Irish M&A: Not Too Irish And Mostly Inversions

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Includes: AGN, CRH, LFRGY, PFE, SHPG, TEVA, WLTW
by: Constantin Gurdgiev

Summary

Experian's latest figures for "Irish" M&A activities for 2015 show some astronomical number.

Per the release, "the number of deals on the Irish merger and acquisition (M&A) market increased by 10 percent last year, its strongest performance since 2008..."

Although the overall number of actual transactions hit 458 in 2015, up from 416 the previous year, it is the value of the transactions that is beyond any belief.

Experian's latest figures for "Irish" M&A activities for 2015 show some astronomical number. Per the release, "the number of deals on the Irish merger and acquisition (M&A) market increased by 10 percent last year, its strongest performance since 2008..." Which is not what is impressive. Although the overall number of actual transactions hit 458 in 2015, up from 416 the previous year, it is the value of the transactions that is beyond any belief.

Again, per Experian:

"The total value of transactions reached €312 billion - up from €154 billion in 2014 and by some way the most valuable year for corporate deal making in the country's history. Activity continues to be driven by the pharmaceuticals and biotech sector."

This number is a third higher than the value of exports of goods and services from Ireland over the period of 12 months through 3Q 2015, and it is almost 60 percent higher than the Irish GDP. In other words, using normal valuation multiples, you should be able to buy anywhere between 1/4 and 2/5 of entire Ireland on this money. In one go, and forever... And that's one year worth.

Per Experian:

"Irish deals accounted for around 3.6% of the total volume of European transactions in 2015, but 20.5% of their total value. In 2014, the Republic of Ireland again featured in 3.6% of European deals but contributed just 12.7% to their overall value."

So, conservatively, let's say 1/3 of Ireland bought last year and, say 1/5 in 2014... that's half the country's economy in two years.

But how on earth can a little country like Ireland attract such a level of financial activity? Why, remember that magic word... "inversions" - yes, that same word that our government denies applies to Ireland.

Well, Experian provides a small insight (it wouldn't tell us the full story, but it can't quite escape from telling us some). Enjoy the following: Per Experian, the Top 5 "Irish" deals announced in 2015 included:

  • Pfizer (NYSE:PFE)/Allergan (NYSE:AGN) at EUR143.564 billion,
  • Teva Pharma (NASDAQ:TEVA)/generic drug business of Allergan at EUR35.454 billion,
  • Shire (NASDAQ:SHPG)/Baxalta (BXLT) at EUR29.533 billion,
  • Willis Group Holdings (WSH)/Towers Watson (TW) deal at EUR15.566 billion, and
  • CRH (NYSE:CRH)/Holcim and Lafarge (OTCPK:LFRGY) deal at EUR7.671 billion.

So, yep, tax inversion at the top, related to tax inversion at No. 2, tax inversion at No. 3... and none (repeat - none, including the CRH deal) related in any way to Ireland, except for the tax domicile of the companies involved.

Repeat with me... "There are no tax inversions into Ireland"... now, with zombie-like intonation, please... "There are no..."

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