Business Irish

Saturday 3 December 2016

Big Irish law firms ride M&A wave as activity hits €32bn

Published 01/08/2016 | 02:30

Legal giants Arthur Cox and A&L Goodbody have between them advised on 24 merger and acquisition deals so far this year, as the value of M&A activity with Irish involvement has hit almost €32bn. Stock photo: PA
Legal giants Arthur Cox and A&L Goodbody have between them advised on 24 merger and acquisition deals so far this year, as the value of M&A activity with Irish involvement has hit almost €32bn. Stock photo: PA

Legal giants Arthur Cox and A&L Goodbody have between them advised on 24 merger and acquisition deals so far this year, as the value of M&A activity with Irish involvement has hit almost €32bn.

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That's fractionally down on the same period last year, at €32.9bn, according to data compiled for the Irish Independent by Thomson Reuters.

The number of deals either completed or in train so far this year totals 184 - down 74 on the same period last year.

But Brian O'Gorman, managing partner at Arthur Cox, said that 2015 was an "exceptionally busy year" in the M&A market.

"I would characterise 2016 as less busy in M&A than 2015, but probably more like a normal year," Mr O'Gorman told the Irish Independent.

"2015 was abnormal in a good way. It was extraordinarily busy."

The need for regulatory approvals, legal due diligence and tax advice means big Irish law firms are continuing to ride the merger wave.

Arthur Cox has advised on 14 deals this year with a combined value of €26.5bn.

A&L Goodbody has advised on 10 deals, with a value of €26.7bn, according to the Thomson Reuters data.

Both firms advised on the deal between Johnson Controls and Tyco International, which pushed up the deals value figure considerably for both companies.

Earlier this year Johnson, a US maker of car batteries and heating and ventilation equipment, agreed to buy Ireland-based peer Tyco in a multi-billion-dollar deal that will lower its tax bill.

By moving its headquarters to Cork, Johnson will be the latest major US company to carry out a so-called tax-inversion.

An inversion is a tax-driven deal in which a US company acquires a smaller, foreign business and adopts its tax domicile to reduce the combined company's overall tax burden.

Arthur Cox advised Tyco, while Goodbody acted for Johnson.

Mr O'Gorman suggested inversions would not be coming to an end anytime soon, despite the clampdown by authorities in the United States.

"There are deals still happening," Mr O'Gorman said.

"We may see a lower volume, but I think international M&A, and in particular international corporates looking to optimise how they organise themselves, that's here to stay, so I don't think we've seen the definite end of that trend."

Inversions contributed to the massive surge in Irish GDP experienced last year.

GDP jumped 26.3pc in 2015, according to the Central Statistics Office (CSO), thanks largely to the accounting activities of Ireland's multinational sector.

Mr O'Gorman added that he did not expect any impact on M&A activity from the Brexit referendum vote.

Rebounding

"I'm not certain Brexit is going to have any material impact on M&A activity," Mr O'Gorman said.

"I think in Ireland you have to differentiate between the domestic M&A market and the international market.

"The domestic M&A market has been quietly rebounding for a number of years and we've started to see reasonable levels of activity in our domestic M&A market and we've also started to see a lot of our largest domestic corporates doing a lot of deals abroad, like CRH and Paddy Power and others.

"So that's a reasonably positive story. It's been on a positive trend since 2012."

Irish Independent

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