M&A activity by Irish IT firms down 50pc

19 Apr 2004

Merger and acquisition (M&A) activity amongst Irish technology and telecoms firms in the first quarter of this year, between January and March, is down almost 50pc compared with the same period last year, according to the latest M&A tracker survey by Ion Equity.

In the first quarter of last year, IT and telecoms acquisitions amongst amounted to at least €25.5m in activity. These included the acquisition of Irish CRM vendor eWare by Computer Associates for €9m and the acquisition by ThirdForce of Electric Paper for €15.5m. As well as this Dublin-based utilities software firm Microsol acquired Automation Technologies & Services for an undisclosed sum, pushing the value of the activity even higher. For the full year 2003, there were 39 acquisitions by, and of, Irish technology firms amounting to a total of €686.4m, accounting for 8.75pc of all Irish M&A activity across the sectors.

However, in the first quarter of this year, IT and telecom acquisitions amounted to at least €17.8m. These included MoreMagic Solutions’ acquisition of Dublin-based Agile for €2m, Mentec’s acquisition of UK-based Transfare Solutions for an undisclosed sum, ThirdForce’s acquisition of AV Edge for €500,000 and Adaptec’s acquisition of Elipsan for €15.3m. IT and telecoms M&A activity in the first quarter this year accounted for only 7pc of overall M&A activity involving Irish firms.

However, an upbeat Ion Equity said that with 55 M&A deals across all sectors in the Irish economy, the first quarter compared favourably with the same period last year, which saw 56 deals across the sectors. Looking forward to the remainder of the year, the investment firm predicts a greater number of smaller deals in comparison with previous years will remain the norm.

Ion Equity director Joe Devine commented: “The persistent strength of the Euro against Sterling and the US Dollar may have prompted an increase in activity as Irish companies made 14 acquisitions abroad, mainly in the UK and US, during the quarter.

“The general environment for corporate driven deals continued to be good in the quarter as concerns over the global economy and the war in Iraq faded with a resultant improvement in financial markets. It is as yet unclear if the current turbulence in the Middle East and the Madrid train bombing will significantly affect Irish corporate M&A activity.

“In the absence of any further major shocks, expect a considerable upturn in corporate activity this year as a whole, as strong indicators from the US and Asia suggest sustained upward momentum outside of Europe. At this point in the cycle, there is still good value to be had and financial buyers continue to actively look for opportunities,” Devine said.

By John Kennedy