Overseas acquisitions drive steady M&A performance in 2012 – William Fry
Ireland’s merger and acquisition (M&A) market performed steadily in 2012 against a backdrop of the Eurozone slipping back into recession, according to William Fry, which today published its annual M&A review.
The firm said 82 deals (down from 85 in 2011), with an aggregate value of €17.1bn (up 18pc from €14.5bn in 2011), are recorded in the review. It said this performance was driven by Irish companies increasing their market share worldwide, with outbound activity surpassing both inbound and domestic activity for the first time.
There was a trend towards deals of a larger value in 2012, said the firm, noting that four deals valued at more than €250m each took place. Small and midmarket transactions were not as strong, with only 11 deals in the €5m to €15m range.
Globally, financial services deals are down both in size and number. However, in Ireland, financial services remained buoyant in 2012, accounting for 18pc of overall deal volume and 38pc of deal value at €6.4bn. This sector saw two of the three largest deals with Sumitomo Mitsui Financial Group’s €5.7bn purchase of the Royal Bank of Scotland’s aviation leasing business, and the €449m purchase of Goldman Sachs hedge fund administration services business by State Street.
For the first time, Irish outbound M&A activity comprised a larger share (41pc with 58 deals) of Irish deal-making than inbound (38pc) and domestic (21pc) M&A. The firm said the fact that there has been no decline in this area highlights the strength of Ireland-based corporates and their ability to compete globally.
During 2012, there was a continued decline in the level of private equity M&A activity with volume and value decreasing by 20pc and 70pc respectively year-on-year. However, the M&A figures do not include loan book and property. William Fry notes that loans and commercial properties with distressed pricetags are being acquired by some of the biggest global buyout firms, including Kennedy Wilson, KKR and Apollo Global Management. It said that while this interest did not directly translate into rising buyout activity in 2012, the continued interest from abroad in Irish assets including loans and commercial properties indicates private equity activity outside the pure M&A sector throughout 2013.
The technology/software sector was quieter in M&A terms in 2012, but the firm said there is ongoing investment in tech companies and it is tipped as an area for growth in 2013 and going forward, given the TMT businesses announced for sale in the last six months. It said that while most activity in this sector still takes the form of venture capital funding, larger transactions should soon follow.
William Fry is also expecting M&A activity in relation to the sale of State assets in 2013. Financial and legal advisers have been appointed to advise on the sale of Bord Gáis Energy and it is anticipated that steps will be taken to bring other State assets to market during 2013.
“Irish M&A performance in 2012 was steady with inbound activity remaining vibrant as in 2011 and Irish outbound acquisitions rising to an all-time high,” said Bryan Bourke, partner and head of corporate and M&A at William Fry. “The M&A market in Ireland appears to be on the path to recovery and, albeit against a backdrop of continued global economic uncertainties, there is cause to be hopeful of good performance in 2013 across a variety of sectors, particularly technology, pharmaceutical, medical and biotechnology.”
