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Mid-market dominates as PE deals top €15bn

A transparent legal system is one of the factors underpinning surging merger and acquisition activity in Ireland according to William Fry’s seventh annual M&A report.

A total of 143 deals worth were announced over the year, representing a 5.9 per cent increase in volume, as dealmakers jostled to secure stakes in successful Irish businesses.

Deal volume peaked at its highest annual total on record from the William Fry Mergermarket database which has been operational since 2001.

Overseas bidders

The top ten private equity (PE) deals were all conducted by overseas bidders who in total closed 93 deals worth €14.4bn.

The largest inbound deal was Canada’s Vermillion Energy and Luxembourg-based holding company CPP Investment Board’s acquisition of a 45 per cent stake in Royal Dutch Shell’s Irish gas assets – a deal valued at €830m.

Inbound activity in the financial services sector was also popular, attracting four of the top 10 inbound deals of the year.

Tax inversion

Private equity deal-making saw 37 deals worth €12.2bn, a 141 per cent value increase over 2016. Megadeals were less prominent with just three deals with a disclosed value of over €500m. This was down from a record 10 transactions in 2016, when a flurry of tax inversion deals served to increase overall deal value.

Midmarket deals accounted for 93.5 per cent of the total volume, up from 82.4 per cent in 2016 while inbound deal-making expanded to 93 deals worth €14.4bn in a diverse range of sectors.

Business-friendly

William Fry’s Shane O’Donnell said “The strong M&A activity in 2017 is renewed evidence of Ireland’s strong economic growth, its business-friendly environment, and increased access to capital. 

“A relatively low corporate tax rate, a flexible and multi-lingual workforce, and a transparent legal system continue to underpin Ireland's attractiveness as a hub for overseas investment, and are drawing interest from overseas buyers. 

Healthy

“In addition, we also saw a healthy increase in outbound activity as Irish firms looked to international acquisitions," he said.

William Fry expects Ireland to remain attractive to international investors, despite Brexit uncertainty and the winding down of the ECB quantitative easing programme which may constrain dealmakers in their ability to access capital. Expected changes to US tax rules may also present a challenge.

Dubai Aerospace’s €6.9bn acquisition of Dublin-based AWAS Aviation Capital was the largest deal of the year. In second place was French telecom company Iliad’s €3bn acquisition of a 64.5 per cent stake in eircom group.