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Wednesday, 24th April 2024 |
| Deals of the Year 2022: Milestone for Irish banking sector as AIB acquires Goodbody Stockbrokers |
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| The deal saw AIB buy back Goodbody Stockbrokers as part of its strategy to fill in service gaps and increase its non[banking income. The transaction gives impetus to the Irish Government’s plans to sell-down its majority ownership in the bank that it has held since 2009. |
The acquisition of Goodbody Stockbrokers by AIB is a milestone acquisition for one of Ireland’s pillar banks. The deal saw the sale by FEXCO Holdings UC (51%) and the trustees of the Goodbody Employee Benefit Trust (49%) of the entire issued share capital in Ganmac Holdings (BVI) Limited, the holding company in the Goodbody Group of companies, to Allied Irish Banks, p.l.c.
It should support AIB in diversifying its income streams and expanding its service offering, and should aid the Irish Government’s ambitions to sell down its majority stake in the bank. The deal also represented a strong return for FEXCO, the Killorgin, Co. Kerry-based IFS company that acquired a majority stake in the business in 2011, with Goodbody management holding a significant minority stake.
Goodbody Stockbrokers is the second largest stockbroking firm in Ireland and a pillar firm in Ireland’s transactional and capital markets.
The deal was not only a significant transaction for all these parties but also more broadly the Irish economy. The acquisition of Goodbody is a strategic acquisition for AIB to address gaps in its customer offering and to diversify income streams. AIB paid €138m to acquire the stockbroker, which includes €56m cash on the balance sheet of Goodbody.
There had previously been two sale processes run for the business, culminating in contractual agreements but ultimately aborted. The acquisition was further complicated by the Irish State’s majority ownership that required a number of approvals and derogations before the deal could be signed off.  | | A&L Goodbody partner Richard Grey. |
This transaction involved a large number of work streams and considerations including share purchase agreement drafting and negotiation; a detailed disclosure process and drafting; regulatory considerations and consent processes (including Central Bank of Ireland, Department of Justice and FINRA (US) filings) to include in respect of governance, remuneration and other disclosures; these included remuneration and State/Ministerial considerations and processes given AIB’s position and significant State shareholding and related agreements; competition considerations and CCPC filings; trust, trustee and employee benefit scheme mechanics and updates as part of the completion process; tax and tax deed; board matters; and escrow arrangements and funds flow.
The transaction gained Ministerial approval, post Cabinet sign-off, in respect of the waiving of certain banking group remuneration and bonus restrictions that would apply to Goodbody employees post transaction.
The deal was signed and announced on 2 March 2021 and completion occurred in August after satisfaction of a number of conditions (mentioned above), particularly regulatory conditions including CCPC and Central Bank of Ireland approval.
This transaction tested the bounds of the banking bonus and salary caps put in place post AIB’s recapitalisation, and entailed negotiation of parameters in relation to bonuses and transferring staff with the Minister for Finance and paves the way for other M&As in the sector. The transaction entailed an element of deferred consideration (and negotiation of ‘good and bad leaver provisions’) for Goodbody staff as part of a post deal stability and retention strategy.
Ultimately the deal was brought to a successful and satisfactory completion for all sides. From the shareholders’ perspective the transaction was completed on favourable terms and AIB were able to achieve its stated desired strategic acquisition to help address its ongoing development of its services offerings.
A&L Goodbody LLP advised AIB on the transaction with its team led by partners Richard Grey, Eugenee Mulhern, Keavy Ryan and including partner Patrick Brandt and associate Thomas O’Donnell.
“Our client, AIB’s acquisition of Goodbody Stockbrokers represented an important step in delivery of its stated strategy of making acquisitions to address gaps in its overall customer offering and diversifying its income streams. This was a landmark transaction for AIB as it is positions itself or expansion in Ireland,” said Richard Grey, partner and Head of M&A at A&L Goodbody LLP.
Eversheds Sutherland LLP were the sole legal advisor to Fexco and Goodbody Stockbrokers on all Irish aspects of this transaction including M&A, trustee considerations, regulatory and competition issues. The Eversheds Sutherland multidisciplinary team was led by partners Lee Murphy and Peter Fahy. They were supported by Lorcan Keenan; Ryan Duggan; Padraic Daly; Deborah Hutton; Ciaran Walker; Enda Newton; David McKeating; Rachel Ahern; Tim Kiely; Robert Dever; Niall Pilkington; Sean Ryan; Katie Haberlin; Marie McGinley; Norman Fitzgerald and Julie Galbraith.
Lee Murphy, partner, Eversheds commented, “This was a highly significant transaction for all parties involved and more broadly within the Irish economy. The acquisition of Goodbody was stated to be a strategic acquisition for AIB in order to address identified gaps in its overall customer offering and to diversify income streams. The transaction had a number of unique elements including the significant stake in Goodbody held by its employees (via the GEBT) and the requirement for Ministerial approval, post Cabinet sign-off, in respect of the waiving of certain banking group remuneration and bonus restrictions that would apply to Goodbody employees post transaction. We were involved in all workstreams in respect of this significant and complex transaction to bring it to a successful completion to include drafting of the core agreements and negotiation, regulatory considerations and consent processes (including Central Bank of Ireland, Department of Justice, FINRA and CCPC filings and processes) and trust, trustee and employee benefit scheme mechanics and updates. This was a very satisfying transaction to complete successfully and we believe its new ownership structure will enable Goodbody go from strength to strength.”
Other advisers on the transaction include Maples Group (BVI), provided certain BVI law advices to the sellers with Wilmer Hale (US) assisting on US aspects. Houlihan Lokey provided financial advice to FEXCO. |
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