Final quarter points to growth for M&A sector with the highest number of deals since 2007
THE number of mergers and acquisitions in Ireland fell last year, but the market rebounded sharply in the final quarter, boosting hopes of future growth.
Law firm McCann FitzGerald calculates that only 33 merger transactions were notified to the Competition Authority in 2012, down by a fifth from the previous year.
While the number was well above the lowest on record, from 2009, there was still little activity for most of the year.
However, the last quarter of 2012 saw the most deals done in a three-month period since the fourth quarter of 2007 – at the height of the boom.
Trading was across a wide range of industries. The media led the way, accounting for a fifth of all deals, followed by financial services, with 14pc of the business.
About a third of the mergers filed involved an Irish company buying into another Irish business. In the vast majority of cases, one firm took majority control, while a tenth of all deals were joint ventures. Only 1.5pc of business that was done involved pure mergers.
The ongoing crash in Dublin also saw further growth in the involvement of private-equity firms in Ireland.
Private equity was involved in some 30pc of all deals, said McCann. These included many of the highest-profile takeovers during the year.
Apollo Management took over MBNA's Irish credit-card business, while Scottish Equity Partners took joint control of the heating firm Geothermal International Limited.
McCann's Damian Collins, who is a partner and co-head of the firm's Competition, Regulated Markets and EU Law Group, said 2012 was a mixed year for Ireland's M&A sector.
He said: "Overall activity was down on previous years. However, there was a bounce mid-year, leading to a strong finish. We may be seeing early signs that the first quarter of 2013 is also looking positive."
His words were echoed by his co-head of the business, Phillip Andrews, who noted that the Competition Authority (CA) had begun to flex its muscles a lot more than it had in the past.
"Under new leadership since the start of the year, the Mergers Division has been vigilant in policing mergers," he said.
"(The takeover of Eason by book seller Argosy) is the first time the CA has stepped in to block a merger since Kerry's attempted takeover of Breeo Foods in 2008, which was later overturned by the courts.
"According to the CA, the deal between Ireland's two main book wholesalers – Eason and Argosy – would have created a 'de facto sole nationwide wholesaler'. It was abandoned after the Competition Authority threatened court proceedings."
The law firm highlighted the pharmaceutical sector as one that is seeing increased consolidation. Last year, United Care took over the pharmacy sales business Pharmex. Now the CA is reviewing another proposed merger in the sector, between Uniphar and AMR.