9 January 2017
Irish M&A activity slows down with a 14% decline in notifications in 2016
Irish merger filings for 2016 declined by 14% from 78 in 2015 to 67 in 2016, suggesting a cool-down in the pace at which Irish deals are being carried out. At the same time, larger scale mergers and acquisitions involving Irish companies increased from three to four, with acquisitions of the Dundrum and Ilac shopping centres, the Glo Health and Aviva health insurance businesses, and the meat processor, Slaney Foods.
Philip Andrews, Head of McCann FitzGerald’s Competition, Regulated Markets, EU & Trade Law Group, said: “While it was a banner year for international deal-making, with $3.3 trillion worth of takeovers worldwide, the pace of Irish deals appears to have cooled in 2016, with merger filings down 14% from last year’s total of 78. At the same time, the number of large Irish M&A deals, those big enough to require filings in Brussels, increased from three to four (Dundrum and ILAC shopping centres, Aviva/Glo Health, two Irish health insurance businesses, and meat processor, Slaney Foods). It was also interesting that perceptions of an increased pushback on international deals by U.S. and EU antitrust authorities in 2016 aren’t reflected at national level, where intervention levels remain consistent.
Five media mergers were notified in 2016 and the proposed acquisition by Independent News & Media Limited of several regional newspaper titles owned by Celtic Media will be closely watched in 2017. We also believe the Unconditional Phase 1 approval of ABP Group/Slaney Foods by the European Commission suggests scope for further consolidation of Irish agri-food businesses.”
CCPC intervention remains level
Perceptions of increased pushback on international deals by U.S. and EU authorities in 2016 are not reflected at a domestic level. The CCPC intervened in 4.5% of cases in 2016 (a total of three cases), compared with a 9.5% intervention rate in Brussels.
In one case, the acquisition of Greenstar by Panda Waste, the CCPC required Panda Waste to commit to divest overlapping collection routes in Dublin. In the second case, Bon Secours’ takeover of Barringtons Hospital in Limerick was cleared with conditions (not yet published) while, in the third, the parties withdrew the filing.
Review of Media Mergers
Five media mergers were notified to the CCPC and the Minister for Communications in 2016, primarily involving foreign targets. As of 31st December 2016 two deals still have decisions pending while the other three were cleared and approved following Phase 1, without conditions, including Liberty Global’s takeover of UTV Ireland.
On average, final approval took 13 weeks (90 days), similar to 2015 levels. Independent News & Media Limited’s acquisition of several regional newspaper titles owned by Celtic Media remains under ministerial review and the result will be keenly awaited.
Local market concerns
Local market considerations were a major factor in the CCPC’s decisions, particularly for deals involving retail or direct consumer-facing businesses. In 2016 for example, the CCPC determined overlap areas for hotels as a 20-minute drive time and for petrol stations, an 8 km radius in rural areas and a 3 km radius in urban areas was used.
What does 2017 hold?
The first merger notification for apps in Ireland is likely to be a growing trend. When mytaxi sought to acquire UK taxi hailing app, Hailo, the CCPC was of the opinion that the two apps were not in direct competition and appeared (albeit implicitly) to consider real-world and online services as direct competitors.
The European Commission’s unconditional Phase 1 approval of ABP Group/Slaney Foods, a contentious acquisition by Ireland’s largest beef processor of a significant stake in the No. 5 player (and No. 1 lamb processor) suggests scope for further consolidation of Irish agri-food businesses. The IFA, opposed the deal arguing it would permit anti-competitive coordination among Irish processors but the European Commission found relevant Irish meat processing markets were “moderately concentrated” and, in so doing, rejected IFA economic evidence. The Commission notably accepted there was significant excess processing capacity and left open whether agri-food processing markets may be wider than national.