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Surge in Irish takeover deals fuels hope of economic bounce$3.25bn

What Elan made from 50pc stake in Tysabri

A BUMPER level of merger and acquisition activity involving Irish firms is underpinning hopes that businesses are emerging from one of the toughest-ever economic eras.

New data shows that some of the largest Irish deals on record have either been completed or are in the pipeline so far this year.

Strong M&A activity is a hallmark of economies where chief executives and investors are confident enough about the outlook for profits and the general business environment to embark on major deals.

This week, US generic drug firm Actavis agreed to pay $8.4bn (€6.5bn) for Ireland-based Warner Chilcott, a manufacturer of women's health products. Actavis, formerly known as Watson Pharma, will also incorporate the enlarged Actavis group in Ireland so as to reduce its tax burden. The deal is expected to be completed by the end of the year.

Global M&A intelligence group Mergermarket said the Warner Chilcott deal is the second-largest ever deal on its records for Ireland and the biggest ever for an Ireland-based pharmaceutical group.

It's also the seventh-biggest global M&A deal so far this year.

It's closely followed by a $6.4bn (€5bn) offer that US-based Royalty Pharma has tabled for Irish drug company Elan. Royalty upped its offer for the company just this week.

If successful, that would be the sixth-biggest ever deal for an Irish company, according to Mergermarket, and would be ranked the 10th-biggest in the world so far this year.

Another survey by financial group Investec notes that the first quarter of 2013 has witnessed the greatest value of M&A deals involving Irish firms since the third quarter of 2010.

It said the bulk of the activity, however, was attributable to the $3.25bn (€2.5bn) disposal by Elan of its 50pc stake in multiple sclerosis drug Tysabri.

But other Irish firms have also been involved in M&A this year:

* Canada's Great-West Lifeco paid €1.3bn for Irish Life.

* CRH has made acquisitions totalling €385m.

* Ladbrokes bought Dermot Desmond's Betdaq for €34m.

* US-based Synchronoss Technologies paid €42m for Ireland's Newbay.

* Saongroup paid €22m for a 90pc stake in ChinaHR.com.

Ryanair had targeted Aer Lingus again last year in a €694m takeover attempt, but this was rebuffed by the European Commission in February. But Ryanair is also betting big on its future expansion, having ordered 175 Boeing aircraft in March in a $15bn (€11.5bn) order at list price.

Jonathan Simmons, a director of Investec Corporate Finance, said he expects to see a "significant" number of deals this year in sectors from IT and telecoms to food services. He also predicted increased activity involving government-owned assets and businesses, including semi-state firms.

"We also expect to see a marked increase in deals driven by bank restructurings and other administrative processes, continued foreign acquisitions by large Irish companies and, potentially, some increase in conventional buyout transactions," he said.

A recent survey of 1,600 global executives by Ernst & Young shows that 51pc think the global economy is improving, up from just 22pc six months ago.

Irish Independent