Tuesday 19 November 2019

What is says in the papers: business pages

Michael Cogley

Here are the business stories you need to know about this morning.

Irish Independent

* Botox maker Allergan and Pfizer are in early stage, friendly talks to create the world's largest drugmaker and potentially set up Pfizer to take advantage of Ireland's 12.5pc tax rate.

A combination with Dublin- based Allergan could allow Pfizer to shift its global tax residency to Ireland to become eligible for the 12.5pc corporate tax rate, rather the 35pc US rate, on global earnings, a strategy called tax inversion. Pfizer's effective tax rate is 25pc, while Allergan's is 15pc.

President Barak Obama has clamped down on inversions, but under US rules a corporation can still claim tax residence here by buying an Irish company, as long as the takeover target is at least 25pc of the buyer's size.

* Gaming technology company Playtech has challenged the Central Bank on its decision to block the UK firm's $105m acquisition of Dublin-based company AvaTrade and is hopeful of a final decision on the matter before the end of the year.

Playtech has recently been looking to move into the area of financial services and announced in July that it had agreed to acquire AvaTrade in an all-share that valued the broker at $105m (€96m).

Last month Playtech, which had sales of €450m last year, said that it expected the acquisition to close by either the end of September or early in October.

* It will take several years, and several rounds of funding, if O'Flynn Construction Group is to hit its target of building 10,000 new homes after the firm relaunced its business.

The company has joined up with US investment house Avenue Capital and AIB to take control of its Irish business back from Blackstone. Avenue and O'Flynn have signed a five-year agreement.

Under the new structure, the O'Flynn Group will have about €400m to fund new development. The company is aiming to build 10,000 homes around Dublin and Cork, but to finance that the company will have to recycle its lending facilities several times. That means the firm will have to repay its borrowings and borrow again.

The Irish Times

* One of Ireland's biggest construction firms, BAM, said that it further moved its focus away from public contracts last year as the company increased its turnover by 15pc.

The company's turnover rose to €353m while its pretax profit was down €1.2m on 2013 to €6.3m. The figures showed the company's decision to move away from public contracts as private contracts rose by 34pc.

The move away from public contracts is due to previous experiences. Theo Cullinane, BAM's chief executive, said that previous public contracts had proven to be adversarial rather than partnering.

* AIB is planning to return to the junior bond market as the bank prepares the begin the process of paying back the Irish exchequer.

The bank is due to begin repaying the state this year ahead of its flotation where AIB is expected to convert over €1.5bn to €2bn of its preference shares.

The deal is still in need of approval from the European Central Bank which is widely expected to be decided upon in mid-November.

* An Oxford professor told Dublin economists last night that it was not Ireland, but the European Central Bank's fault for the years of austerity the country has experienced in recent times.

Simon Wren-Lewis, who is also a economic adviser to the UK Labour Party said that the ECB should have acted earlier in order to do its job as a lender of last resort.

Mr Wren-Lewis was speaking at the Royal Irish Academy yesterday where he argued that austerity was not inevitable after a recessionary period and that it could have been avoided in Europe.

Irish Examiner

* A bottleneck that has been created by companies moving to upgraded technology is hindering their ability to innovate according to new research.

The research reveals that the move from old to new is costing companies thousands of euro a year and adding to security concerns.

The complexity of the new 'hybrid IT' systems which are a stopping point between legacy technology and cloud computing is also proving to be a concern for business owners.

* An additional €50m is being made available to SMEs to help them acquire machinery, vehicles and equipment as part of funding by the Strategic Banking Corporation of Ireland (SBCI).

The €50m is added to an exisiting €400m fund of low-cost finance that has been made available to businesses through the state-funded SBCI.

So far some 1,600 companies have borrowed a total of €45m through the fund's first two partners, being AIB and Bank of Ireland.

* Irish engineering consultancy firm, RPS, is betting on improving its revenues through the development of Irish Water.

According to RPS's directors' report the water-engineering services market is expected to pick up in 2015 and also in future years.

Despite a media-filled year for Irish Water, RPS said it was satisfied with the group's performance saying that the modest increase in income and careful management resulted in an increase in operating profit for the year.

Online Editors

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