International interest in Northern Ireland keeps M&A activity levels high

04 July 2017

Author: Neasa Quigley
Practice Area: Corporate - M&A

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It is no secret that businesses in Northern Ireland have faced an interesting and somewhat challenging environment this year.

As we approach the half way point, political and economic uncertainty continues to play its part, impacting and in some cases halting growth plans for some local firms. Others have been riding on the coat tails of favourable exchange rates and using this as an opportunity to further penetrate their export markets.

As you would expect, this landscape has had an impact on local M&A activity. But while some people have talked about there being a slight dip in the number of deals being explored by local firms, over the last year there has been an increase in inward investor enthusiasm from Asia, not just in Northern Ireland, but on a wider basis as they target acquisitions of firms across Europe and America.

Carson McDowell advised Gaelectric when it selected China General Nuclear Power Corp (CGN) as preferred bidder for a majority stake in a 230-megawatt portfolio of wind farm assets. The Chinese company has been diversifying in recent times into renewable energy and recognised the potential to invest in a company which has shown continued ambition and growth potential in this sector.

Shortly before there was another major transaction when Chinese firm CIMC Vehicles acquired the parent company of Toomebridge manufacturer SDC Trailers for an undisclosed sum with a view to increasing production on a global scale.

American investors, who have been active players in Northern Ireland for many years, continue to snap up promising companies. Carson McDowell acted on the buy-side of the Dungannon based O&S Doors transaction when it was sold to an affiliate of Sun European Partners while Lisburn based Environmental Techniques was acquired by another Carson McDowell client, US firm Aegion, in March of this year.

The International Bar Association held its mid–year conference in Belfast at which the focus turned to how vital it is for legal firms in Northern Ireland to remain active and visible outside of our own market so that we can directly facilitate and support international M&A transactions here.

A report published in March by McKinsey & Company, titled ‘M&A 2016: Deal makers catch their breath’ has confirmed that globally deal value and volume both saw contractions in 2016 compared to the year previous, with deal value down around 17 per cent while deal volume was down around 5 per cent. Despite this, 2016 was still one of the strongest years for performance in the last decade.

There has been a fall in the value of mega deals as investors instead turn their eyes to smaller opportunities in a bid to manage risk levels. It is precisely this reason that companies in Northern Ireland hold so much appeal at the moment. Not only are they, for the most part, trading with confidence they also meet the target value size which makes them attractive for mergers and acquisition.

Globally cross regional M&A activity is up on 2016 with a notable increase in the number of deals Asia-Pacific investors are making in the EMEA and Americas markets. Sectors such as telecoms, transportation, logistics and energy have been driving the majority of these deals.

This year holds the potential to be as strong as 2016 and we are confident that deal activity in Northern Ireland will continue to perform well in the face of the uncertain landscape.

Contact Neasa Quigley at [email protected] for more information.

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