Monday 11 December 2017

Costly buyout blunders are familiar territory for our biggest businesses

THE news that AIB has sold its half share in a Bulgarian commercial lender for a mere €100,000, just three-and-a-half years after paying €216m for the stake, must rank among the worst investments ever made by a quoted Irish company.

Unfortunately it wasn't the first time a major Irish company has made a pig's ear of an acquisition. Don't choke on your cornflakes as we take a look back at some of Ireland's biggest buyout blunders.

Bank of Ireland & Chase de Vere

In July 2000, Bank of Ireland paid £110m (€123m) for Chase de Vere, an independent financial adviser in the UK.

It must have seemed like a good idea at the time but when Bank of Ireland offloaded the company three years later it received just £15m (€17m).

Baltimore Technologies & Content Technologies

Way back around the turn of the century, Baltimore Technologies and its flamboyant boss Fran Rooney could do no wrong. At one stage, the Irish internet security firm made it into the FTSE 100 of Britain's elite companies.

Then, in September 2000, Baltimore lashed out €1bn for UK firm Content Technologies. Rooney's timing couldn't have been worse. The internet bubble burst and when Baltimore was forced to sell Content in January 2002 it received just €29m.

Iona & Netfish

In February 2001, Iona splashed out $270m (€190m) for US technology company Netfish in an all-share deal.

Within two years the deal had gone horribly wrong and Iona had written off $268.7m (€189.4m) of goodwill related to acquisitions, effectively reducing the value of Netfish to zero.

Kingspan & Tate

In 2001, Kingspan paid $120m for US flooring company Tate. Unfortunately the ink was barely dry on the deal before the Tate management team exited, taking most of their customers with them. The result was several years of legal wrangling, with the former Tate owners agreeing to refund $36m to Kingspan in 2005.

Sean Quinn & Barlo

Even before his disastrous punt on Anglo Irish Bank, Sean Quinn's track record when it came to listed companies was decidedly patchy.

In 2004, he blew away Tony Mullins' MBO by paying €85m for radiators and plastics group Barlo. Even at the time, there were many who reckoned that Mr Quinn had overpaid -- and Barlo is now worth just a fraction of what he paid.

Greencore & Hazlewood

In 2000, Greencore paid £350m for the UK's biggest sandwich-maker Hazlewood Foods, the firm founded by former Manchester City player Francis Lee.

Eleven years later, the whole of Greencore is worth just €215m.

Ryanair & Aer Lingus

Aer Lingus hadn't been floated a wet day on the Stock Exchange in September 2006 when Ryanair pounced. It quickly accumulated a 29.8 per cent stake in its rival at a cost of almost €450m.

With the European Union having blocked the intended takeover, the Aer Lingus share price has collapsed -- leaving the Ryanair stake with a value of just €115m.

Stick to the flying, Michael.

One51 & Irish Continental

The epic takeover battle for ferry company Irish Continental was one of the business stories of 2007.

Philip Lynch's One51 teamed up with Doyle Shipping to bid €22-a-share for the Irish Continental Group (ICG). The consortium built up a combined shareholding of just under 25 per cent.

Last month, Doyle sold its 12.5 per cent of Irish Continental for €15.75-a-share, incurring a €19m loss in the process.

Boundary & Arnotts

There was a time when Niall McFadden's Boundary Capital could do no wrong. The corporate financier could, it appeared, walk on water.

In September 2007, an investment consortium headed by Boundary ponied up €65m for a 45 per cent stake in Dublin retailer Arnotts. Then the Celtic Tiger bubble burst and, in February 2010, Boundary was forced to write off its entire investment.

Irish Life & Irish Permanent

In 1999, Irish Life and former building society Irish Permanent "merged", in reality an Irish Life takeover of Irish Permanent, in a €3.5bn all-share deal to create Irish Life & Permanent.

The idea was that the new bancassurer would be able to sell more of Irish Life's products through Irish Permanent's branch network. Instead, Irish Permanent, since renamed Permanent TSB, with €18bn of loss-making tracker mortgages on its books, has brought IL&P to the verge of ruin.

With Permanent TSB needing another €4bn of capital, Irish Life is now up for sale and IL&P will be broken up.

Sunday Indo Business

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