Ireland’s M&A activity skyrockets following challenging 2020
Deal value in the first six months of 2021 is more than eight times H1 2020 figure.

Deal value in the first six months of 2021 is more than eight times H1 2020 figure

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M&A activity in Ireland reached a record high in the first six months of 2021. A total of 106 deals were recorded in the first half of the year – a 33% rise on the same period in 2020 and the most of any half-year period on Mergermarket record (since 2006). This is according to the mid-year William Fry Mergers & Acquisitions Review 2021, in association with Mergermarket, which was published today.

 

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Key findings for H1 2021 include:

  • Deal volume rose from 80 to 106 deals (33%) compared to H1 2020
  • Deal value came to €19.6bn, more than eight times H1 2020’s figure of €2.4bn
  • Private Equity (PE) value jumped by 477% year on year to a total of €9.8bn
  • Inbound activity rose by both volume (76 deals) and value (€15bn) on H1 2020
  • There have already been nine deals each worth €500m+ triple the total number of transactions in that price range in the whole of 2020

Stephen Keogh, Head of Corporate / M&A, stated: “Irish M&A deals reached a new record high in the first six months of 2021, continuing to build on the momentum experienced in the final quarter of 2020. International buyers – both corporate and private equity – have been a key driver of this activity, with the value of M&A conducted by overseas bidders totalling €15bn, nearly twice as much as the whole of 2020. Competition within high-growth sectors such as TMT, healthcare and consumer served to push up valuations, and activity shows no signs of slowing down”.

Megadeals

The first six months of the year saw a steep uptick in activity at the top end of the market, with nine deals valued at over €500m and six securing a price tag of over €1bn. The largest was Allied Irish Banks (AIB)’s acquisition of Ulster Bank Ireland’s commercial lending business from the Royal Bank of Scotland for €4.1bn.

Mid-market deals

Typically, the mainstay of the Irish M&A deal landscape, the midmarket (€5m-€250m) continued to perform well in the first half of the year, accounting for 73% of deals with disclosed value. The largest mid-market deal of the year was Swedish medtech company Addlife’s €240m purchase of Cork-based medical equipment supplier Healthcare 21. The deal highlights the appeal of Irish homegrown life sciences talent for international firms looking to access new markets.

Inbound activity

18 out of the top 20 deals of H1 were inbound transactions. The growth in deal size seen in H1 2021 reflects an increasing confidence in the market – the €15bn in value in the first six months of the year has already overtaken total value in the entirety of 2020. US buyers spent €10.7bn on Irish firms and they were also the most active buyers in terms of volume, securing 26 deals while the UK came in second place with 16 deals worth €1.29bn.

Private equity

US-based PE firms continued their dominance in the Irish market. The largest deal of H1 2021 was US buyout firm Clayton, Dubilier & Rice’s takeover offer for UDG Healthcare for €3.4bn. The second and third largest PE deals – Advent and Eurazeo’s €1.8bn acquisition of Planet and Bain’s US$1.7bn acquisition of Valeo – both also involve US-based bidders. However, both Bridgepoint/Astorg’s acquisition of Fenergo and Digital 9 Infrastructure’s purchase of Aqua Comms highlight UK PE firms’ interest in Ireland’s homegrown tech talent.

Sector watch

Technology, Media and Telecom (TMT) - Following on from an active 2020, the TMT sector continued to generate the largest number of deals across all sectors in the first six months of 2021, taking up 27% of overall M&A volume. The largest TMT deal saw US PE firm Advent International acquire an undisclosed stake in fintech firm Planet, alongside existing investor Eurazeo, in a deal which valued the target at €1.8bn. The second largest transaction in the sector in H1 saw Navitas Semiconductor merge with US-listed SPAC Live Oak Acquisition Corp, at a €785m valuation

Financial services – While the TMT sector attracted the highest number of deals, it was financial services that delivered the highest deal value – accounting for 32% of market share. Its dominance is largely due to the AIB/Ulster Bank transaction, but also Carlyle Aviation Partners’ purchase of Fly Leasing Limited. The purchase of the aircraft leasing company, valued at €1.95bn, is a sign that optimism is returning to the beleaguered aviation industry. 

Consumer – The third largest sector by value posted €2.2bn across four deals in the first half of the year. The €1.7bn acquisition of Valeo Foods by Bain demonstrates the attractiveness of food and beverage manufacturers which have shown tremendous resilience through the pandemic. Moreover, M&A within the sector is set to heat up as buyers look to adapt to changes in consumer behaviour seen amidst the Covid-19 dislocation period – particularly in relation to online shopping, home improvement, fitness and gaming.

Renewables - As noted in William Fry’s 2020 M&A Report, a growing trend has been the number of deals within the renewable energy sector. Solar and wind assets have been in high demand, as seen in Norwegian sustainable investment company Aker Horizon’s €675m acquisition of Mainstream Renewable Power and the €35m sale of a 14.1MW wind farm in Letteragh to Greencoat Renewable – the largest domestic deal of the year so far across all sectors.

Outlook for H2 2021

Looking at the remainder of 2021, Stephen Keogh noted: “H1’s performance shows that Ireland is resolutely open for business. International PE funds in particular, with access to unprecedented amounts of capital, will continue to search for attractive acquisition targets. Overseas buyers will continue to be drawn to Ireland’s business-friendly economy, thriving multinational scene and homegrown talent. With the macroeconomic picture continuing to improve, the stage looks set for a stand-out year for Irish deal-making.”

 

Key Contacts

Stephen Keogh Partner