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Saturday, 20th April 2024 |
| Nominations for ‘Deal of the Year’ 2006 |
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| The nominations for the FINANCE ‘Deal of the Year’ 2006, which are chosen by a panel of corporate financiers to reflect the best and most innovative deals of the past year. We look at why these deals were nominated, and also the key trends in Ireland’s corporate finance market over the past year, such as an increase in diversification, as corporates look to expand their product offering. |
Deals over €1,000 million
Jurys Doyle Hotel Group plc
Acquirer: JDH Acquisitions plc
Target: Jurys Doyle Hotel Group plc
Acquirer advisor: Goldman Sachs International/NCB Corporate Finance
Target advisor: IBI Corporate Finance
Acquirer legal advisor: Arthur Cox
Target legal advisor: William Fry
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 12/10/05
Date of completion: 21/12/05
Consideration: €1,250m
Profile: IBI. Without doubt the highest profile deal in the Irish market in 2005 was take private of Jurys Doyle Hotel Group plc (Jurys Doyle) by a consortium led by its largest shareholders, the Doyle family, through their bidding vehicle JDH Acquisitions plc (JDH Acquisitions).
Jurys Doyle was first put ‘in play’ in May 2005 following an initial unsolicited approach at a level of E15.25 per share from Precinct Investments Limited (Precinct) (the David Coleman, Bryan Cullen and John J Murphy backed company which acquired Gresham Hotels plc in 2004). The Reuben Brothers’ Aldersgate Investments were also connected with the approaches from Precinct. This approach and a further five approaches from Precinct were rejected by Jurys Doyle.
On 28 July 2005, Jurys Doyle announced that following a public tender sales process it had entered into a conditional agreement to sell the Ballsbridge Site (housing Jurys Ballsbridge, The Towers and The Berkeley Court Apartments) to property developer Sean Dunne for E260 million.
On 29 July 2005, Jurys Doyle announced that a further approach of E17.50 per share from Precinct, which was subject to an acceptance condition of 50.1 per cent. was at a level which a majority of the Board would be prepared to recommend to shareholders if a firm offer without pre-conditions was made.
On 12 August 2005 Sean Dunne commenced his stakebuilding in Jurys Doyle by acquiring a 3.4 per cent shareholding. This was soon increased to 18.2 per cent. and ultimately increased to c. 26.4 per cent.
On 25 August 2005, Jurys Doyle announced that following notification from Precinct that its proposed bank funding support had been withdrawn it had terminated the due diligence exercise which Precinct was undertaking on the Company. On 31 August Precinct’s directors confirmed to the market that they no longer intended to make an offer for Jury Doyle.
That left three parties (Sean Dunne, Quinlan Private and Patrick Kelly and associated interests) who had announced that they were potentially interested in bidding for Jurys Doyle, although none of them had formally approached Jurys Doyle. Sean Dunne continued his stakebuilding exercise. Property developer Liam Carroll had also acquired an 8.3 per cent. interest. The Doyle and Beatty families had also increased their long held interests in the Company. By mid September, in excess of 75 per cent. of the Company’s shares were held in the hands of the directors, the family interests and the two property developers.
On 19 September, the Board announced that it had received a possible offer proposal of 18.90 per share the Doyle and Beatty families and Elizabeth Nelson. The offer from JDH Acquisitions, which was subject to a 50.1 per cent. acceptance condition and which was unanimously recommended by the Independent Board, valued the Company at E1.25 billion. The offer price represented a 68 per cent premium over the twelve month average closing price of a Jurys share to 5 May 2005.
JDH Acquisitions managed to achieve the important 80 per cent. acceptance level threshold when Sean Dunne elected to accept the offer in November 2005. Sean Dunne was also successful in acquiring The Berkeley Court Hotel site a week later for E119 million.
Raymond Donegan is an associate director in IBI Corporate Finance.
NCB: Interest from potential acquirers of the business began in May 2005 when Jurys Doyle Hotel Group plc received an unsolicited approach from Precinct Investments Limited (Precinct). Following rejections of several increased bids by Precinct, the Company commenced discussions with Precinct in July 2005. These discussions ended in August 2005 when Precinct’s proposed funding support was withdrawn and it was not able to provide alternative funding facilities.
As part of its defence measures, the Company decided in June 2005 to undertake a public tender sale process in relation to c.4.84 acres of the ‘Ballsbridge Site’, encompassing Jurys Ballsbridge Hotel, The Towers and The Berkeley Court Apartments. In July 2005 the tender was awarded to Padholme, a company controlled by Sean Dunne. Padholme acquired the Ballsbridge Site for E260 million.
Throughout August and September 2005 a number of parties were rumoured to be interested in the Company, including Quinlan Private and Paddy Kelly. Sean Dunne emerged as a potential interested party, acquiring 28 per cent of the Company through shares and CFDs while Liam Carroll acquired 8.3 per cent. However, Sean Dunne’s acquisition of shares prevented him from voting on the approval of the sale to Padholme at the subsequent EGM.
The family’s long-term interest in the hotel business remained and they increased their stake in early September 2005, followed swiftly by an approach to the Company regarding a recommended cash bid. On 19 September 2005, Jurys Doyle Hotel Group plc announced that it had received a possible offer from JDH Acquisitions plc, a consortium involving Eileen Monahan, Ann Roche, Bernadette Gallagher, Walter Beatty and Elizabeth Nelson (the ‘Consortium’). JDH Acquisitions plc, advised by Goldman Sachs International and NCB Corporate Finance, offered E18.90 per share for the entire issued share capital of the Company, being the highest price previously paid in the market by the Consortium. As part of the approach, the Company agreed to pay a 1 per cent break fee to JDH Acquisitions plc, should the transaction not complete.
After much speculation, the sale of the site to Sean Dunne was approved in late September 2005. Speculation continued as to whether Sean Dunne would complete on the site purchase or launch his own bid for the Company with several rumoured financial backers. However, on 12 October 2005, JDH Acquisitions plc announced its formal cash offer and immediately purchased shares in the market, triggering a mandatory cash offer for those shares it did not own and reaching control with approximately 50.4 per cent of the issued share capital of the Company within a few days. Cash financing for the bid was provided by AIB.
A ‘Recommended Mandatory Cash Offer’ document was issued to shareholders on 26 October 2005. By November 2005, both Liam Carroll and Sean Dunne had sold their holdings in the Company to JDH Acquisitions plc. On 21 December 2005, the final extended deadline for receipt of offer acceptances, JDH Acquisitions plc had acquired approximately 90.8 per cent of the Company. Following the compulsory purchase of the outstanding issued shares, by 5 January 2006 JDH Acquisitions plc had acquired 100 per cent of the issued share capital of Jurys Doyle Hotel Group plc. On 6 January 2006 Jurys Doyle Hotel Group plc was delisted from the Irish and UK Stock Exchanges.
Fergus McLoughlin is a director and Fiona McGinley is an associate director in NCB Corporate Finance.
JV between Ark Life and Hibernian
Acquirer: Hibernian Life & Pensions Limited
Target: Ark Life Assurance Company Limited
Acquirer advisor: Goldman Sachs; Ernst & Young
Target advisor: AIB Corporate Finance
Acquirer legal advisor: A&L Goodbody
Target legal advisor: Matheson Ormsby Prentice
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 22/11/05
Date of completion: 30/01/06
Consideration: 24.99 per cent interest in the joint venture and E205.4 million in cash
AIB: The joint venture between Ark Life and Hibernian Life & Pensions brought together Ireland’s largest retail bank, AIB, and the UK’s largest insurance group, Aviva, to form a joint venture with an estimated value of E1,326 million.
Under the terms of the joint venture, AIB holds a 24.99 per cent interest in Hibernian Life Holdings, the joint venture vehicle, with the Hibernian Group holding the balance of the shares. The parties entered into an exclusive distribution agreement for 5 years, renewable for a series of 5 years terms and also established a joint services company to service their operational requirements.
This complex transaction marked the formation of a new leading player in the life, pensions and investments market in Ireland with both parties bringing their individual and complementary strengths to the table. AIB has both a proven distribution capability, with access to 1.6 million retail customers in Ireland and core expertise in product distribution. Aviva is a leading partner for bancassurance distributors with a reputation for creativity and a proven manufacturing capability.
This combination of expertise will enable customers to avail of a comprehensive range of quality products and access to a wider range of fund options and managers.
Peter Coyne is a director in AIB Corporate Finance.
Ernst & Young: The new joint venture makes Hibernian the third biggest operator in the Irish life insurance market (19 per cent), significantly closing the gap on market leaders Bank of Ireland (24 per cent) and Irish Life (25 per cent). It strengthens Hibernian’s position in the Irish life and pensions market and widens growth opportunities in this market.
Both companies are expected to maintain their separate identities. AIB’s branches will continue to sell Ark Life-branded products, while Hibernian will continue to offer its products through its network of brokers.
Ernst & Young provided due diligence services to Hibernian.
Sinead Munnelly is a director in Ernst & Young.
Superquinn
Target: Tokad (Superquinn holding company)
Acquirer: Select Retail Holdings
Target Advisers: AIB Corporate Finance,
Target Legal Adviser: Arthur Cox
Acquirer Advisers: KPMG (Transaction Services)
Acquirer Legal Advisers: William Fry, Eugene F Collins
Date of Announcement: 01/05
Date of Completion: 08/05
Consideration: Not disclosed
AIB: Superquinn was advised during the transaction by a team from AIB Corporate Finance led by Mon O’Driscoll and Graham Reid. AIB Bank has a long-standing relationship with Superquinn and the Quinn family is one of its main bankers. ‘AIB Corporate Finance brought its considerable experience and ability to ensure a successful outcome for the Quinn family’. Arthur Cox advised the family on the legal issues of the transaction.
Simon Burke commented: ‘We are proud to have become the owners of Superquinn. Fergal Quinn has left a tremendous heritage in Irish grocery retailing and we intend to build on it. We want to keep Superquinn famous for its quality, its range and its service while also offering good value for money. Our customers rightly expect exceptional quality from us, especially in fresh food, and I will see that they get it,’ he continued.
Graham Reid is a director in AIB Corporate Finance.
Deals over E100 million
Meteor
Acquirer: Eircom plc
Target: Meteor
Acquirer advisor: Merrion Corporate Finance (advised eircom ESOT as 21 per cent shareholder), Morgan Stanley and Goodbody CF
Target advisor: Deutsche Bank
Acquirer legal advisor: A&L Goodbody, Arthur Cox
Target legal advisor: Friedman Kaplan Seiler & Adelman
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 25/07/05
Date of completion: 10/05
Consideration: E420m
Eircom, the largest telecommunications company in Ireland, marked its return to the Irish mobile telecommunications industry in July 2005 when it announced its acquisition from Western Wireless of the mobile operator, Meteor for E420 million. The acquisition would ‘transform the growth prospects of the company’ remarked Tony O’Reilly, as chairman to eircom plc. This acquisition would help ensure that eircom would remain a low-cost operator in the Irish market.
Eircom funded the acquisition entirely through an equity rights issue of E423 million by issuing about 313 million shares, representing about 29 per cent of its issued ordinary share capital. ‘Offering the rights issue at a subscription price of 1.35 euro is a significant achievement and is underpinned by the strong strategic rationale and the expected financial benefits of the Meteor acquisition,’ said Eircom CEO Philip Nolan. The acquisition has enabled the Irish company to return to the cellular market after four years. The company had exited the cellular segment in 2001 by selling Eircell to Vodafone Group Plc for E3.3 billion. Following the acquisition, Eircom is now the only Irish operator offering fixed line, broadband and mobile phone services. Eircom aims to double Meteor’s share of the Irish mobile market within four years.
John Sheridan is a director at Merrion Corporate Finance.
Goodbody
eircom disposed of its mobile interests via the sale of eircell to Vodafone in 2001. When its mobile non-compete came to an end in mid 2004 and in an effort to compensate for declining fixed line revenues, eircom began exploring ways of re-entering the fast growing mobile segment of Ireland’s ?4bn+ telecoms market. The obvious candidate for eircom to consider acquiring was Meteor, Ireland’s 3rd largest mobile operator. Meteor’s parent, Western Wireless, a US based wireless operator was itself acquired in late 2004, which triggered the sale of its international operations, of which Meteor was a part. In a lengthy bidding process with strong trade and private equity competition, eircom secured the acquisition of Meteor in July 2005 for a cash consideration of ?420m. The company had limited ability to fund the acquisition via debt, given its existing levels of leverage. However, with the support of its financial advisers, the decision was taken to fully fund the deal through a ?420m rights issue, jointly underwritten by Goodbody. As well as advising on the acquisition of Meteor, Goodbody also played a key role in the marketing and success of the rights issue. The take-up by existing shareholders of their rights and subsequent share price performance was a vindication of eircom’s strategy to re-enter the mobile market and fund the deal via an equity issue. The deal reflected a trend of consolidation around 3rd/4th mobile operators in European countries. Since completion, Meteor has continued to grow ahead of its competitors and by early 2006 had a 14 per cent share of the mobile market.
Simon Howley is a director in Goodbody Corporate Finance.
Canary Wharf properties
Acquirer: Brian & Mary Patricia O’ Donnell
Target: Two properties - a)15 Westferry Circus; b)17 Columbus Courtyard, both in Canary Wharf, London. These properties were the first disposals in the Canary Wharf Estate post the takeover by Songbird Limited. Songbird is the private vehicle owned by Morgan Stanley (60 per cent) and Brascan Inc (40 per cent - Brascan is a publicly quoted Canadian property company) which led the highly leveraged acquisition of Canary Wharf Plc at the beginning of 2005.
Target Advisors: Jones Lang Le Salle
Acquirer Advisor: Deloitte Corporate Finance Ireland
Target legal advisers: Clifford Chance
Acquirer Legal advisers: Brian O’Donnell & Partners and Shoosmiths
Origin of Acquirer: Irish
Origin of Target: UK
Date of Announcement: 17/03/05
Date of Acquisition: 23/05/05
Consideration: stg?256m (E400m)
Profile: Early in 2005 Deloitte Corporate Finance was contacted by one of its private clients - Brian O’Donnell - who wanted to expand his property portfolio outside of Ireland where property returns are currently much lower compared to the rest of Europe. Deloitte through its UK contact base identified a number of suitable opportunities which were initially evaluated. One of these was the potential disposal of assets from Songbird following their highly leveraged takeover of Canary Wharf Plc due to Deloitte’s view that Songbird wished to reduce its gearing. Deloitte then made an unsolicited approach to the board of songbird to purchase both 15 Westferry Circus and another property in the Canary Estate - 17 Columbus Courtyard. The board’s initial reaction was that they were not sellers but this subsequently changed a month later and they decided to appoint Jones Lang Le Salle to openly market the first disposal - 15 Westferry Circus. This property is leased to Morgan Stanley, generating ?8.23m pa with another 22 years to run on the lease and no break clauses in between. Following a detailed indicative bid process, 4 bidders remained in contention for the deal. These included Brian O’ Donnell, The Govt of Singapore, Teachers Pension Fund (US) and another Irish consortium.
JLL was about to ask the 4 bidders to make their final bid when on 16th March Gordon Brown in his UK budget abolished the stamp duty exemption for certain exclusion areas in the UK, one of which was Canary Wharf. The impact of this was that as stamp duty now had to be factored into the price, this would mean a reduction in the bids by 4 per cent. However, the legislative change only became effective from midnight on 16th and Deloitte made a proposal to Canary that Brian O’Donnell was in a position to exchange the contracts before midnight that night and proposed to split the stamp duty saving evenly with Canary as long as the deal exchanged that evening. Canary accepted and the contracts were exchanged at 3 minutes to midnight. The full transaction closed out on 23rd May. Deloitte arranged aggressive financing on a non recourse basis through a combination of Lehman Brothers in the UK and Anglo Irish Bank in Ireland.
A complex SWAP agreement put in place in March which allowed Brian O’Donnell to benefit from subsequent falls in UK interest rates and at the same time capped his interest rate exposure in the event that rates moved against him between contract exchange and closing and then for a further period after closing. Interest rates have subsequently gone in Mr O’Donnell’s favour as have market property yields and with prime comparable property yields in the Uk now at 4.5 per cent - the property is now worth between c.?175-180m, a notional gain of ?40-45m (E60-70m) in less than 12 months.
Deloitte also put an efficient tax scheme in place to ensure that the property can be ultimately be sold on through a Special Purposes Vehice which avoids any stamp duty leakage on the disposal price and also allows the investor avail of some surplus rental income on the building tax efficiently during the period of his investment.
In June the board of Songbird decided to dispose of another investment - 17 Columbus Courtyard, a property leased to Credit Suisse on a 20 year plus lease. Again the combined forces of Deloitte and Brian O’Donnell were successful in outbidding heavy international and Irish competition and this property was ultimately contracted in August for stg?120m and completed in October 2005. Similar aggressive financing terms were secured from Morgan Stanley this time round and the investor’s interests were fully maximised and protected by implementing an attractive SWAP arrangement and effective tax structuring.
In the space of less than a year through a series of bold and imaginative moves Deloitte have pro-actively assisted Brian O’Donnell in becoming a major real estate player in the UK from a position where he was practically unknown in this market prior to that. Brian O’Donnell is also the first and only private owner of property in the Canary Wharf Estate.
In addition no other purchaser in the UK (Irish or international) has managed to complete 2 major UK property transactions in the face of such stiff international competition in a ‘sharks’ market in the space of 6 months in 2005.
David O’Flanagan is a partner and Kevin Beary is a director in Deloitte Corporate Finance.
Bristol & West
Acquirer: Britannia Building Society
Target: Bristol & West (savings business and 97 branches)
Acquirer advisor: Lehman Brothers
Target advisor: IBI Corporate Finance/ Goldman Sachs
Acquirer legal advisor: Clifford Chance
Target legal advisor: Norton Rose
Origin of acquirer: UK
Origin of target: UK
Date of announcement: 24/05/05
Date of completion: 21/09/05
Consideration: E218 million
Profile: In 2005, Bank of Ireland sold its Bristol & West branch network and associated deposit base to Britannia Building Society (Britannia). As part of the agreement Bank of Ireland retained ownership of the Bristol & West brand and all other parts of the Bristol & West business, including the mortgage business.
The deal realised very good value for Bank of Ireland shareholders and was a positive outcome for the customers and employees of the Bristol & West branch network.
IBI’s role in the transaction involved comprehensive corporate finance advice and transaction management support including contact and negotiation with potential bidders as well as executing the final transaction with Britannia.
Raymond Donegan is an associate director in IBI Corporate Finance.
Leinster Leader Limited
Acquirer: Johnston Press Plc
Target: Leinster Leader Limited
Acquirer advisor: Merrion Corporate Finance
Target advisor: PricewaterhouseCoopers
Acquirer legal advisor: MacRoberts, A&L Goodbody, Dillon Eustace
Target legal advisor: Eugene F Collins
Origin of acquirer: Scotland
Origin of target: Ireland
Date of announcement: 16/09/05
Date of completion: 15/12/05
Consideration: E139m
Profile: Johnston Press plc, the listed UK based media company, acquired The Leinster Leader Limited, the regional newspaper group which publishes six weekly paid-for newspapers in the Republic of Ireland, comprising the Leinster Leader, Leinster Express, Offaly Express, Dundalk Democrat, Limerick Leader and The Echo. The Leinster Leader had recently commissioned a new print facility on a green field site in Limerick which for the first time enabled the company to print all Leinster Leader titles in-house.
Merrion Corporate Finance was the sole corporate finance adviser and advised on all aspects of the transaction including valuation, market intelligence, offer letters, bid tactics and potential synergies.
The acquisition was an excellent strategic fit for Johnston Press as it extended its presence in the profitable and well-established Irish regional newspaper market, and provided opportunities for significant operational and purchasing synergies. The deal is in line with Johnston Press’ growth strategy to focus on the regional newspaper franchise. The company expected the acquisition to be earnings enhancing.
Johnston financed the acquisition from its existing bank facilities.
The acquisition greatly enhanced Johnston Press’ position in the Irish market as it was announced at the same time as its ?65m (E96m) acquisition of Local Press Group from 3i. Local Press published 12 titles in Northern Ireland and the Republic of Ireland including the Donegal Democrat, the Newsletter and the Derry Journal. Merrion Corporate Finance were also the sole corporate finance adviser to Johnston Press on that transaction.
It also followed the announcement in June 2005 of its acquisition of Score Press Limited for ?155m (E233m), from EMAP plc, the listed UK media house. Score Press’ newspaper portfolio includes Morton Newspapers in Northern Ireland, and Kilkenny People Holdings, Leitrim Observer and Longford Leader in the Republic of Ireland, in addition to a number of UK titles.
Thus over a six month period, Johnston Press spent in the region of E468m on companies which own Irish regional newspaper titles.
John Sheridan is a director at Merrion Corporate Finance.
Deals over E50 million
Century Homes
Acquirer: Kingspan Group Plc
Target: Century Homes
Acquirer adviser: NCB Corporate Finance
Target adviser: Bran Keogh (Sole practitioner)
Acquirer legal adviser: McCann Fitzgerald
Target legal adviser: O’Donnell Sweeney
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 14/03/05
Date of completion: 14/04/05
Consideration: E98 million (inclusive of earn out)
Profile: Century Homes represented one of Ireland’s most entrepreneurial and fastest growing companies. It remains a leading player in Modern Methods of Construction (‘MMC’) in Ireland. From an initial meeting with Century Homes, NCB identified Kingspan Group PLC as a natural acquirer of the business and one that the shareholders of Century Homes would be comfortable with. Century met with Kingspan’s desire to increase their product offering within the Irish and UK offsite construction sector and in turn, Century needed a strong brand name to aggressively enter the UK market.
NCB originated the idea for Kingspan and was retained by Kingspan to advise on all aspects of the transaction from origination to agreement of heads of terms to management of the due diligence process to negotiation of the sale and purchase agreement.
NCB secured bilateral discussions for Kingspan at an attractive price. The deal was executed within a very short time frame and in absolute confidentiality. The success of the transaction is demonstrated by the fact that Kingspan paid E64m net in upfront consideration and Kingspan added approx. E150m in market capitalisation on the day of announcement.
Conor McCarthy is a director and Mandy O’Sullivan is an associate director in NCB Corporate Finance.
ARCON International Resources P.l.c.
Acquirer: Lundin Mining Corporation
Target: ARCON International Resources P.l.c.
Acquirer advisor: Macquarie Bank Limited
Target advisor: Davy Corporate Finance Limited
Acquirer legal advisor: Arthur Cox
Target legal advisor: Matheson Ormsby Prentice
Origin of acquirer: Sweden
Origin of target: Ireland
Date of announcement: 3/03/05
Date of completion: 25/04/05
Consideration: circa E93m
Profile: In March 2005, the boards of Lundin Mining and ARCON announced their intention to merge by way of a cash and paper offer made by Lundin Mining for the entire issued share capital of ARCON. The cross-border merger created a premier mining company with three low-cost and profitable mines focused in Europe, a diversified production portfolio of zinc, lead, copper and silver, an extended commercial life and greater financial scale, resources and technical expertise to accelerate production and conduct further exploration at ARCON’s single mine, Galmoy.
The consideration comprised a combination of cash and Lundin Mining Swedish Depository Receipts (SDR’s). This enabled ARCON Shareholders realise a cash value for part of their investment at a rate considerably in excess of that at which the rescue financial restructuring and rights issue was conducted in 2002 and reflecting the prevailing favourable sentiment towards base metal equities, while also providing participation in the future of the enlarged group. Since the merger, the value of Lundin Mining SDR’s have increased by approximately 120 per cent.
Eugenee Mulhern is a director of Davy Corporate Finance.
Lifestyle Sports Limited
Acquirer: Stafford Group Holdings
Target: Lifestyle Sports Limited
Acquirer advisor: Ernst & Young
Target advisor: Merrion Corporate Finance
Acquirer legal advisor: McEvoy & Partners
Target legal advisor: A&L Goodbody
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 29/11/05
Date of completion: 29/11/05
Consideration: Not disclosed - E50 -100m
Merrion: Merrion Corporate Finance was instrumental in creating and executing the sale of Lifestyle Sports to Stafford Group Holdings.
The substantial growth in Lifestyles turnover and earnings profile over the past 2 years coupled with a highly underleveraged balance sheet led us to believe the company was ripe for a corporate transaction to release shareholder value. ACT venture capital, the largest individual shareholder at 36 per cent, backed the MBO team led by Andy Sharkey 7 years ago out of Tesco and we believed would be open to an exit strategy if a fair value could be attained for their shares.
We approached a number of private equity houses on behalf of Lifestyle and engaged in considerable negotiations which ultimately were terminated by Lifestyle as it was difficult to overcome the perception that such a route was merely replacing one VC with another.
The Stafford Group was identified as a potential investor/buyer given its desire to diversify into other sectors once the criteria of strong management, high cash generation, strong local brand with further growth prospects were met. The strength of the Stafford group balance sheet gave us confidence that a deal could be funded reasonable quickly from debt with the further upside for the acquirers to refinance the existing debt within Lifestyle post completion on more favourable terms. Merrion developed a pricing structure which we believed would meet the needs of the shareholders of Lifestyle while also being acceptable to an acquirer such as Staffords.
The structure of the proposed deal which involved an earn-out element, allowed the current executive management team of Lifestyle to continue to manage the day to day running of the business for the foreseeable future suitably incentivised to deliver a sustained level of growth and profitability in the business. Obviously, from a Stafford Group perspective, an earn-out structure significantly de-risked the acquisition allowing the diversification into a totally new sector of sportswear retailing to be developed on a gradual basis.
The share purchase agreement was signed within 5 weeks of signing the heads of agreement which is exceptionally quick by any standards.
Andy Sharkey and Tony McEntee, CEO & CFO of Lifestyle Sports had previously gone through an MBO process out of Tesco 7 years previously – this experience was invaluable in being able to zone in quickly on the key commercial points for negotiation
The commercial deal experience of both Mark Stafford and Mark Carter, CEO and CFO of Stafford Group, led to a pragmatic approach being taken to negotiations by the acquirer.
John Sheridan is a director of Merrion Corporate Finance.
Ernst & Young: Stafford Holdings, the Irish family-owned fuel distribution group, entered the retail sector through the acquisition of Lifestyle Sports, Ireland’s largest sports retailer. The acquisition is in line with its stated strategy of seeking acquisition opportunities in new sectors which offer strong growth potential and diversification benefits. It also fit Stafford’s requirements for a strong business, with a leading or secondary position in its market and a capable and stable management prepared to stay on post-acquisition.
Staffords will look to grow the Lifestyle business in Ireland through the opening of new shops and larger replacement outlets. Ernst & Young provided due diligence services to Stafford Holdings.
Sinead Munnelly is a director in Ernst & Young.
The Snowie Group
Target: The Snowie Group
Acquirer: The Oran Group
Target advisers: Tindall Grant & Co
Target legal adviser: Dallas McMillan
Acquirer advisers: Deloitte
Acquirer legal advisers: Mayer, Brown, Rowe & Maw LLP
Origin of acquirer: Ireland
Origin of target: Scotland
Date of announcement: 12/09/05
Date of completion: 07/09/05
Consideration: In excess of STG?40 million
Profile: The Oran Group was formed in 1997 to manage the investments / business interests of Richard Fitzgerald. It is currently involved in extensive commercial and residential property investments including pubs, restaurants, hotels and housing units across Ireland, UK and Europe.
The Snowie Group employs approximately 300 people. Based in Alloa, in Scotland, it is one of the leading waste management and storage & logistics companies in the UK.
Prior to the deal Oran had an extensive involvement in the waste industry in Ireland. This deal has allowed
Oran to widen their geographical interest in the waste sector to the much larger UK market.
The Oran Group is proposing a significant investment strategy for its new UK company, emphasising increased market share and expansion of its core business together with the development of significant property opportunities which were acquired under the Snowie deal. Specifically the Oran Group has identified the continued development of waste-to energy plants and material recovery facilities as major growth areas for the company in the future.
Deloitte were the lead advisors and acquisition finance was provided by Anglo Irish Bank.
Ger O’Mahoney is a partner in Deloitte Corporate Finance.
Deals over E10 million
Brindley Media Group
Acquirer: Aegis Group PLC
Target: Brindley Media Group
Acquirer advisor: Internal
Target advisor: IBI Corporate Finance
Acquirer legal advisor:Mason Hayes & Curran
Target legal advisor: Whitney Moore
Origin of acquirer: Irish based
Origin of target: Irish based
Date of announcement:19/09/05
Date of completion: 16/09/05
Consideration: E12 million +
Profile: A landmark deal in the Irish media sector in 2005 was the acquisition of Brindley Advertising by the Aegis Group plc.
The sale represented a further milestone for Brindley, one of Ireland’s longest established and leading advertising agencies. The company’s attractiveness as an acquisition target was due to a strong business model and client base.
The acquisition of one of the best recognised brands in the advertising sector consolidates Aegis’ position as the largest agency in its target segment in the Irish advertising market.
The transaction provided evidence of the strong appetite for recognised, well managed Irish companies with a track record of growth and strong earnings generation.
Raymond Donegan is an associate director in IBI Corporate Finance.
AC Tape & Packaging Limited
Vendor: AC Tape & Packaging LimitedAcquirer: Zeus Packaging Limited
Vendor advisor: BDO Simpson Xavier Corporate Finance
Acquirer advisor: Moloney O’Neill
Vendor legal advisor: O’Rourke Reid
Adviser legal advisor: Thornton Solicitors
Origin of acquirer: Ireland
Origin of target: Ireland
Date of announcement: 17/03/05
Date of completion: 03/03/05
Consideration: E11.6 million
Profile: Founded by Aidan Corless in 1985, AC Tape had grown to an annual turnover in excess of E7 million prior to its acquisition by Zeus Group. AC Tape supplies a range of innovative packaging products to the Irish and European markets with a particular focus on the pharmaceutical and health care industries.
Zeus Packaging was an acquisitive industry player wishing to consolidate its position in the Irish market and expand its product offering to both existing and a newly acquired customer base. Over the last three years Zeus had made a number of acquisitions including Cosgrave Packaging, Elite Packaging and RJ Sales amongst others. The AC Tape acquisition significantly increased the scale of Zeus to in excess of E25 million annual group turnover and gave access to new and complimentary markets.
Post the deal the main expansion expected by Zeus was in the manufacturing of adhesive labels and tapes.
Jackie Quinn is a senior manager at BDO Simpson Xavier.
Undisclosed
AGB Scientific
Acquirer: VWR International
Target: AGB Scientific
Acquirer advisor: Ernst & Young
Origin of target: Irish
Origin of acquirer: US
Date of announcement: 01/04/05
Consideration: Undisclosed
Profile: VWR International is a global leader in the distribution of scientific supplies, with worldwide sales of US$3.0 billion. VWR’s business is highly diversified across a spectrum of products and services, customer groups and geography.
AGB Scientific is Ireland’s largest supplier of laboratory instrumentation, equipment, consumables and expertise, representing many of the world’s major equipment manufacturers. AGB Scientific provides Ireland’s scientists with a high level of technical support for the analytical instrumentation and laboratory equipment that constitutes the backbone of Irish scientific manufacturing.
The acquisition gives VWR a good opportunity to enhance its ability to serve customers in Ireland and elsewhere. AGB has a long history and solid presence in the marketplace that will support VWR’s goals of premier service, product quality and customer satisfaction.
Ernst & Young provided due diligence services to VWR.
Sinead Munnelly is a director in Ernst & Young.
Cecil M. Yuill Limited
Acquirer: Taggart Holdings Limited
Target: Cecil M. Yuill Limited
Acquirer Adviser: NCB Corporate Finance
Target Adviser: Endeavour Partnership
Acquirer Legal Adviser: Tughans Solicitors
Target Legal Adviser: Endeavour Partnership
Origin of Acquirer: Ireland
Origin of Target: UK
Date of Announcement: 06/02/06
Date of Completion: 31/01/06
Consideration: Undisclosed
Through discussions with NCB, Taggart Holdings, the successful Irish based property developer, identified the UK as an area of future growth for the company. Although Taggart had an existing organic operation in Manchester it was decided that a greater scale and presence could be achieved more quickly through the acquisition of a suitable regional house builder. An extensive search, performed by NCB, identified Cecil M. Yuill as a potential target for Taggart Holdings. Cecil M Yuill has been established for nearly 80 years and is one of the leading house builders in North East England. The company has a strong management team with extensive knowledge of the North East of the UK and in 2005 sold over 300 units generating revenue of ?58.5 million and operating profit of ?14.8 million. The transaction needed to be progressed quickly due to the ongoing consolidation in the sector with many of the UK regional housebuilders being acquired by the large quoted UK housebuilders.
NCB project-managed the entire transaction from commencement to completion. NCB identified Yuill Homes as a suitable target and approached the vendor on Taggart’s behalf, secured exclusivity and agreed heads. Thereafter all due diligence was co-ordinated by NCB and along with Taggart management discussions were held with a number of banks to secure the best possible acquisition and working capital debt facilities. NCB also managed the process of obtaining regulatory clearance from the UK Pensions Regulator under the new clearance procedures introduced by the Pensions Act 2004.
The transaction was one of the largest purchases of a UK regional builder during 2005 and is a notable achievement for Taggart given the extent to which the large quoted UK builders have been aggressively consolidating the sector. Quality targets are at a premium. The purchase provides Taggart with a strong presence in the northeast housing market, and, coupled with its exiting organic operations, the opportunity to strongly grow its UK business in a market with solid fundamentals and long term growth prospects.
Fergus McLoughlin is a director, Jonathan Simmons is an associate director, Fiona McGinley is an associate director and Shane Sorohan is an executive in NCB Corporate Finance.
National Linen
Acquirer: HTS International GmbH
Target: National Linen
Acquirer adviser: AIB Corporate Finance
Target adviser: NCB Corporate Finance
Acquirer legal adviser: Whitney Moore & Keller
Target legal adviser: O’Flynn Exhams
Origin of target: Ireland
Date of announcement: 06/07/05
Deal value: Undisclosed
Profile: NCB Corporate Finance advised the board of National Linen on the sale of a majority stake in the Company to HTS International, the major international textile rental company. National Linen is the market leader in textile and linen rental services in Ireland with operations in Dublin, Cork, Limerick and Galway and employing 440 staff. HTS International is one of the leading suppliers in Europe for washroom hygiene and workwear with operations in 16 countries and annual turnover in excess of E650m.
As part of the transaction, the Guiness Ulster Bank Equity Fund, managed by NCB Ventures, sold its 37 per cent stake in the Company. NCB Ventures had originally invested in the Company at the start-up stage back in 1998.
Diarmuid McNamee is a director, John Dolan is an associate and Shane Sorohan is an executive in NCB Corporate Finance.
Cara Group
Acquirer: BT Group plc
Target: Cara Group
Target Adviser: Goodbody Corporate Finance
Target Legal Adviser: Matheson Ormsby Prentice
Origin of target: Ireland
Origin of acquirer: UK
Date of Announcement: November 2005
Consideration: n/d
Profile: With a history of over 30 years, Cara Group is Ireland’s leading IT services provider, employing over 130 people nationwide and with annual turnover of ?40 million. In 2001, the management team, backed by Hibernia Capital partners acquired the company from Groupe Bull. By late 2004, the shareholders and management had fundamentally restructured and repositioned the business into an efficient profitable service-oriented company. Having demonstrated an in-depth knowledge of the competitive landscape and current market dynamics, the owners engaged Goodbody Corporate Finance in mid 2005 to explore options for realising value.
Recognising that there was activity across the sector in UK and Europe, Goodbody selected a range of potential purchasers to explore the possibilities. One such party was BT Group, a leading player in the corporate IT services market and the UK’s monopoly telecoms provider. BT’s strategy was to become the leading networked IT services company in Ireland and had been actively acquiring companies in this sector across its geographic markets. Attracted by Cara’s strong networking and services portfolio and the vast experience of its work force, BT agreed terms with the shareholders and concluded the transaction in November 2005. The deal represented a successful exit for the management and shareholders and gave BT the opportunity to better serve the telecoms and IT services requirements of its’ corporate customers in Ireland.
Simon Howley is a director in Goodbody Corporate Finance. |
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| Article appeared in the March 2006 issue.
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