Ukraine war may weigh on repeat of €46bn worth of Irish deals

The geopolitical crisis sparked by Russia's attack on Ukraine may dampen the prospect of a repeat of last year's €46 billion of Irish cross-border mergers and acquisition (M&A) deals, according to corporate law firm Philip Lee.

"The Irish M&A market is just coming off a record-breaking year, where we saw record levels of capital invested, and on an international scale never witnessed before," said Eoghan Doyle, a partner with the Philip Lee and co-author of a new quarterly Irish cross-border deals report.

“In terms of deal flow for the year ahead, there is no doubt that the current geopolitical crisis is going to affect both initial expectations for 2022 and the resolve of target companies and their bidders to transact. That said, as was the case during the pandemic, some sectors are likely to continue to thrive, such as the technology and renewable energy sectors.”

The first quarterly Philip Lee M&A Insights report, co-authored with Andrew Tzialli, another partner at the firm, and using data provided by Experian, estimates that €46 billion of the record total €96 billion of Irish deals last year amounted to cross-border transactions. The total value of deals was more than three times the €31 billion figure recorded in 2020, the height of the Covid-19 crisis.

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Outbound deals

Of the €46 billion, about €36 billion was classed as outbound deals, mainly by companies that were not established in the Republic but are based in the State for tax purposes. The value of inward M&A amounted to €10 billion.

“Irish companies made acquisitions in 28 different countries across the globe and across a range of sectors, this being the widest geographic reach we have seen over the last decade,” said Mr Doyle.

Two massive deals drove the total tally last year. Irish aircraft-leasing firm AerCap Holdings acquired rival GE Capital Aviation Services, which had dual headquarters in Connecticut in the United States and Shannon, for more than $30 billion (€27.1 billion) and Dublin-founded clinical trials group Icon Plc's almost $12 billion takeover of US-based PRA Health Sciences.

Elsewhere, Irish-registered but US-run medical equipment group Steris purchased former New York-listed Cantel Medical in a transaction with a total enterprise value of about $4.6 billion. The list also includes Dublin-headquartered multinational power management group Eaton Corporation's $2.83 million acquisition of Cobham Mission Systems.

"While it might be difficult to equal the highs of 2021, the reality is that private-equity firms and institutional investors remain well funded and are still actively seeking deal opportunities," said Mr Doyle. "Despite the geopolitical climate, there will still be plenty of deal flow in the Irish market, where we believe that Irish target companies and bidders will be buoyed by the results of 2021 for Irish M&A, plus the fact that Ireland remains a very attractive country to transact for international bidders."