Ireland ripe for M&As, says study

Ireland is ripe for a surge in mergers and acquisitions as its economy starts to recover and despite fears that the euro zone recession is worsening, says a new report.

The study came as Royalty Pharma launched its $6.5 billion bid for drug company Elan.

This followed Canadian life insurer Great-West Lifeco €1.3 billion acquisition last week of Irish Life.

A programme to sell Ireland’s state assets sales and economic recovery will help to fuel MA activity in 2013, law firm William Fry said in its MA Report 2012. It pointed to a pipeline of potential deals in the pharmaceutical, medical and biotechnology sector this year, echoing findings from Mergermarket, the data providers, which said pharma deals were already outstripping other sectors this year.

Corporate confidence

The value of mergers and acquisitions completed in Ireland rose 18 per cent to €17.1 billion in 2012, reflecting improved corporate confidence in the country’s prospects, the report said. “Overseas buyers are not only focused on distress-driven opportunities. With its improved competitiveness, Ireland’s future within the euro is more certain than it was a year or two ago,” William Fry said.

Last year marked the third consecutive year of increased MA activity since 2008-09. The financial services and industrials chemicals sector accounted for most of the activity in 2012, while the value of transactions in the technology sector and State sector is forecast to rise this year.

Computer software companies represent the bulk of the technology groups put up for sale during the past six months.

For every three deals brokered in Ireland in 2012, two were undertaken by overseas acquirers, the report says. Two of the biggest deals were Sumitomo Mitsui Financial’s purchase of Royal Bank of Scotland’s aviation leasing business in a €5.7 billion deal and State Street Bank’s purchase of Goldman Sachs’ administration services unit. Seventeen acquisitions valued at $12.7 billion in 2012 were by US buyers, setting a record for the US and overtaking Europe for the first time in a decade, said Mergermarket.

Inbound deals

For the first time, the value of acquisitions by Irish companies of non-Irish businesses has overtaken inbound deals. Some of these deals are driven by homegrown Irish companies expanding their international operations. But they also include multinationals headquartered here such as US firm Eaton Corporation, which acquired Copper Industries for €9.3 billion in Ireland’s biggest deal last year. – Copyright The Financial Times Limited 2013