Value of Irish mergers and acquisitions plummets 65%

Reflecting tougher US regulations on corporate deals...

The value of Irish mergers and acquisitions (M&As) has fallen 65% in 2017 thus far, according to new figures from Thomson Reuters.

The study, commissioned by the Irish Independent, found that new rules in the US to clamp down on tax inversion – where big American companies purchase smaller rivals to move their tax base to Ireland – has impacted corporate deals being done here.

Mark Ward, head of mergers and acquisitions at law firm A&L Goodbody, believes that the $14 billion merger of Johnson Controls and Tyco, which created a global engineering business in Cork, was the last such major US relocation.

Johnson Controls Automotive Experience / AP

 

He told the newspaper:

 

"January was quiet, you had Brexit to the east and Donald Trump to the west and there's no doubt it had an impact, but that waiting period is well over now.

"[Inversions] have paused, and it's hard to see them coming back again soon. The market is back to more normal, Irish-sized deals."

The biggest Irish deal so far this year was the $6.1bn sale of Medtronic's deep vein thrombosis and nutritional insufficiency unit to the US-based Cardinal Health.

The US government unveiled its plans to curb tax inversions in April 2016.

The new US Treasury rules impose a three-year limit on overseas companies bulking up on US assets to avoid ownership limits for a subsequent inversion deal.

Picture by: Wiktor Dabkowski/DPA/PA Images

Former US Treasury Secretary Jack Lew (pictured) said at the time:

"We know companies will continue to seek new and creative ways to relocate their tax residence to avoid paying taxes here at home."

He added that the new regulations would "further rein in inversions and reduce the ability of companies to avoid taxes through earnings stripping."