Falling share prices spur buyouts

FALLING share prices led to a record year for company buyouts in Ireland with deals hitting €5bn in 2002, lead by the €3.5bn delisting of Jefferson Smurfit.

The Jefferson Smurfit deal was the largest buy-out ever recorded in Ireland and realised €3.5bn, making it the second biggest deal in Europe last year, behind the divestment of French Company Legrand for €5bn.

The €1,116m taking private of Green Property was the eighth biggest buyout deal in Europe in 2002 and the second largest public to private deal.

Figures released yesterday by the Centre for Management Buy-out Research (CMBOR), co-sponsored by Deloitte & Touche and Barclays Private Equity, found 18 deals were completed in Ireland, the highest reached since 1987.

The total deal value was a record 5bn, representing a 55% increase on the previous year. The total value of the buyouts came to 4.01% of GDP.

The average deal value also increased in 2002, rising to a new record of €276m.

Ireland accounted for over 10% of the 2002 total European market value, although over 90% of this came from the two large deals,

Jefferson Smurfit and Green Property, with a combined total of €4.6 billion. With the two largest deals, the total capital invested in public to private deals in Ireland during 2002 was greater than in Britain.

Partner in Charge of Corporate Finance, Deloitte & Touche, David O'Flanagan, said: "2002 was a record year for Ireland for volume and value of buy-outs."

Three deals had a transaction value exceeding €250m, led by the Jefferson Smurfit deal the second largest in continental Europe as a whole in 2002. There continued to be a good flow of smaller deals, with eight deals valued at below €5m.

The divestment of Legrand for €5bn, was the largest ever recorded in Europe. Overall, Ireland was in third place in European buyouts in terms of value, up from fourth in 2001.

Mr O'Flanagan said over the last 15 years Ireland has experienced dramatic growth in the value of buyouts/buy-ins, with the record deal value of €5bn in 2002 well up on the €72m in 1987.

"We can be expect to see a continuing level of buyouts in Ireland given the prevalence of public to privates, and the potential for increasing levels of foreign parent divestment, where seven buyouts arose in Ireland 2002," he said.

As in 2001 Ireland produced the highest average deal value of €276m, followed by France (€135m) and then Denmark (€98m). However, the Irish ratio was boosted by the huge Jefferson Smurfit buy-out.

France, Germany and Ireland between them shared the top eight deals in 2002.