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Fexco makes a bargain basement deal for Goodbody

LAST week's deal, which saw Kerry-based Fexco pay AIB just €24m for Goodbody Stockbrokers, underlines once more just how much management at rival stockbroker Davy overpaid when they bought their firm back from Bank of Ireland in 2006.

Almost exactly four years ago, Davy management and staff agreed to pay Bank of Ireland €316m for its 90 per cent stake in the stockbroker.

Taking into account the 10 per cent shareholding which management and staff already had in the company, this valued the whole of Davy at a scarcely credible €350m.

Even at the time it was widely felt that this was a toppy price. Just how toppy was shown this week when Brian McCarthy's Fexco snapped up Goodbody from AIB for a mere €24m.

Of course, there were significant differences between the two transactions. Bank of Ireland was not forced to sell Davy. AIB is flogging off everything that isn't nailed down as it desperately seeks to raise enough capital to stay out of majority state ownership.

Even allowing for these differences, there can be little doubt but that the Davy management, widely regarded as the sharpest cookies in the Irish market, got their timing seriously wrong when they bought 90 per cent of a stockbroking firm right at the top of the market.

So what is Davy worth now? While it is a considerably bigger firm than Goodbody, in the current climate it can't be worth much more than €50m.

And who do you think funded the ridiculously over-priced Davy buyout four years ago? Yes you've guessed it, Anglo Irish, the bank that couldn't say no!

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