M&A deal volumes rise 5% in 2018, though total value falls

The volume of mergers and acquisitions (M&A) involving Irish companies is at its highest level since at least 2005, according to a new study by Investec. There were a total of 268 deals in 2018, up 5 per cent on the 255 deals agreed in the previous year, the Investec M&A Tracker found.

The total disclosed transaction value of these deals arrived at €10 billion, down almost 49 per cent on the €19.6 billion recorded in 2017, but higher than the €7.9 billion value in 2016.

The drop-off was recorded partly because last year saw an increase in the number of deals where the value of the transaction was not disclosed by the parties involved. This was the case in almost two-thirds of deals.

The 2017 values were also boosted by three large M&A deals: NJJ Group’s takeover of Eir for about €3.5 billion; Pandox’s purchase of Jury’s Inn Group for about €900 million; and the Dubai Aerospace Enterprises acquisition of AWAS Aviation Capital for about €6.9 billion.

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“We believe deal volume to be a better gauge of the market than deal value and so 2018 has been a particularly positive year,” Investec said.

But it said it did not expect the same levels to be repeated this year, partly as a result of Brexit uncertainty being “fully upon us”, while there may also be some caution about pursuing deals in light of recent stock market volatility and the potential for rising interest rates in the US.

The biggest transaction last year by some distance was Goshawk Aviation’s €2.4 billion acquisition of Sky Aviation Leasing, a company based in the Cayman Islands.

The second most significant deal was the acquisition of Greencore’s US holdings by American company Hearthside Food Solutions for €863 million. Third place was taken by the purchase of Adapt Pharma by US company Emergent BioSolutions for €586 million.

Buyers and sellers

The top 10 deals accounted for €6.5 billion or 65 per cent of the total disclosed deal value of the year. In six of these transactions, the acquirer was an Irish company, while in the other four cases they were from the US.

Overall, there were 65 deals that involved both Irish buyers and sellers, up from 42 in 2017. The largest disclosed deal of this type was Uniphar Group's acquisition of Sisk Healthcare for €100 million.

Nine of the 10 biggest deals involved sales to trade buyers, with the only private equity acquirer being Apollo Global Management, which bought Tifco Hotel Group for €500 million.

Accenture Ireland was the most active firm in terms of deal volume in 2018, making a total of 20 acquisitions, mostly in the IT and telecoms sector.

Goshawk's acquisition of Sky Aviation Leasing meant the financial services sector recorded the highest level of deal value, accounting for almost 28 per cent of the total, while food and food services was next, responsible for almost 25 per cent of the total as a result of major deals involving Kerry Group, Glanbia and Greencore.

IT and telecoms was the most active sector in terms of the volume of transactions with 49 deals, although this was down from the 61 recorded in 2017.

Among deals where the value was disclosed, two-thirds were for less than €100 million.