Irish M&As down 65pc as door shuts on US inversions
The value of Irish mergers and acquisitions (M&As) has tanked in the first half of the year - plunging 65pc, according to new figures from Thomson Reuters commissioned by the Irish Independent.
The collapse in the value of corporate deals reflects tougher rules in the US, preventing big corporations shifting their tax base to Ireland by buying smaller rivals - a process dubbed tax inversion, according to Mark Ward, head of mergers and acquisitions at law firm A&L Goodbody.
A&L Goodbody is the busiest adviser active in the Irish market so far this year, clocking up mandates on 11 deals.
While blockbuster US corporate deals have dried up, according to Mr Ward deal volumes have returned to the levels seen in recent years, after a slowdown at the start of the year.
"January was quiet, you had Brexit to the east and Donald Trump to the west and there's no doubt it had an impact, but that waiting period is well over now," he said.
He reckons last year's $14bn merger of Johnson Controls with Tyco, to create a global engineering business incorporated in Cork, was the last of the spate of corporate US relocations that dominated Irish M&As for three years.
"They (inversions) have paused, and it's hard to see them coming back again soon. The market is back to more normal, Irish-sized deals," he said.
The period after the crash was characterised by definite waves of activity - first property loan sales and corporate restructurings, then a spate of corporate inversions, he said.
The picture now is more mixed.
"I couldn't say we are in any particular phase now, there is a mix of activity and it adds up to a health whole on the volume side," he said.
He cited a mix of private equity-backed corporate takeovers such as Carlyle Cardinal Ireland's recent €50m acquisition of a majority stake in Sam McCauley Chemists, international interest in Irish financial technology (fintech) and life sciences businesses, and property linked deals in areas including hotels.
Fintech is seen as especially sexy, he noted.
Even so, the inversions have a long tail. The biggest 'Irish' deal this year so far was a $6.1bn sale by Medtronic of its deep vein thrombosis and nutritional insufficiency unit to US-based Cardinal Health.
Medtronic has been called as the inversion that got away. It closed a $49.9bn takeover of Ireland-based Covidien last September just ahead of rule changes in the US to emerge as an Irish corporate giant.