The value of Irish M&A deals fell 80 per cent in the first three months of the year compared to the same time last year, from a record €52bn to €11bn, although the number of deals has held up better .
In the battle for bragging rights among top advisers, Dublin law firm A&L Goodbody worked on more deals than any other adviser, but competitor Arthur Cox’s slightly smaller deal list consisted of larger deals, according to figures provided to it Irish Independent from data provider Refinitiv, part of the London Stock Exchange Group.
The data ranks among the quarter’s biggest “Irish” deal, as auto technology developer Aptiv acquired Wind River, a specialist software solutions developer, for $4.3 billion. Aptiv moved its global headquarters from the UK to Dublin four years ago, although the global company has relatively little presence there.
Cross-border deals have dominated the year’s big deals so far, starting with CRH’s sale of its US building materials company Oldcastle Building Envelope for just over €3bn and Canadian asset manager Brookfield’s €1bn acquisition of Hibernia Reit before selling a majority stake in its division secure communications Tetra to Triple Point Investment Management based in the UK.
The latest data also highlights the increasingly blurring lines between traditional venture capital investing and classic mergers and acquisitions, with financing deals for Irish software developers Wayflyer (€130 million) and Flipdish (€87 million) among the biggest deals of the quarter, which reflecting the large financial commitments for significant investments in those companies now engaged in late-stage financing rounds.
Attorney Connor Manning, a partner at Arthur Cox, said the decline in the value of stores in the first quarter of 2022 was more a reflection of the outsized balance sheet a year earlier, which was at least partly due to pent-up activity that was seen during the first Covid lockdowns in 2020 postponed.
The volume of deals so far this year and the pipeline of new deals now in the works is high compared to pre-Covid times, he said.
“We believe the market is very resilient despite the disruptions caused by Covid, the war in Ukraine and inflationary pressures,” he said.
The prospect of rising interest rates and higher borrowing costs has not yet weighed on valuations, although the market is watching, he said.
At the larger end of the market, foreign private equity buyers are particularly active in targeting growing domestic companies, Mr. Manning said. Domestic multinationals selling non-core assets and private-equity divestitures of companies bought in the past decade are drivers of deals, he said. The hunt for tech assets is a significant feature of the market, regardless of deal sizes and sectors, he said.
There are also signs that the pace of closing individual deals is slowing as buyers need more time to complete due diligence on acquisition targets, he said.
Lengthy regulatory processes will be a feature of some of the biggest deals set to close this year given the impact of the Bank of Ireland’s bid for the majority of KBC Bank’s Irish assets and Ulster Bank’s takeover of retail banking assets Permanent TSB on banking competition.
Legislation to introduce a national mechanism to enforce the EU’s investment screening regulation is also expected later this year and could further slow individual transactions, although the regulation’s ultimate goal is to prevent sensitive assets and technology from companies linked to foreign governments be purchased, impact may be limited given Ireland’s lack of a significant defense industry or regionally significant infrastructure assets.
According to data from Dealogic, the value of mergers and acquisitions activity suffered a 29 percent slump globally in the first quarter of 2022, with some signs of uncertainty, including the Russian invasion of Ukraine, slowing the deal as executives paused to digest the Impact of Market Volatility. Despite the proximity to the war, transaction volume in Europe fell by 25 percent, less than in the US or Asia. Dealmakers said first-quarter activity suffered from sky-high comparisons to last year’s volumes that were difficult to replicate.
https://www.independent.ie/business/value-of-irish-m-and-a-drops-sharply-but-advisors-see-busy-pipeline-41512411.html Irish M&A value plummets but advisors see busy pipeline