Wednesday 17 October 2018

Goodbody Stockbrokers to seal deal with Chinese buyer in June

Suitor is a subsidiary of China’s aerospace giant AVIC. Photo: Qilai Shen/Bloomberg
Suitor is a subsidiary of China’s aerospace giant AVIC. Photo: Qilai Shen/Bloomberg

Gretchen Friemann

Goodbody Stockbrokers is set to conclude buyout negotiations with its Chinese Government-backed suitor, Zhong Ze Culture Investment Holdings, by the end of June leaving regulatory approvals the sole remaining hurdle to the deal's completion.

The Chinese firm has been locked in advanced negotiations to acquire Ireland's second-largest stockbroker since the start of the year. Zhong Ze's interest emerged during a period of renewed activity in the sector, as stock market transactions surge amid a wider economic recovery.

Earlier this month the Irish arm of Cantor Fitzgerald consummated a long-awaited union with Merrion Capital in a near-€18m deal, while AIB approached, and then retreated, from takeover discussions with Investec Ireland, the local unit of the South African bank.

In March, the pan-European bourse Euronext completed a €137m takeover of the Irish Stock exchange, triggering a hefty windfall for its five stockbroker stakeholder. Goodbody reportedly netted close to €50m from the sale.

It is understood Goodbody and the Chinese investment consortium, which is a subsidiary of China's state-owned aerospace, defence and electronics company AVIC, are due to exchange legally binding contracts, known as a heads of agreement, by the start of June.

The buyout is then expected to conclude by the end of that month at which point regulators in Ireland and China will assess the deal.

Goodbody's management are predicted to make about €60m in cash and earn-outs from the takeover.

This latest change in ownership opens a radical new chapter for the local broker, which was offloaded by AIB at the peak of the financial crisis to the Kerry-based financial services group, Fexco for the paltry sum of €24m.

Roy Barrett, who has led Goodbody since 1996, informed staff in February that the merger would not result in job cuts or a strategy change.

However it is understood the broker, which traces its roots to 1877, may attempt to strengthen its private wealth arm by tapping into the rapidly burgeoning Asian markets.

Irish Independent

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