1) MID-YEAR
M&A REVIEW
2015
1
2) WILLIAM FRY
OVERVIEW
Welcome to William Fry’s half year M&A review,
published in association with Mergermarket. In this
edition of our review, we analyse deal activity in the
first half of 2015 and look at the likely trends for the
remainder of the year.
We noted in our last report that 2014 was a
significant year for Irish M&A activity, heralding
a return to values and volumes not seen in the
years since 2009. While the level of M&A activity
has been steady in H1 2015, volume has declined
by 12% year-on-year (YoY) to 45 deals, and value
has decreased 10% YoY to €35.1bn.
However, broader market factors as well
as a number of key trends in Irish M&A
activity point to positive momentum in the
Irish marketplace. Ireland continues to benefit
from a positive macroeconomic climate. The
European Commission forecasts that Ireland
will experience 3.6% GDP growth in 2015,
maintaining its status as the fastest-growing
eurozone economy.
In addition, there is also ample evidence of strong
cross-sectoral interest in Irish assets, pointing
to full pipelines for the remainder of the year.
IRISH M&A DEALS, 2010 - H1 2015
Volume
35,000
Value (€m)
30
30,000
25
25,000
20
20,000
15
15,000
10
10,000
5
5,000
0
2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15
0
Value of deals €m
40,000
35
Number of deals
40
From an M&A perspective, this is supported
by the broad range of deals in various industries
announced in 2015 to date. A number of sectors
have performed strongly, such as pharmaceuticals,
medical and biotech (PMB), which continues to
attract foreign investment, with five inbound deals
in the first half of 2015. This included the arrival
of a newcomer to the Irish market, Slovakia-based
Saneca Pharmaceuticals, with its acquisition
of Suir Pharma Ireland, a pharmaceutical
contract manufacturer.
There is evidence of renewed market confidence
which, coupled with a stronger financing climate,
is providing dealmakers with the conviction and
means to undertake transactions. While bank
finance still remains an option, the market
is also responding to the need for alternative
forms of financing. Ireland now has the third
largest alternative lender market among EU
countries, worth approximately €2.9tn. The
European Central Bank (ECB) estimates that
if this segment continues to grow at its current
pace, it will surpass bank lending activities
in the next five years.
Larger companies are also increasingly turning to
the bond market as a means of raising capital. H1
2015 has seen several high profile and successful
bond issuances. For instance, Ireland-based bank
3) MID-YEAR M&A REVIEW 2015
Permanent TSB’s recent bond issue attracted more
than €1.25bn in investment.
Irish corporates clearly have the appetite to engage
in M&A activity which we believe will result in a
strong finish to the year.
SECTOR SPECIFICS
These are some of the highest figures in post-crisis
Ireland for this sector.
There has also been a steady flow of one-off hotel
purchases in Ireland, with more hotels sold in Ireland
during the first three months of 2015 than in the
entirety of 2014. One such deal involved the acquisition
of the luxury hotel, Adare Manor by the Ireland-based
McManus family. The €30m deal sees the expansion
of the McManus family’s hotel portfolio into Ireland.
Deals of this nature demonstrate confidence in
the intrinsic value in the Irish tourism space, and
point to a rejuvenated Irish leisure sector overall.
From an Irish M&A perspective, the midmarket is generally a helpful indicator of the
broader dealmaking climate. Ireland is home
to an estimated 200,000 small to medium-sized
enterprises (SMEs), accounting for the vast
majority of Irish industry. Accordingly, small to
medium-sized deals account for a large portion
of Ireland-based M&A.
The previous edition of the M&A Review noted that
the mid-market had seen marked improvements
over the course of 2014. In the first half of 2015, the
level of mid-market activity has remained consistent:
of the 26 deals with announced deal values, 77%
were valued at €100m or below. In H1 2015, the
20 deals valued at €100m or less had a combined
value of €386m, compared to 22 deals worth €376m
in H1 2014.
Among small- to mid-sized M&A deals, leisure has
been a particularly active sector. Looking at leisure
deals, there were eight under €100m in H1 2015.
In 2015, PMB deals accounted for 11% and 93%
of deal volume and value, respectively. Notably,
IRISH M&A SPLIT BY DEAL SIZE
120
40
20
<€15m
€15m-€100m
14
7
80
60
Not disclosed
5
6
5
100
Number of deals
MID-MARKET MATTERS
While the leisure sector has performed well,
a range of other Irish industries have also continued
to drive acquisitions in 2015. In the 2014 edition
of this report, we noted that PMB dominated
the M&A landscape. As noted above, the sector
continues to perform strongly in 2015, unsurprisingly
given that pharmaceuticals account for 50% of
the country’s exports, making Ireland the largest
exporter of pharmaceuticals among EU countries.
5
5
12
18
4
8
14
1
12
18
21
5
5
13
€101m-€250m
€251m-€500m
1
>€500m
45
19
3
5
43
32
3
2
3
34
40
43
3
15
19
0
2010
2011
2012
2013
2014
2015 YTD
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4) WILLIAM FRY
The PMB sector continues to perform
strongly. In 2015, PMB accounted
for 11% and 93% of deal volume
and value respectively
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5) MID-YEAR M&A REVIEW 2015
H1 2015’s largest Irish M&A deal took place in the
PMB sector. In a €32.6bn deal, Mylan, a UK-based
generics pharmaceutical company, announced
plans to acquire Ireland’s Perrigo. This move is
set to make the combined company a leader in
generics, over-the-counter and nutritional products.
Mylan’s Executive Chairman Robert Coury said:
“This proposal is the culmination of a number of
prior discussions…about the compelling strategic
and financial logic of this combination. This
combination would result in meaningful immediate
and long-term value creation.” Mylan’s bid was
made on an unsolicited and hostile basis and has
not yet been concluded.
Other significant PMB deals include US company
OPKO Health’s takeover of EirGen Pharma for
€121m, and a domestic deal involving private
healthcare company Malin taking a 65% stake
in drugmaker Altan Pharma. Malin chairman John
Given said of the deal: “Altan offers Malin significant
exposure to the fast growing injectable drug
market which is also benefiting from the increasing
demand for generic drugs.”
While PMB accounted for the largest share of deal
value in H1 2015, TMT transactions were the most
active by volume, accounting for 22% of announced
transactions. Within TMT, technology was the most
active segment, accounting for 6 of the 10 deals
in the sector.
In the largest technology deal of 2015 thus far,
US-based online payment processing company
Global Payments purchased Ireland’s Realex
Payments for €115m. The deal will help Realex
Payments gain a broader geographical reach,
TOP 5 IRISH M&A DEALS BY VALUE, H1 2015
Announced
Date
Target Company
Target Dominant Sector
Bidder Company
Bidder Dominant
Country
Seller Company
Seller Dominant
Country
Deal Value
EUR( m)
24/04/2015
Perrigo
Medical:
Pharmaceuticals
Mylan
UK
26/01/2015
Jurys Inns Group
Leisure
Lone Star Funds
USA
26/05/2015
Aer Lingus
Transportation
International Consolidated
Airlines Group
UK
05/05/2015
EirGen Pharma
Medical:
Pharmaceuticals
OPKO Health
USA
Founders (Tom Brennan
and Patsy Carney); Saudi
Pharmaceutical Industries and
Medical Appliances and others
Ireland (Republic)
121
25/03/2015
Realex Payments
Internet / ecommerce
Global Payments
USA
Lyon family
Ireland (Republic)
115
32,609
Ulster Bank Ireland;
Westmont Hospitality Group;
Avestus Capital Partners;
Oman Investment Fund;
Mount Kellett Capital
Management LP
Oman
911
817
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6) WILLIAM FRY
While indigenous private equity (PE) funds are
increasingly active in the market, PE figures
remained relatively muted in the first six months
of 2015. In this period, there were eight PE deals with
an aggregate value of €993m. This marks a 33% YoY
drop in volume and a 64% YoY decrease in value.
Nonetheless, there were several PE highlights
in H1 2015, and, in particular strong domestic
activity. Of the indigenous funds, Carlyle Cardinal
Ireland has already made two acquisitions in 2015
including Carroll Cuisine, a producer of hams and
OUTLOOK
In the 2014 edition of the M&A Review, we noted
that we expected to see large strategic plays by
Irish corporates. This has had some impact in the
first half of the year, particularly among public
transactions. For instance, H1 2015 saw three deals
involving a public target, compared with three in
the entirety of 2014. We expect this trend to gain
momentum in the second half of the year.
IRISH PRIVATE EQUITY DEALS, 2010 - H1 2015
4,500
Volume
4,000
12
Value (€m)
10
3,500
8
3,000
2,500
6
2,000
4
1,500
1,000
2
500
0
6
ready meals. The deal underlines Carlyle Cardinal’s
interest in acquiring strong companies with
potential for growth.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 14 15 15
0
Value of deals €m
The transport sector also saw a substantial boost
in deal value in the first half of 2015. This was
largely due to International Consolidated Airlines
Group (IAG), the UK-based parent company
of British Airways, announcing plans to acquire
Aer Lingus, the Ireland-based airline carrier,
for €817m. The deal has garnered substantial
headlines, not least because Ryanair, the budget
airline carrier that is Aer Lingus’s largest
shareholder and market competitor, had declined
previous offers for its stake in Aer Lingus, and
delayed responding to IAG’s offer. Ryanair’s
members have since voted to unanimously accept
IAG’s offer which means that the two biggest
shareholders in Aer Lingus, the Irish Government
and Ryanair, have both agreed to sell their
respective 25% and 29.8% stakes. The successful
conclusion of this deal supports the market view
that international buyers continue to perceive
value in important Irish assets and are willing
to pursue them strategically.
PRIVATE EQUITY SNAPSHOT
Number of deals
while Global Payments stands to benefit from
Realex Payments’ technological capabilities.
Despite the presence of large-cap technology
multinationals in Ireland, technology M&A
in H1 2015 was characterised by strong midmarket activity.
7) MID-YEAR M&A REVIEW 2015
Looking ahead, we are optimistic that H1 2015
has set the stage for a dynamic and buoyant M&A
climate for the remainder of the year. Some of
the challenges of previous years, such as high
valuation expectations and sluggish funding
opportunities, are now being overcome. In addition,
US multinationals and PE houses continue to look
to Ireland for opportunities.
Despite these favourable conditions, there remain
challenges ahead. Ireland’s Economic and Social
Research Institute, in a general statement about
2014 and 2015, suggests that there are weak growth
prospects on a pan-European level. In addition,
currency risks and uncertainty around both British
and Greek commitment to the EU may have an
impact on European dealmaking.
However, increasing activity levels among domestic
sellers and buyers as seen so far in 2015 is
particularly indicative of strong growth in the Irish
mid-market. A buoyant mid-market is generally
indicative of a reasonably robust market overall, and
we expect to see this growth continue in the second
half of 2015.
7
8) WILLIAM FRY
We are optimistic that H1 2015 has
set the stage for a dynamic and
buoyant M&A climate for the
remainder of the year
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9) MID-YEAR M&A REVIEW 2015
ABOUT THE RESEARCH
The underlying data to this report comes from the Mergermarket database.
Historical data contained in this report includes deals announced from
01/01/2008 to 30/06/2015, excluding lapsed or withdrawn bids or deals
valued below €5m.
Remark, the research and publications division of The Mergermarket Group,
publishes over 60 thought leadership reports and holds over 70 events across
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The Mergermarket Group
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10) WILLIAM FRY
ABOUT WILLIAM FRY
As one of Ireland’s largest law firms, William Fry offers unrivalled legal and tax
expertise across the full breadth of the business sector. We advise a substantial
number of leading Irish and international companies, covering both the public
and private sector.
With a staff of over 430, the firm operates a large international practice with offices
in Dublin, London, New York and Silicon Valley and regularly acts in cases involving
other jurisdictions, including the United Kingdom, the United States, Asia, the
Netherlands, Germany, France, Spain, Italy, Poland and Eastern Europe.
M&A is core to our practice at William Fry. Our team has top tier credentials,
a wealth of experience and an impressive depth of expertise. We are consistently
involved in the most sophisticated and complex corporate transactions in Ireland,
including large cross-border deals. We focus on identifying and delivering on our
clients’ priorities.
Recent awards include:
• Irish Law Firm of the Year – Chambers Europe Awards 2015
• Corporate, Litigation & Dispute Resolution Law Firm of the Year - Ireland DealMakers Country Awards 2015
• Mergers and Acquisitions: Reverse Merger and Redomicilation Deal of the Year Finance Dublin Deals of the Year 2015
• Most Outstanding Corporate Law Firm - Ireland - M&A Awards 2015 Corporate
LiveWire
• Project Finance & Corporate Law Firm of the Year - Ireland - InterContinental
Finance Magazine Global Awards 2015
• Corporate Finance Law Firm of the Year - Ireland - Corporate International
Magazine Legal Awards 2015
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Recent directory commentary includes:
• “The legal advice is always given in a digestible, user-friendly format, and the
team understands market practices well, not just in Ireland but internationally.
It is sophisticated in what it does.” – Chambers Europe 2015
• William Fry’s team has “tremendous industry knowledge and experience” –
Legal 500 EMEA 2015
11) MID-YEAR M&A REVIEW 2015
CONTACTS
Shane O’Donnell
Head of Corporate and M&A
T. +353 1 639 5112
E. shane.odonnell@williamfry.com
Bryan Bourke
Managing Partner
T. +353 1 639 5106
E. bryan.bourke@williamfry.com
Alvin Price
Chairman
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E. alvin.price@williamfry.com
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Partner
T. +353 1 639 5208
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Partner
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E. david.carthy@williamfry.com
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Partner
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E. myra.garrett@williamfry.com
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Partner
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Partner, Head of London office
T. +44 20 7571 0497
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Partner
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