Robust business climate drives merger and acquisition activity

Irish merger and acquisition activity accelerated in the first half of 2006, with 82 deals compared to 65 a year earlier. Low borrowing costs, positive business sentiment, and rising corporate earnings were the driving forces, according to the Ion Equity survey.

The combined value of deals over the period fell to about €5.4 billion from €5.7 billion in the first half of last year, according to Neil O'Leary, chief executive of the private equity firm, despite the inclusion of the latest takeover of Eircom in the figures.

However, overall transaction values for the first half are ultimately likely be similar to the same period a year earlier because companies such as CRH and Kerry Group don't always disclose the value of small deals until after the six-month period, Mr O'Leary said.

The largest acquisition of the first half was Australian investment firm Babcock & Brown's purchase of Eircom.

"The second quarter of 2006 in itself was probably the most active we've ever recorded," Mr O'Leary said. "There are a lot of assets moving into Irish hands and that will likely continue."

The value of deals in the property and construction sector in the first half was €856.2 million, led by CRH's €280 million acquisition of MMI Products in April and the purchase of the Halfen-Deha Group for €170 million in May.

Earlier this week, the building materials company confirmed it spent more than €800 million on acquisitions and development in the first half, more than three times its expenditure for the same period a year earlier.

Meanwhile, Quinlan Private topped deals in the retail sector with its €300 million purchase of the Diagonal Mar shopping centre in Barcelona.

In the leisure and travel sector, the largest transaction was the purchase of health club group Next Generation Clubs (NGC) for about €293 million.

The business was sold by bloodstock tycoon John Magnier, and his associates, Michael Tabor, currency dealer JP McManus and financier Dermot Desmond, as well as the family of former tennis pro, David Lloyd.

Mr O'Leary is optimistic M&A activity will remain strong in the next six months, despite a trend of rising interest rates, as the cost of debt remains relatively low.