Belfast Telegraph

Tax rate cut 'could lead to mergers'

By Clare Weir

A reduction in the Northern Ireland corporation tax rate could lead to more mergers and acquisitions, it has been claimed.

A poll of the top companies in Northern Ireland and the Republic interviewed 85 decision makers involved in corporate strategy within Ireland's top 1000 companies and Northern Ireland's top 250, selected from a spread of business sectors.

Fifty-six percent of the companies are now looking to make an acquisition this year, with 67% over the next five years. The majority of these acquisitions are targeting gains in market share or improved product offerings.

Forty percent anticipate improvements in M-amp;A opportunities over the next 12 months.

The survey, conducted by business advisory firm BDO, said that the key factor to the potential lack of future M-amp;A activity, identified by the majority of respondents, is a continued price expectation gap between vendors and buyers. Thirty-five percent of respondents said that funding would be a barrier.

Barry-John Kelly, director at BDO's corporate finance team, said that businesses who are willing to be flexible and innovative will be best placed to engage in mergers and acquisitions.

"Through our work on the Moy Park acquisition of the O'Kane Group we saw that there is still a strong appetite amongst firms for growth via acquisition," he said.

"Indeed the likely devolution and reduction of corporation tax could mean an increase in M-amp;A as we see new entrants to the market seeking to avail of the reduced rate."

Northern Ireland's rate of corporation tax stands at 28%, compared to the Republic's rate of 12.5%.