Monday 19 March 2018

Irish M&A activity up 12pc as firms showing return of confidence

Sarah McCabe

Sarah McCabe

HAVING faced down the worst of the recession, companies with cash to spare are beginning to buy once again.

Data shows that large-scale Irish mergers and acquisitions (M&A) activity continued to recover in 2013.

The Irish Competition Authority was notified of 37 deals during the year, up from a low of 29 in 2009 and an increase of 12pc on 2012.

The authority must be notified of deals concerning Irish companies with turnover of more than €40m and must give approval before a merger or acquisition takes place.

The system is designed to prevent any one company gaining too much of a monopoly in the market.

"In keeping with the general spirit of Ireland returning to normal, merger control at the Competition Authority in 2013 also matched the "new normal" -- a steady increase in merger notifications, more efficient and swifter (but ever careful) decision-making and more transactions in the 'real' economy of manufacturing and industry," said Dr Vincent Power, a partner at law firm A&L Goodbody.

This recovery is particularly important for professional services providers such as the country's biggest legal and accounting firms, who earn a large chunk of their revenue from advising on M&A.

Dr Power added that there were good signs for 2014 activity already.

M&A approval is handled by the EU for even larger deals that concern companies that are active in several member states.

Unusually, two EU merger notifications related to Ireland in 2013: these were the sale of Irish Life to Canada Life (part of the Canadian Power Corporation) and the ongoing proposed sale by Telefonica of O2 Ireland to Hutchison Whampoa, with a decision due this year.

This could be evidence, Dr Power said, of a trend -- as companies grow larger, more and more will look to EU rather than national authorities for approval.

"It is unusual to see two Irish-centred transactions among the 300 or so deals notified to the European Commission annually. It is possible that with increasing turnover in businesses and reducing EU thresholds that more and more Irish-centred deals will be decided by Brussels rather than Dublin," said Dr Power.

Regardless of whether it takes place in Dublin or Brussels, the approval process is not an easy one. Executives now have to contend with more rigorous examination of their plans than would have been the case even five years ago.

There is an increasing focus on transparency, and firms that have something to hide are all too aware of this. "It is now commonplace for the EU and Irish competition authorities to ask for emails, business plans or memos from several years previous as part of the notification process," said Dr Power.

"Executives contemplating M&A deals therefore have to be aware that their thoughts on their competitors or the marketplace could become open to scrutiny, and ultimately determine the success of a deal. This focus on transparency is likely to be the next major battleground for Irish merger control."

Irish Independent

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