Irish plcs may become M&A targets as Brexit resolved, Davy’s Byrne says

Companies here may also take to the acquisitions trail once agreement reached

Irish public-limited companies, whose shares have been depressed in recent years by concerns over Brexit, may find themselves the subject of takeover approaches once uncertainty over the UK's future is resolved, according to Bernard Byrne, head of capital markets at stockbroking firm Davy.

Speaking at event organised by specialist deals publication Mergermarket in Dublin this week, Mr Byrne predicted that Irish companies may also take to the acquisitions trail as Brexit is sorted out.

“Right now, it’s very hard to see how anyone’s risk appetite is well served by taking a brave position,” Mr Byrne said, adding, however, that Irish companies could find themselves involved in mergers and acquisitions (M&A) activity as Brexit plays out.

Mr Byrne stepped down earlier this year as chief executive of AIB after nearly four years at the helm.

The Irish stock market has stood out as a weak spot across global equity markets since UK voters decided in June 2016 to quit the European Union. The Iseq index has declined by 3.4 per cent over the period, even as the domestic economy has continued to be among the best performing in the EU.

By contrast, the FTSE 100 in London, which is dominated by exporters that have benefited from sterling weakness against other major currencies, has jumped 16.8 per cent, while the more domestic-focused FTSE 250 has also advanced by almost 15 per cent.

The pan-European Stoxx 600 index has added 13 per cent, and the S&P 500 in New York is currently 40 per cent above where it was before the Brexit referendum.

Mr Byrne said that the sale process surrounding property group Green Reit’s has highlighted the disconnect between the market valuations of Dublin-listed companies and what private investors are prepared to pay for Irish businesses.

Green Reit put itself up for sale in April, bemoaning the fact that the stock had been trading persistently at a discount to the underlying net asset value of its portfolio of properties. It agreed to sell itself in August to UK real estate company Henderson Park for €1.34 billion, a 25 per cent premium to its market value before the sales process was announced.