M&A activity up for first time in six years

MERGER AND acquisition activity in the first quarter of 2011 rose by 58 per cent compared to the first quarter of 2010 – the first jump in six years, according to a study by NCB Corporate Finance.

Fifty-seven deals took place during the first quarter of the year, compared to the 36 deals recorded in the same quarter of 2010, according to the latest NCB Corporate Finance M&A Tracker Survey.

The increase in M&A activity was driven primarily by a number of foreign acquisitions by Irish companies, as companies like CRH, Kerry Group and Glanbia increased their presence abroad.

However, the value of the deals continued to be relatively modest, totalling €921.6 million during the quarter. While this was an 83 per cent increase on the €505 million recorded in the same quarter last year, it was a significant decrease from the €2.6 billion recorded in the fourth quarter of 2010. This reflected a number of high-value transactions which took place towards the end of last year, such as the ESB’s €1.4 million acquisition of Northern Ireland Energy (NIE).

Jonathan Simmons, director of NCB Corporate Finance, said that the latest survey demonstrated “a consistent level of improvement” in terms of the value of MA deals, particularly since the record low of €271 million recorded in the second quarter of 2009.

Building and construction-related stocks accounted for 18 of the 57 deals recorded during the quarter, with CRH completing 13 transactions during the period.

Ireland’s food groups were another key driver of the increase in M&A activity, with Glanbia’s acquisition of US sports nutrition company BSN and transactions by Origin and Kerry Group resulting in a relatively active quarter for Irish food companies.

NCB Corporate Finance expects M&A activity in 2011 to broadly match or exceed 2010 levels.