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Irish acquisitions value up but volume static Back  
Acquisitions by Irish companies in the first half of the year reveal a bid to grow internationally, particularly in the US but also show that some sectors including financial services have experienced a marked decline in activity.
There were eighty one acquisition by indigenous Irish companies in the first six months of 2000, with a total value of IEP2.76 billion according to an interim survey by CFM Capital.

Although the number of deals was similar to the same period last year, the values of the transactions has increased by IEP340 million representing a 14 per cent growth. This indicates the continued availability of funds and the greater appetite for consolidation.

In the six-month period to the end of June, there were 35 acquisitions by foreign companies of Irish owned business and there has been an increasing trend for multinationals to target the Irish market, particularly in utilities like telecoms.

The largest deal undertaken was the IEP647 million acquisition of the P&O property portfolio by Green Property and Whitehall Fund. Elan Corporation Plc continued to build as a major player with its IEP470 million purchase of Liposome.

The IT and Telecommunications sector accounted for the majority of the period’s activity with 31 deals totaling IEP554 million, overtaking in number the normally dominant Construction and Property sector with ten deals and the Pharmaceutical sector with eight deals.

The Financial Services area recorded five deals, at a value consideration of IEP3.5 million, This was a marked slow-down in activity compared to last year, when over IEP570 million was spent.

‘With no real activity from any major institutions in the period, we predict that this figure will increase in the coming six months, with another push for a European presence by one of the major players or with the consolidation of one of these players with one of their larger European cousins.’ says David Chapman, managing director of CFM Capital.

One of the interesting features of this survey is the substantial drop in activity of some sectors, namely Food Drink & Agribusiness, Financial Services and in Natural Resources. Just four transactions in the Food Drink & Agribusiness sector compared to 13 in the same period last year. And those four deals made up just one per cent of the value of the half year total - down from 29% in 1999.

For Financial Services the five deals mentioned accounted for less than one per cent of the half year total.

Significantly in the last six months there were 23 transactions involving acquisitions by Irish buyers outside of Ireland and the UK. This compares with just 14 in the first half of 1999.

On a regional basis - 43 per cent of deals were based in Ireland and 29 per cent in the UK. The UK continued to be a focal point of Irish acquired during the period, with European activity reducing. But the biggest increase on a geographical basis was into the US driven by the IT sector. USA activity was up over four times from just four transactions in 1999 to 18 deals in the first six months of 2000.

Interestingly the survey notes that management buy-out activity (MBOs) was reduced with only two deals occurring in the first half of 2000 compared with five for the same period in 1999. However it is expected that such transactions will increase in the second half of the year.

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