Irish IT and telecom companies led merger and acquisition activity in Ireland in the third quarter, despite the fact that overall M&A activity is down 82pc on last year.
“Much of this can be attributed to the absence of any deals of the scale witnessed last summer when the Green Property, Jefferson Smurfit and Allfirst transactions all broke the €1bn barrier,” explained Joe Devine, director of corporate finance firm Ion Equity.
“There is actually a lot of activity in the Irish market, with year-on-year transaction volumes up 40pc for the second quarter running, but th edeal sizes have tended to be low, the majority of the disclosed values being under €10 million,” Devine said.
He indicated that the strength of the euro against sterling and the US dollar as well as the continuing instability in the Middle East have had knock-on consequences in terms of mergers and acquisitions, with the values and volumes of Irish companies sold to the UK and US well down in comparison to previous surveys.
“A recurring theme for the past two quarters has been a general resurgence in the number of IT and telecoms transactions involving Irish companies. There were a total of 13 deals in this sector during the quarter out of a total of 56. This is due both to consoldiation opportunities and evidence of green shoots in certain IT sectors,” Devine said.
M&A activity in the Irish IT sector was dominated by the stripping off of Baltimore Technologies’ assets in the form of sales of its SelectAccess division to Hewlett-Packard for €12m, as well as three of its divisions to BeTRUSTed for €11.3m. Other highlights included the sale of Massana to Agere for €25.7m and Moss Technologies’ acquisition by Calyx for €5m. Just as the report from Ion came out this morning it was revealed that Calyx has made an additional purchase in the form of HCS Solutions for more than €500k.
Looking forward to the next three months Devine said that some cautious optimism was returning to the markets and this may prompt acquisitions by larger traditional businesses.
“The climate is still opportune for good management teams to take advantage of reasonably depressed corporate asset valuations allied to cheap debt in a highly competitive Irish debt market and an abundance of private equity in Europe.
“Expect management buyouts, consolidation plays and a few more public-to-private deals between now and spring,” Devine said.
By John Kennedy