part of Ireland’s external funding program, the State had agreed to the sale of certain of its assets. While the sale of the national forests, and the national stake in Aer Lingus, have not gone ahead for strategic reasons, the State has successfully sold Bord Gais (the national gas utility). The sale to an international consortium including Brookfield Renewable Power Inc, Centrica plc and iCON Infrastructure LLP closed on 30 June.
In the telecommunications sector, mobile communications company Three Ireland reached agreement to buy rival O2 from Spanish telecoms company Telefonica, in an €850m deal that will make it the second largest player on the Irish market. The sale is subject to competition approvals at an EU level.
Notable mid-market deals in H1 2014 included the €104m acquisition of the healthcare communications business of UK firm Knowledgepoint 360 by UDG Healthcare plc, a Dublin-based healthcare services business.
In the outsourcing and business processing sector, UK firm Capita plc recently acquired Cork based Business Process Outsourcing provider Southwestern from Ion Equity for €35m. In the property sector the most widely reported deal was the acquisition of the world famous Doonbeg Golf Resort by Trump Acquisitions LLC, which has been rebranded as part of the Trump International Golf Links group.
The M&A climate in Ireland appears to be getting healthier year by year. While Ireland has a number of challenges yet to face, the recent upturn and show of confidence by major multinationals provides a positive outlook heading towards 2015.
Feargal Brennan is Head of Corporate and Laura Greene is a corporate solicitor at ByrneWallace. Mr Brennan can be contacted on +353 1 691 5276 or by email: firstname.lastname@example.org. Ms Greene can be contacted on +353 1 691 5495 or by email: email@example.com.
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Feargal Brennan and Laura Greene