Value of M&A transactions plunges 70%

THE value of mergers and acquisitions in Ireland plunged 70% over the past year with food, health and energy the most active sectors.

Despite the massive annual drop there was an increase in the value of deals done in the first quarter of the year compared with the last quarter of 2008.

The total value of deals in the first quarter of 2009 was €687m compared with €473m in quarter four of last year, which was the worst reported quarter since quarter one of 2005.

As the strongest performers, the food, health and energy sectors registered some significant deals in the first quarter of 2009, according to the NCB Corporate Finance M&A tracker survey.

The food sector recorded seven deals, including Sysco Corporation’s acquisition of Pallas Foods for a reported €175m. The health and pharmaceutical sector saw six transactions, including the €18m investment in Opsona Therapeutics.

The energy sector registered five transactions, including Endesa’s completion of its €450m acquisition of four power plants from the ESB.

Although the total value of deals in the quarter was €1.28bn, this included two high-profile transactions which were worked on and announced during 2008 but completed during quarter one of 2009 — the Endesa deal and Kerry Group’s €140m acquisition of Breeo Foods Limited. Excluding these two transactions, total deal value for the quarter amounts to €687m.

Director of NCB corporate finance, Jonathan Simmons said: “At 34 deals, total deal volume is down 28.8% compared to the same quarter last year. The run rate volume based on quarter four of 2008 and quarter one of 2009 would indicate a current level of activity of about 30 deals per quarter.

“This compares with a historic average of 55 deals per quarter for 2006, 2007 and 2008. If this run rate continues for the remainder of 2009, deal activity would settle at a level which is about 45% down on the previous three years.”

Other notable deals during the quarter included CRH plc’s acquisition of a 26% stake in Yatai Group Cement for €224m and Western Union’s €123.1m acquisition of Fexco’s European Money Transfer Business.

Irish businesses acquired 11 foreign businesses during the quarter.

“This certainly compares favourably with the historic trend since quarter one 2005 and is something worth noting in the context of negative international sentiment towards Ireland,” said Mr Simmons.