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Upcoming Irish and overseas elections may affect M&A activity this year, William Fry warns

Falling interest rates could fuel deal-making but acquirers are wary of policy changes at home and abroad

Laya Healthcare's €650 million takeover by Axa was the second-largest Irish financial services deal last year.

Joe Brennan
Thu Feb 15 2024 - 05:00

Corporate law firm William Fry said that Irish mergers and acquisitions (M&A) activity may be subdued this year, following a 20 per cent slump in the value of deals in 2023. It says potential buyers will brace themselves for possible “significant policy changes” in the Republic and overseas with key elections on the horizon.

“Ireland faces a national election at some point in the next 15 months. The potential for significant policy changes not only in Ireland but also in the jurisdictions of our largest FDI [foreign direct investment] acquirers seems unlikely to help encourage more active deal-making in 2024,” said Stephen Keogh, head of corporate and M&A at William Fry, in the firm’s latest annual report on Irish deals activity.

[ Life sciences a rare bright spot in muted Irish M&A activity last year - EY ]

Sinn Féin, which has never been in government in the Republic, is the most popular party in the State, with 28 per cent support, according to an Irish Times/Ipsos B&A opinion poll published last week, even if backing for the party has fallen recently to a three-year low.

Britain and the US, the sources of two-thirds of all overseas bidders for Irish companies in 2023 according to the William Fry report, also face elections later this year.

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Still, Mr Keogh said that a supportive factor for deal-making may lie in “a more stable interest rate environment, coupled with Ireland’s resilient economic performance”.

Big central banks, including the European Central Bank, the Federal Reserve and the Bank of England, are expected by financial markets to ease official rates this year after hiking the cost of borrowing aggressively since 2022.

The William Fry report said that 334 deals above the €5 million threshold were struck in the Irish market last year, with the total value of such transactions amounting to €11.8 billion. While the number of deals increased by 10 per cent from 2022, the value was down by €3 billion, or 20 per cent.

[ Irish M&A market poised for growth in 2024 after ‘resilient’ 2023 ]

The financial services sector was the most active sector, accounting for 35 per cent of 2023 deals. This included the largest deal of the year, the €3.3 billion acquisition of Irish-based Pembroke Aircraft Leasing by AviLease. The second-largest financial services acquisition was Axa’s €650 million purchase of Laya Healthcare

The second-largest deal overall was Italian rare disease specialist Chiesi Farmaceuti’s €1.34 billion acquisition of Amryt Pharma.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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