Key deals boost M&As to £3.5bn in first half of 2000

Irish companies were involved in mergers and acquisitions worth almost £3.5 billion (€4.44 billion) in the first half of the year, while overseas companies bought Irish companies and assets worth over £2.7 billion, according to detailed figures compiled by The Irish Times.

Both figures are, however, distorted by a couple of major deals. However, even excluding these distortions the accompanying tables show a very high level of merger and acquisitions activity spread across a range of sectors.

The merger of Enba's First-e with the Spanish group Uno-e was the single biggest deal involving an Irish company as a buyer or partner, while British Telecoms's acquisition of Esat and the remaining 50 per cent of Ocean accounted for almost two-thirds of overseas acquisitions of Irish companies.

Many of the country's biggest companies were notable absentees from the first half M & A list, with AIB, Bank of Ireland, Kerry and Smurfit barely registering. But CRH and Elan continued to be among the most active buyers.

CRH spent almost £480 million on three big deals in the US and UK and did half a dozen smaller deals where the price was not disclosed. CRH's £480 million-plus spend accounted for the majority of the £555 million spent on acquisitions in the building materials sector.

This sector did, however, produce some new names as substantial buyers, with Qualceram's £40 million purchase of Shires likely to treble the Arklow group's business.

Elan - inevitably at the top of the spending list - showed it had not lost its acquisitive appetite with its £469 million purchase of Liposome, while Galen - its Northern Ireland lookalike - showed it intended to expand agressively with the £262 million acquisition of Dublin-based Warner Chilcott.

Independent News & Media has featured regularly on the acquisitions list in recent years and, in the first half of 2000, the agreed £383 million bid for the Belfast Telegraph (still subject to British government approval) was Independent's big deal. The other notable feature of the media business in the first half was the aggressive expansion into the Irish newspaper market by Scottish Radio Holdings, with its £28 million acquisition of the Kilkenny People regional newspaper group and the £8 million acquisition of Ireland on Sunday.

The food industry has usually been an active sector when it comes to M & A activity by Irish companies. But the first half of this year showed just £26 million spent, with the bulk of this down to IAWS's acquisition of the Pierre's ready meals business.

This level of inactivity is unlikely to last much longer, with strong speculation that Kerry, which tends to execute its big deals in three-year cycles, is in the frame for the US flavourings group Bush Boake Allen - worth £600-£800 million. Greencore is also seen as a likely buyer in the not too distant future.

Technology and software acquisitions accounted for the greatest number of deals by sector, if not the largest in terms of the total value. There were 30 technology acquisitions worth £449 million but this was dwarfed by the four deals worth £2.1 billion in the telecom sector.

Apart from the 30 deals in the technology sector, there were 19 involving building materials companies, 11 in financial services, five in media, four in telecoms, three in food and 20 spread across other industries.

In terms of value, telecoms dominated with £2.1 billion, followed by financial services with £1.35 billion, pharmaceuticals with £762 million, building materials with £555 million, technology with £449 million and media with £422 million.

These figures actually understate the real value of first-half acquisitions as in many cases the consideration was not disclosed.

There were only a handful of management buy-outs or buy-ins in the first half, but corporate financiers expect a greater number of these sort of deals in the future, not to mention public companies being taken private by managements which have finally given up on the ratings on the stock market. Adare Printing, Dunloe Ewart and Green Property are all likely to go private in the second half of the year and other second-line public companies seem destined to follow.

Finance for acquisitions does not seem to be a problem, with Irish and overseas banks and investors all apparently willing to fund acquisitions in the buoyant domestic economy and to fund expansion abroad. Those £3.4 billion and £2.7 billion figures for first-half acquisitions might not be repeated in the second half, given the distorting effect on the Firste/Uno-e merger and the BT/Esat/ Ocean deals but corporate financiers report a steady flow.

"It's a good time to be in the investment banking business," commented one banker . . . with not a hint of understatement.