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Deals over €500 m
C&C Group plc
(Global Offer and Listing on Dublin and London Stock Exchanges)
Advisor to Company: IBI Corporate Finance Limited (Joint Lead Manager), Goldman Sachs, Citigroup, Davy
Legal Adviser to Company: McCann Fitzgerald, Dickson Minto
Origin of Target: Ireland
Date of Announcement: 14/05/04
Date of Completion: 19/05/04
Consideration: €726m (based on the announced offer price)
Profile: The IPO of C&C Group plc was one of only two IPOs that took place in the Irish market last year (the other being eircom plc). IBI acted as joint lead manager on the global offer and listing on the Irish and London Stock Exchanges. C&C is one of the largest manufacturers, marketers and distributors of branded beverages in Ireland and Northern Ireland and savoury snacks in Ireland.
The €398 million global offer enabled BC Partners (who had lead a leveraged buyout of C&C from Allied Domecq plc in January 1999), other co-investors and some members of senior management to realise some of their investment in C&C. At the time of its listing, C&C had a market capitalisation of €725million.
In its role as joint lead manager IBI assisted in the preparation of listing particulars and roadshow marketing materials. A strong portfolio of brands, high cash generation, an experienced management team and defensive characteristics were some of C&C’s attractions to investors. The fact that the global offer was over-subscribed, together with C&C’s very strong share price performance since flotation (share price has risen by ca. 40p.c.), is an endorsement of the course of action taken by the company.
Leo Casey is an associate director of IBI Corporate Finance.
 | | Leo Casey is an associate director at IBI Corporate Finance. |
Deals over €100 m
Heiton Group plc
Acquirer: Grafton Group plc
Target: Heiton Group plc
Acquirer Adviser: AIB Corporate Finance
Target Adviser: IBI Corporate Finance
Acquirer Legal Adviser: Arthur Cox
Target Legal Adviser: A&L Goodbody
Origin of Acquirer: Ireland
Origin of Target: Ireland
Date of Announcement: 12/08/04
Date of Completion: 07/01/05 (date declared unconditional)
Consideration: €353 million
Profile: AIB Corporate Finance. For many years, analysts and market commentators have speculated as to when, rather than if, Grafton and Heiton would come together. In August 2004, the two companies announced that they had agreed the terms of a recommended offer valuing Heiton at approximately €353 million.
There was strong commercial logic for the acquisition, which afforded both shareholders and customers a number of attractions and opportunities. For Heiton shareholders, the offer represented significant value at a premium of approximately 32.1 per cent over the closing price of Heiton shares the day prior to commencement of the offer period. The payment of the consideration was divided between cash and new Grafton units. This way, Heiton shareholders could realise value in the present and participate in the future growth and profitability of the enlarged group. For customers, Grafton would have the opportunity to offer enhanced services, a wider product range, broader geographic coverage and still more competitive pricing.
The acquisition was endorsed by Grafton shareholders and accepted by Heiton shareholders but fulfilment of the competition condition remained outstanding. The Competition Authority moved its investigation into phase 2 and it looked uncertain whether a decision could be delivered within the prescribed takeover timetable. With the agreement of the Takeover Panel the timetable was extended until 10 January 2005. When the Competition Authority announced its unconditional approval of the acquisition on 6 January, the offer was declared unconditional in all respects.
Mon O’Driscoll is managing director of AIB Corporate Finance.
IBI
One of the landmark deals of 2004, the transaction presented a number of challenges, particularly against the backdrop of Grafton having built up a stake of approximately 29p.c. in Heiton over a five year period :
• The requirement to maximise value for Heiton shareholders given its strategic value to Grafton and its positive prospects as an independent company;
• The competition approvals process required; and the commercial sensitivity surrounding the disclosure of any price sensitive information to Grafton (as a competitor of Heiton).
Due to Grafton’s position as a competitor of Heiton, it was critical that a credible proposition was put forward by Grafton before information concerning Heiton was provided to Grafton. This requirement had to be balanced with a desire by the market for a recommended transaction to be completed, given the compelling rationale for the combination of the businesses.
The transaction was a particularly important and unusual one in the Irish market as it represented an in-market acquisition of one public company by another. Speculation concerning a possible bid started as far back as 1999 when Grafton acquired its initial stake of c. 8p.c. in Heiton.
The offer was very well received by the market and the final offer was accepted by over 92p.c. of Heiton ordinary shareholders and for Heiton shareholders who accepted a pro rata element of Grafton paper under the offer an increase of c. 33p.c. over the value of the announced offer (in August 2004) has been achieved and a total premium of c. 70p.c. to the pre-approach price.
Leo Casey is an associate director of IBI Corporate Finance.
Gresham Hotels Group plc
Acquirer: Precinct Investments Limited
Target: Gresham Hotels Group plc
Acquirer Adviser: Deloitte Corporate Finance
Target Adviser: AIB Corporate Finance
Acquirer Legal Adviser: Matheson Ormsby Prentice
Target Legal Adviser: Mason Hayes & Curran
Origin of Acquirer: Ireland
Origin of Target: Ireland
Date of Announcement: 21/05/04
Date of Completion: 08/07/04
Consideration: €117 million
Profile: AIB Corporate Finance advised the board of Gresham Hotels Group plc on the recommended offer by Precinct Investments Limited, a company owned by David Coleman, Bryan Cullen and John Joe Murphy. Gresham Hotels Group plc is an international hotel group which operates in Dublin, Cork, London, Amsterdam, Hamburg and Brussels.
The deal was announced in May 2004 after a long period of negotiation commencing in November 2003. The final consideration paid represents a premium of 84p.c. to Gresham’s average closing share price in the twelve months prior to the announcement by Gresham that it had received an approach which might lead to an offer being made for the company.
The offer provided the Gresham shareholders the opportunity to realise their investment at a price which the share had not traded above in the 24 years in which Gresham share price records had been maintained.
Mon O’Driscoll is managing director of AIB Corporate Finance.
Deloitte Corporate Finance identified an opportunity to take Gresham private and approached a group of investors with interests in the hotel and property sectors. Precinct Investments was then formed by these promoters to make a bid for Gresham. Deloitte Corporate Finance made an initial approach to the board of Gresham in November 2003 offering €1.35 per share. This approach was rejected on the grounds that Red Sea, a holder of 27 per cent of the voting rights would not support the deal. Deloitte then designed innovative tactics over the next six months to try to gain the support of the board and to isolate Red Sea.
Central to this was Precinct’s willingness to make an offer with a 54 per cent acceptance condition, which, if successful, would leave Red Sea in a minority position in a delisted company. Complex financing arrangements needed to be put in place to support this bid as it fell short of the normal 80 per cent acceptance level. Ultimately Precinct succeeded by increasing its offer to 1.40 per share. During the course of the offer process, Precinct ran a highly successful PR campaign which gained the support of Gresham’s 8000 small shareholders. Since the acquisition, Precinct has continued to enhance the hotel portfolio.
David O’Flanagan is a partner in Deloitte Corporate Finance.
 | | David O'Flanagan, Deloitte |
Group Hubert
Acquirer: IAWS Plc
Target: Group Hubert
Divestor: Apax Partners France
Acquirer Adviser: Ernst & Young
Target Adviser: Goldman Sachs
Acquirer Legal Adviser:
Target Legal Adviser:
Origin of Acquirer: Ireland
Origin of Target: France
Date of Announcement: 1/12/04
Date of Completion:
Consideration: Maximum of €105m on completion
Profile: IAWS plc acquired Groupe Hubert (Boul’pat) in December 2004. This business was being sold by the fund managed by Apax Partners France who held a majority stake. Groupe Hubert is France’s leading distributor of products to bakers and catering professionals. Apax Partners acquired the Hubert group from the founding family in 1999 and brought in a new management team (LBI) to grow the business.
IAWS will pay a maximum consideration of €130 million for the company, €105 million of which will be payable in cash on completion with the remaining €25 million linked to performance over a five year period.
The existing management team will be remaining with the Group. The business has a strong product development focus combined with a major sales, marketing and distribution capability in French speciality baked goods.
Sinead Munnelly is a director in Ernst & Young Corporate Finance.
Deals over €50 m
PostTS UK and PostTS Spain
Acquirer: Alphyra
Target: PostTS UK and PostTS Spain
Divestor: An Post
Divestor Adviser: Goodbody Corporate Finance
Acquirer Adviser: NCB Corporate Finance
Acquirer Legal Adviser: McCann Fitzgerald
Target Legal Adviser: Arthur Cox
Origin of Acquirer: Ireland
Origin of Target: UK and Spain
Date of Completion: 01/05
Consideration: €85 million
Profile: Businesses sold
PostTS UK and PostTS Spain (the businesses) are electronic payment processors focused primarily on the distribution of prepaid mobile phone TopUp (ETU) for the principal mobile phone operators in their domestic markets of UK and Spain respectively.
Background
The businesses were acquired by An Post in February 2002 and were initially to be part An Post’s international objectives. Under An Post’s management, the Businesses have grown from combined EBITDA losses of €2.79 million in 2002 to estimated combined EBITDA profits of €6.33 million in 2004. Following a strategic review in 2004, the board of An Post decided to dispose of PostTS UK and PostTS Spain, principally because the businesses operate in non-core geographical markets.
Careful analysis of trends in the European payment processing industry including the consolidation taking place in the sector, showed that there was an opportunity for An Post to achieve a premium price in the sale of the businesses.
Alphyra represented a natural partner for the Post TS businesses, with its ability to provide the investment to fund new products/services, exploit acquisition opportunities, look at further geographical expansion and invest in the existing terminal base.
Deal statistics
An Post achieved a significant return on its initial investment. The two companies were bought by An Post from the Caudwell Group for €8.5 million in February 2002 and capital expenditure by An Post brought its total investment in the businesses to €16 million. The consideration of €85 million received by An Post represented a return to An Post of 431 per cent on its total investment. Based on EBITDA profits of €6.33 million in 2004, the consideration represented a EBITDA multiple of 13.4x.
Finbarr Griffin is a director in Goodbody Corporate Finance.
 | | Finbarr Griffin, Goodbody |
Barlo Group plc
Acquirer: Quinn Group/Sarcon Limited
Target: Barlo Group plc
Acquirer Adviser: NCB Corporate Finance
Target Adviser: AIB Corporate Finance
Acquirer Legal Adviser: Mason, Hayes & Curran
Target Legal Adviser: William Fry
Origin of Acquirer: Ireland
Origin of Target: Ireland
Date of Announcement: 23/03/04
Date of Completion: 23/04/04
Consideration: €84 million
Profile: AIB
In February 2004, Melgan Limited, a new company created by Dr Anthony Mullins, the then CEO of Barlo and other members of management, agreed to acquire Barlo Group plc for €70 million. The battle to acquire the radiators and plastics firm took on a new dimension in March 2004, however, when Sarcon, announced the terms of a cash offer to acquire the company.
Sarcon, backed by the prominent businessman, Sean Quinn, launched a rival offer of 48 cent per share, which valued the company at approximately €84 million. At this price, Sarcon was offering shareholders 20 per cent more than Melgan. Its offer represented a 92 per cent premium over the closing price of Barlo shares on July 10, 2003, the last dealing day prior to an approach by Dr. Mullins.
Following the announcement of Sarcon’s offer, Melgan’s offer lapsed and was withdrawn. The independent directors, who were advised by AIB Corporate Finance, recommended acceptance of Sarcon’s offer to shareholders. The offer represented good value for shareholders who, prior to these offer approaches, had seen the Barlo share price average around 20 cent. Difficult economic conditions, pricing and market movements all meant that Barlo could not, with any certainty, predict future profitability for shareholders.
However, at 48 cent per share, Barlo shareholders could exit their interest in the company with a certain premium.
NCB
NCB Corporate Finance was retained by Quinn Group to act as its financial advisor in its public offer for Barlo Group plc (Barlo). At the time of the bid, Barlo was already the subject of an advanced public offer, led by its management team, at 40c per share, which meant that Quinn Group were required to prepare a counter bid under an extremely tight timetable. Speed of execution was essential and, on 19 March, Quinn Group signaled its interest in Barlo with the acquisition of a 14.7p.c. blocking stake. This was acquired from one large shareholder which when added to Quinn Group’s existing holding of 2.4p.c. gave it a holding of 17.1p.c..
Within four days, on 23 March, Quinn Group announced a counter offer of 48c per share (€84 million) which was subsequently recommended by the Independent Committee of Barlo. On the same day Quinn Group acquired a further 12.9p.c. of Barlo in a move which underpinned its offer in the market. One month later, on 23 April, the first closing date, Quinn Group announced that it had received acceptances for the offer in respect of 88.2p.c. of Barlo shareholders, enabling NCB to close the offer. In one of the most expedient public company takeovers ever in the Irish market Quinn Group went from owning 2.4p.c. of Barlo to 88.2p.c. in the space of five weeks. Quinn Group’s advisers worked around the clock to execute the deal. The deal was notable for a number of reasons including:
• Market purchase strategy before and after the announcement of a firm intention to make an offer
• A MBO ‘insider’ offer being out bid by an offer from a third party trade player which bucked the trend in previous take privates in the Irish market
• The announcement of a firm intention to make an offer and subsequently seeking a recommendation from the independent board of Barlo
Fergus McLoughlin is a director and Jonathan Simmons is an executive of NCB Corporate Finance.
Burdale Financial Holdings Ltd
Acquirer: Bank of Ireland Group
Target: Burdale Financial Holdings Ltd
Acquirer Adviser: IBI Corporate Finance Limited
Target Adviser: Ernst & Young Corporate Finance
Acquirer Legal Adviser: Herbert Smith
Target Legal Adviser: Nabarro Nathanson
Origin of Acquirer: Ireland
Origin of Target: United Kingdom
Date of Announcement: 16/12/04
Date of Completion: 16/12/04
Consideration: €71 million
Profile: In December 2004, Bank of Ireland acquired Burdale Financial Holdings Ltd, a leading UK based comprehensive asset based lender and majority owned subsidiary of Wachovia Corporation, for approximately €71 million (?49 million).
Comprehensive asset based lending is a highly supportive and flexible form of commercial financing and is particularly useful for companies undergoing periods of change e.g. in situations such as acquisitions, buyouts, re-financings and turnarounds. Bank of Ireland, as advised by IBI Corporate Finance, was selected as preferred bidder for Burdale in the face of stiff competition from a range of international bidders.
Leo Casey is an associate director of IBI Corporate Finance.
Coyle Hamilton
Acquirer: Willis Group Holdings
Target: Coyle Hamilton
Acquirer Adviser: Internal
Target Adviser: Davy Corporate Finance Limited
Acquirer Legal Adviser: A&L Goodbody
Target Legal Adviser: Arthur Cox
Origin of Target: Ireland
Origin of Acquirer: US
Date of Announcement: 06/04
Date of Completion: 09/04
Consideration: circa €70 m
Profile: Willis Group Holdings, a global insurance broker and risk management consultancy, agreed to acquire a 56p.c. stake in Coyle Hamilton, the leading independent Irish insurance broker and risk management consultancy operating in the Republic of Ireland and the United Kingdom, for a consideration of c. E70m with the remaining shareholding to be acquired over the next five years.
The deal agreed between Coyle Hamilton and Willis was remarkable for a number of reasons:
• As a ‘people business’ owned by its management with a 100 year history of independence it was critically important to ensure that the culture and outlook of the purchaser complemented that of the vendor
• The price delivered significant value to shareholders and the realisation of this value recognised the Coyle Hamilton brand and people
As reported in the national press at the time, the deal was quite complex given the existing share structure of Coyle Hamilton, the acquisition of a majority stake and the operations of the Coyle Hamilton Group in Dublin, London and Belfast. The negotiation lasted over 12 months, but the willingness of the parties and the efforts of their respective advisors ensured that an arrangement suitable to all parties was agreed.
Des Carville is a director and John Frain is an associate director at Davy Corporate Finance.
Deals over €10 m
Lake Communications Limited
Acquirer: Inter-Tel Inc.
Target: Lake Communications Limited
Target Adviser: Goodbody Corporate Finance
Acquirer Legal Adviser: Arthur Cox
Target Legal Adviser: Mason Hayes & Curran
Origin of Acquirer: USA
Origin of Target: Ireland
Date of Announcement: 01/05
Consideration: $45.7 million
Profile: Lake Communications, a leading Irish provider of converged communications products, was reaching a critical stage in its development in early 2003, where it either required significant equity investment, sourced externally to develop more product lines and enter new markets or be acquired by a larger group which could bring capital and scale to its business model.
Late that year, in the midst of seeking funders, it became clear that its primary channel into the US market, Inter-Tel Inc., a NASDAQ listed company with a market cap of $500 million, was interested in increasing the range of products it could offer to the US market place. Lake was having some initial success with its product range in the US at that time. In addition, Inter-Tel recognised that Lake had multiple blue chip telecoms customers in Europe which could be very valuable. The key terms of a deal were agreed in autumn 2004 and the deal was finally closed in early 2005. While Lake had undertaken significant restructuring that year, the valuation secured of up to $45.7 million represented a highly attractive exit for the founding shareholders.
Simon Howley is a director in Goodbody Corporate Finance.
Irish Estates Management Limited
Acquirer: Boundary Outsourced Services
Target: Irish Estates Management Limited (IEM)
Acquirer Adviser: Davy Corporate Finance
Target Adviser: NCB Corporate Finance
Acquirer Legal Adviser: Matheson Ormsby Prentice
Target Legal Adviser: Irish Life in-house Lawyer
Origin of Acquirer: Ireland
Origin of Target: Ireland
Date of Announcement: 22/12/04
Date of Completion: 22/12/04
Consideration: e21.5 million
Profile: NCB was retained by Irish Life & Permanent plc (IL&P) to advise it on the disposal of its property and facilities management business, IEM. A decision had been made by IL&P to dispose of IEM as it was considered a non-core subsidiary and IL&P wished to focus on its core operations of retail banking and life assurance in the Irish market going forward. NCB received numerous offers from a range of trade and financial buyers. As part of the process bids were assessed against a number of criteria, with successful bids being brought through to the due diligence stage following which Boundary emerged as the preferred bidder. Both IL&P and Boundary moved quickly to complete the deal and the deal was completed within two months from issue of the information memorandum.
Emer Finnan is a director and Jonathan Simmons is an executive of NCB Corporate Finance.
Profile: Davy
We advised the Boundary Capital led vehicle, Boundary Outsourced Services Limited in an innovative transaction which used institutional equity to fund the acquisition of two private Irish companies in the business support services sector. The deal contained a number of unusual features including:
• The use of institutional equity to part fund the acquisitions;
• Both transactions were fully funded, negotiated and completed over a 35 day period;
• The identification of the complimentary businesses and strategic fit of the two companies ensured a successful fundraising allowing Boundary to conclude both transactions in an efficient and cost effective manner.
Des Carville is a director in Davy Corporate Finance.
elipsan Limited
Acquirer: Adaptec Inc.
Target: elipsan Limited
Target Adviser: Goodbody Corporate Finance
Acquirer Legal Adviser: Heller Ehrman LLP, McCann Fitzgerald
Target Legal Adviser: William Fry
Origin of Acquirer: USA
Origin of Target: Ireland/UK
Date of Announcement: 02/04
Consideration: $20 million
Profile: Elipsan, the former IP SAN division of Eurologic was spun out of the storage solutions Group in advance of the $30 million sale of Eurologic to Adaptec in early 2003. The founders and management of elipsan engaged Goodbody Corporate Finance to help secure a Series-A international venture capital funding round in mid 2003.
By November a syndicate of venture capital and corporate investors was finalised to invest up to $10 million in this pre-revenue start-up, which had a total of 20 employees. As a potential customer of the IP SAN software, Adaptec learned of the potential deal and approached the company with a view to making a pre-emptive offer. Adaptec, a NASDAQ listed company with a market cap of $1 billion at the time, decided that elipsan represented a key part of their product strategy going forward. Over a period of five weeks, a deal was negotiated and completed. The $20 million price-tag represented a 3x return for shareholders versus the proposed VC deal. The deal reflected a recurring trend of US companies aggressively targeting Irish software companies software expertise.
Simon Howley is a director in Goodbody Corporate Finance.
 | | Simon Howley, Goodbody |
Deals under €10 m
Westone Products Limited
Acquirer: Alltracel Pharmaceuticals Plc
Target: Westone Products Limited
Acquirer Adviser: Ernst & Young
Origin of Acquirer: Ireland
Origin of Target: UK
Date of Announcement: 20/12/04
Date of Completion: 14/01/05
Consideration:Maximum of €5.8m on completion
Profile: Alltracel Pharmaceuticals Plc, (Alltracel), a brand focused, bio pharmaceutical R&D company acquired Westone Products Ltd, (Westone) in January 2005. Westone is a privately owned oral care product development company.
The consideration for the acquisition was €5.8 million in a mixed cash and paper offer with further payments due over the coming year and a final payment subject to Westone’s performance which could increase the total potential consideration to €8 million.
As this transaction was deemed a reverse takeover under AIM rules a readmission document had to be prepared for Alltracel. This resulted in significant additional procedures being performed to complete the transaction. The readmission document was prepared in tandem with negotiations with the vendors and the due diligence process to minimise the potential time Alltracel’s share dealing on AIM was suspended.
Alltracel’s shares were suspended when the deal was announced on 20th December 2004 and trading was restored on 22nd December 2004. The transaction was approved by an EGM and the transaction completed on 14th January 2005.
Garry O’Rourke is a senior manager in Ernst & Young Corporate Finance.
Undisclosed
Botanic Inns Limited
Acquirer: NCB Private Clients
Target: Botanic Inns Limited
Vendor: Jas Mooney
Acquirer Adviser: NCB Corporate Finance/Beltrae Partners
Target Adviser: Grant Thornton
Acquirer Legal Adviser: McKinty and Wright
Target Legal Adviser: JG O’Hare
Origin of Acquirer: Ireland
Origin of Target: Northern Ireland
Date of Announcement: 01/10/04
Date of Completion: 01/10/04
Consideration: Undisclosed
Profile: NCB Corporate Finance assembled and advised two private clients of the firm on the acquisition of Northern Ireland’s largest pub group.
The business comprises 11 public premises (9 freehold and 2 leasehold). The deal was structured to hive off the underlying properties into a separate vehicle from the trading business. This structure allowed for an optimum bank financing structure and maximised return on equity investment for the investors. It also allowed a shareholding in the trading company to be sold to the existing CEO of the business, independent of the properties.
The deal was completed confidentially within a 3 month period from first contact.
Fergus McLoughlin is a director and Conor McCarthy is an associate director at NCB Corporate Finance.
 | | Fergus McLoughlin, director, NCB Corporate Finance |
M&G Limited
Acquirer: Motor Mania Limited
Target: M&G Limited
Acquirer advisor: PricewaterhouseCoopers
Target advisor: Grant Thornton Corporate Finance
Acquirer legal advisor: Arthur Cox
Target legal advisor: O’Gradys Solicitors
Origin of Acquirer: N/A
Origin of Target: N/A
Date of Announcement: 31/10/04
Date of Completion: 31/10/04
Consideration: Undisclosed
Profile: M&G Limited is a leading distributor of pipes, valves and other civil engineering products to local authorities, contractors and builders merchants. The business is well established and has a number of exclusive distribution agreements.
This was a management buy in and the acquirer had experience in the civil engineering distribution sector.
The sale of M&G Limited facilitated a complete exit for the existing shareholders. Grant Thornton Corporate Finance advised the shareholders of M&G Limited.
Michael Neary is a director of Grant Thornton Corporate Finance. |
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| Article appeared in the May 2005 issue.
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