Irish firms back on the acquisitions trail at home and abroad

Irish companies are firmly back on the acquisitions trail at home and abroad, according to a fresh report on company buyouts from Investec. The purchaser in more than half of the 45 deals that involved Irish firms was a domestic company, according to Investec's M&A Tracker survey for the second quarter.

In total, the survey recorded deals valued at more than €3.75 billion during the period. It only includes deals that get unconditional shareholder approval during the period in question, distinguishing it from some other M&A reports that also include planned deals.

According to the survey, there were 14 trade sales of Irish companies to domestic buyers during the quarter, such as Gaelectric’s acquisition of a Kerry wind farm for €20 million and pharma company Malin’s €35 million deal for a 65 per cent stake in Altan Pharma.

Foreign acquisitions

Irish companies were also active abroad, buying 11 foreign companies. The largest deal in this category was DCC’s €464 million buyout of French fuel supplier Butagaz. Other notable foreign conquests by Irish companies include Valeo Foods’ €225 million of Italian biscuit manufacturer Balconi and Smurfit Kappa’s €60 million deal for Inspirepac.

US buyers snapped up four Irish companies in the quarter, such as OPKO Health’s €121 million deal for EirGen Pharma. British buyers bought five Irish companies, according to the survey, such as PZ Cussons’ €30 million deal for Glanbia’s 50 per cent of Nutricima.

The €3.75 billion total value of deals recorded was down significantly from the €8.5 billion in the first quarter, although that figure was heavily swayed by CRH’s €6.5 billion acquisition of a slew of Holcim-Lafarge assets. The Q2 figure was also skewed by a single large transaction, however, as 46 per cent of Dublin-headquartered Dragon Oil was bought by Emirates National Oil company for more than €2.5 billion.

Deal volume

Overall deal volume for the first half of the year was 113, versus the 107 deals in the first six months of 2014. Even stripping out the CRH deal, which was well flagged before the quarter, deal value for the first half was well ahead of 2014.

The health and pharmaceutical sector was the most active part of the economy for deals, as the sector globally is still in the throes of a frenzy of consolidation and off-loads. It recorded 10 deals, while IT and telecoms, with eight deals, and the industrial sectors, with five, were also busy.

There was only one recorded management buyout during the second quarter: the reported €10 million paid for PJ Walls Construction.

Financial buyers took control of four Irish companies, including MML Capital’s buyout of IdentiGEN and Fitzwilliam Finance’s 50 per cent buyout of Arnotts, which was cleared by competition regulators last week.

“In terms of the first half of 2015 versus 2014, we are ahead on both deal volume and value,” said Jonathan Simmons, a director of Investec Corporate Finance.

“Overall deal volume and value [in the second quarter] were both well down on the first quarter, [but] that did not come as a surprise to us given the particularly active first quarter of the year.”