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Mercury could now face €300m buyout approach

Buyers are thought to be circling Mercury Engineering, the €300m-valued firm set up by the late Frank O'Kane and his partner Joe Morgan.

Morgan (67) retired as the company's managing director last month. Financial sources told the Sunday Independent that O'Kane's family and Morgan may have been approached about selling their stake in the Sandyford-headquartered company. "They're trying to do something with it at the moment," according to one source.

A spokesman for the company denied that new managing director Michael Kennedy or his management team were trying to buy the company or that stakes were being put up for sale.

Mercury, which recently advised Qatar on its successful World Cup 2022 bid, is one of the country's biggest and most successful electrical engineering firms.

It provided all the electrical works for the €700m Luas project, as well as working on the new T2 in Dublin Airport. More recently the group has expanded abroad, working in Russia, the Middle East and North Africa. The company employs more than 2,000 staff.

Mercury is unlimited and as such does not have to file detailed financial statements. It is thought to have generated sales of more than €450m in 2009, well down from the boomtime peak of €631m in 2007. The company had sales of €65,000 in its first year of operation in 1972, representing a massive growth.

The ownership of Mercury Holdings is swaddled in a web of companies, including some offshore entities. But it appears the O'Kane family hold about 70 per cent of the ordinary shares in the ultimate holding company Carterton.

O'Kane's son Ronan is a board member of Mercury. Morgan and his family own the remaining 30 per cent.

Company filings show that Morgan stepped down as a director of Carterton in November last year.

Sources have told the Sunday Independent that financing a buyout "is an issue", given that Irish banks are reluctant to lend money.

But international banks and private equity groups may be tapped for funding. BC Partners, CVC, Axa Private Equity and Cinven are all active in the sector, while Russian group Pamplona and US buyout firm Hellman & Friedman LLC are all thought to be looking at Irish assets.

A bid to buy out either the O'Kane or Morgan stakes could smoke out a number of potential trade buyers, with the likes of Swedish firm ABB or French outfit Alstrom keen to grow in the sector.

Hugh O'Donnell's oil services firm Kentz was also mentioned as a possible suitor.

O'Kane founded Mercury engineering with Morgan in 1972. A well-known philanthropist, who funded the renovation of a cinema in UCD, O'Kane left an estate valued at €108m, according to documents filed in the probate office in late 2009.

A deal for Mercury would be the latest in a series of big-money buyouts in recent months as Irish companies get picked off by international players and private equity companies.

Listed concrete firm Readymix has received a preliminary takeover approach, valuing the company at €35m. Warehousing group Norish is also in talks over a takeover.

Paul Kerley's Norkom Technologies is being bought by BAe in a €217m deal, with Spectrum buying Trintech for almost €70m. And last week medical devices firm Zerusa was bought by US firm Vascular Solutions in a multi-million euro deal.

Sunday Indo Business