VW buys Flaherty brothers' in ?100m deal
Published 23/01/2007 | 00:11
THE country's top motoring dynasty has sold its core selling business to Volkswagen in a deal worth close to ?100m.
THE country's top motoring dynasty has sold its core selling business to car-maker Volkswagen in a deal some analysts believe could be worth up to ?100m.
The German giant is buying Motor Distributors Ltd (MDL), a wholly-owned subsidiary of O'Flaherty Holdings.
The sale comes after the O'Flaherty family reaped dividends of about ?75m from the family firm in just four years.
From October 2008, MDL will give up their long-term contract to import, distribute and market Volkswagens, Audis and Skodas.
Sales of the cars will instead be handled by Volkswagen Group Ireland, a subsidiary of the Volkswagen Group which also owns the Audi and Skoda brands. The new company will also take on the 120 staff now involved in the three marques at MDL.
Both MDL and Volkswagen refused to disclose the value of the deal. However, sources suggest a conservative price of ?100m. The price reflects MDL's billion euro turnover and ?32m profit in 2005, 70pc of which is thought to be accounted for by sales of Volkswagens, Audis and Skodas.
In a similar deal in 2002, Volkswagen paid out ?175m to secure the 50pc stake that it didn't already in its Swedish distributor.
However, the actual cash payment in the MDL case may be reduced because of the high dividends paid out by MDL in recent years. In the three years after the Volkswagen deal was first mooted in 2003, MDL's directors drew dividends totalling ?53.6m, even though there had been no dividends at all between in the three years between 2000 and 2002.
Details of 2006's dividend have not yet been filed with the Companies Office. However, if it is in line with previous years, directors will have drawn dividends of about ?75m in just four years. VW, Audi and Skoda are sold here through a 63-dealer network serviced by MDL.
In a statement yesterday, MDL said there would be no loss of jobs and existing dealer contracts will continue on existing terms.
Last year MDL sold 36,000 VWs, Skoda and Audis, giving the company 16.7pc share of passenger cars and 14.4pc share of commercials.
Volkswagen's decision to take on the distribution of its own cars comes as part of a European wide re-alignment of the way vehicles are distributed and sold, in the wake of new regulations and competition laws.
The initial discussions between MDL and VW were first highlighted by the Irish Independent in September 2003.
A spokesman for Volkswagen in Germany told this newspaper last night the deal is unlikely to have any implications for the price of vehicles.
"It is just a transition from MDL," he said, emphasising that the large MDL site, which is worth a fortune at today's property values, remains in the ownership of the O'Flaherty family. MDL will have representation on the board of the new company for an agreed period "to facilitate "a smooth transfer".
The development is historical in that MDL acquired the franchise the VW Beetle back in 1950.
The famous cars were assembled in Dublin for the Irish market. The Audi franchise was acquired in 1967 with Skoda added in 1993. Also significant is that Volkswagen Financial Services AG will be offered on the market.