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Thursday, 18th April 2024
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Merrion's trade sale reflects a sharp upswing in stockbroking values Back  
The purchase by top Icelandic bank Landsbanki of Merrion Capital, reflects a general rise in stockbroking profits in the past year as well as Merrion's own performance, which is confirmed also in this year's Finance Magazine survey (see elsewhere on this page).
Two years after their former employer staged a management buy-out of NCB Stockbrokers, John Conroy, Adrian O’Carroll, Rory Gillen and other directors at Merrion Capital, have reversed roles with NCB by selling Merrion Capital to Icelandic bank Landsbanki, in a deal worth a minimum of €55.3 million.
John Conroy,Managing Director, Merrion Capital



The deal will net Merrion CEO John Conroy, between €5.5 and €8.3 million, at minimum, as Landsbanki is paying out 50 per cent now in cash, with the remainder being paid on an earn-out arrangement over the next three years, which, depending on the profits Merrion generates, may value the firm at well over the price disclosed now.

The rest will be shared between the other shareholders, of which US investment bank Allen & Co Inc, has a 30 per cent stake, which it is estimated, it purchased for $3 million back in 1999.
Around 55 of Merrion’s 75 staff members are shareholders.

Merrion has a strong reputation for quality, and in the press release announcing the deal, Merrion referred to its performance in last year’s FINANCE Stockbroking Survey, when it won the major categories of Best Salesperson, Best Analyst, Most Objective Research, and Best Website, and also to the FINANCE ‘Deal of the Year’, which it has won twice in the past four years.

According to Conroy, it will be very much ‘business as usual’ at the firm, and the brand/premises will remain the same. However, management is only tied in for three years under the earn-out arrangement.
According to one of Landsbanki’s CEOs, Sigurjon Th. Arnason, the partnership will complement Landsbanki’s pan-European operations, and also represents an opportunity to enter the Irish financial services market, and Landsbanki ‘will pursue further opportunities in Ireland consistent with the bank’s overall strategy’.

Landsbanki is a major provider of banking and financial services in Iceland. With a market capitalisation of €3.3 billion and a total balance sheet of €15 billion, it is the ninth largest bank in the Nordic region. It recently acquired two other European brokerage firms, Teather & Greenwood, in the UK, and Kepler Equities, which has offices in Amsterdam, Frankfurt, Madrid, Milan, New York, Paris, and Zurich.

According to Arnason, the ‘strong fit’ Merrion has with Kepler and Teather & Greenwood provides an opportunity to produce operational synergies, and the combined entities will now provide research for over 700 companies.

According to Conroy, the firm was at a cross-roads, in the sense that they could continue to run the business as is, or do something different. The firm has had tentative take-over offers over the past 2/3 years, but never pursued them.

Merrion will also expect to expand its wealth management and fund management divisions across Europe by linking up with other Landsbanki operations such as its private banking operation, Landsbanki Luxembourg S.A.

The take-over will give Merrion the opportunity to access a much wider audience for its products, and will also enable it to play a bigger role in corporate finance, and get more involved in the origination of transactions.

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