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M&A deals at five-year high but values drop back

The volume of merger and acquisition (M&A) deals in Ireland has reached a five-year high.

The eighth edition of William Fry’s annual M&A review shows that deal volume rose from 151 to 162 in 2018.

However, deal value fell by 57% to €7bn in 2018.

There were 65 ‘mid-market’ deals valued between €5 million to €250 million, while nine of the year’s top ten  deals had overseas buyers.

Outbound, there were 102 M&A deals from Irish companies worth a total €6.1 billion.

Private-equity transactions remain strong, with 34 deals announced.

The top sectors were business services at 19%; technology, media and telecom at 16%; pharma, medical and biotech at 15%; and financial services at 12%.

William Fry partner Shane O’Donnell (pictured) said: “Activity was strongest in the first three quarters of the year, with both the value and volume of M&A deals falling as 2018 drew to a close. This is consistent with global M&A patterns, and reflects growing unease due to political and economic uncertainty."

The Irish mid-market, with deal values between €5 million to €250 million, continues to dominate, and accounted for 93% (65 deals) of the total, where pricing was made publicly available.

Of these, over half (37) were in the €15 million to €100 million bracket. Two noteworthy deals were the British company Nomad Food's €226 million acquisition of Green Isle Foods (the manufacturer and distributor of Goodfellas pizzas), and Groupe Circet SA's €150 million acquisition of KN Group.

Private equity activity

Although the value of private equity (PE) activity in Ireland fell in 2018, the volume of deals has repeated the record performance of 2017. Rising volumes demonstrate growth in Ireland's PE scene.

Further expansion is to come, William Fry believes, as some of the newer funds raised over the last five years start to explore exit opportunities.

The largest PE deal in Ireland for 2018 was the Cinven acquisition of AXA Life Europe, which was valued at under €1 billion. Another large PE deal was Apollo's €500-million acquisition of hotel-management business Tifco.

International activity

International buyers continue to see considerable strategic value in Ireland’s businesses. 2018 saw the highest annual volume of inbound deals – 108 in total, with a value of €6.3 billion. 

Nine of the top ten largest deals of 2018 were inbound transactions, with acquirers emanating from as far afield as Japan and China.

Buoyant

Outbound activity was also buoyant, with 102 deals boasting a value of €6.1 billion during the year, compared with 101 in 2017.

Key inbound deals included the €495 million acquisition of the Mater Private Group by France's InfraVia Capital Partners, and the 30% stake acquisition in Avolon [SPELLING?] Holdings Limited by Japan's ORIX Aviation Systems Limited. 

Key outbound deals during the year included Smurfit Kappa's €460 million acquisition of paper and board recycling business Reparanco, based in the Netherlands, and Kerry Group's acquisition of US-based Fleischmann's Vinegar Group for €350 million.

Sector watch

Ireland is as an attractive location for many businesses seeking to relocate operations post-Brexit, according to O’Donnell, who said: “The rise of large financial services transactions over the last two years are, in part, a reflection of Ireland's strength in the aircraft-leasing sub­sector, but it also demonstrates the attractiveness of Dublin as a base for businesses in the sector looking for alternatives to London.

Hub

“Dublin has positioned itself as a hub for previously UK-based firms that need to service EU clients, and has attracted names such as Barclays and Merrill Lynch, which have both received authorisation to expand in Ireland.”

O’Donnell believes the outlook for M&A activity in Ireland is more mixed than has been the case in recent years.

“The first few months of the year may be more subdued in terms of both value and volume than in 2017 and 2018,” he commented.