‘Buy & Sell’ the latest acquisition in Denis O’Brien’s spending spree

The victory by Denis O'Brien's Communicorp Group in last week's bidding process for the Buy & Sell title and website was the latest in what has been a steady stream of Irish acquisitions by the billionaire businessman over recent years.

Communicorp subsidiary Dermica Ltd, in a process overseen by the Supreme Court, submitted a significantly higher bid than Midland Web Printing Ltd, which had at one stage believed its bid had been accepted as part of an earlier process overseen by the High Court. The price paid by Dermica for Buzreel Ltd, in liquidation, was not disclosed, but is believed to have been in excess of €300,000.

Last month, it was disclosed that O’Brien had taken control of the Beacon Private Hospital in Sandyford, Dublin, at a reported cost of €35 million. The American private hospital operator, University of Pittsburgh Medical Central (UPMC), had put tens of millions of euro into the venture over the previous decade but had been unable to successfully restructure bank debt of about €100 million owed to Ulster Bank.

UPMC, in a statement, said a generous offer had been made but the bank had opted to sell the debt to O’Brien. “The new debt owner will not restructure the debt and clearly indicated his intent to own, control and manage the Beacon Hospital,” it said. It said it was selling its ownership for a nominal value, and was relinquishing all management responsibilities. The hospital has 600 employees and 200 consultants. Accounts for hospital operating company UPM C Beacon Sandyford Ltd, filed this week, show it incurred a loss in the year to the end of June 2013 of €8.7 million and had a net liability position then of €65.8 million. (These accounts pre-date the purchase of the debt at a discount.)

O’Brien’s purchase of the debt led to UPMC’s managerial role being replaced by the Beacon Medical Group, with Michael Cullen, chief executive and co-founder of the group, being named chief executive of the hospital. Cullen is a long-standing friend of O’Brien’s, and of the long-time business associate of O’Brien’s, Lucy Gaffney.

Earlier this year, O’Brien, who had already been a minority shareholder in the business, took over Topaz Energy Group in a deal that again involved the writing down of bank debt.

O’Brien took a controlling interest after he bought about €304 million of the group’s loans from the State-owned Irish Bank Resolution Corporation (IBRC), in liquidation,for a reported €150 million.

The fuel retailer and distributor recorded an 8 per cent rise in revenues to more than €3.17 billion in the 12 months to the end of March last year, and made a small operating profit of €296,000. However, its interest bill on its debt pushed it into the red, with a loss after tax of more than €13 million. Topaz operates about 330 petrol stations across the State and accounts for about a quarter of the market.

The group had a turnover in excess of €3 billion in the year to end March 2013, when it reported a pre-tax loss of €12 million. The group had more than 40,000 employees that year.

Last month, Topaz announced a number of appointments to its board including former taoiseach Brian Cowen and the former managing director of AIB, Colm Doherty. O'Brien also joined the board as did Lucy Gaffney, Sean Corkery, the chief executive of Siteserv, and O'Brien's nephew, Emmet O'Neill, who recently sold Smiles Dental for €36 million.

There was a brief controversy over the circumstances of O’Brien’s purchase of the substantial business support services group, Siteserv, in March of 2012.

The former plc owed about €150 million to the IBRC and the sale occurred after Davy Stockbrokers and KPMG were asked by a sub-committee of the Siteserv board to find a buyer and to review offers. IBRC decided to go along with this process rather than to retrieve what value it could by other means.

O’Brien’s bid of €45.42 million in cash won out, leaving the IBRC with a loss on its loan due of about 70 per cent. An unusual part of the deal was that a number of shareholders were to receive €4.96 million between them arising from the transaction. That element of the bid was reportedly aimed at keeping key management on board. This meant the State-owned bank only got €40 million.

In the wake of the deal being announced, the unsuccessful bidder, French fund Altrad, said it would have paid €60 million for the group. It lodged a complaint with the Competition Authority but withdrew it just a few days later.

Altrad executive Ray Neilson sent an email to Siteserv chairman Hugh Cooney advising him of the withdrawal of the complaint.

“If Mr O’Brien and yourself decide that you are interested in exploring the opportunity of selling any part of the Siteserv companies in the future then we would be very happy to open confidential discussions on this subject and would sign a confidentiality agreement as is usual,” he added.

Ballynahinch Castle

At the time, Siteserv indicated it might still be intending to complain to the Office of Fair Trade in the UK about Alstrad’s purchase of Ge

neration Hire and Sales, which competes with Siteserv’s Deborah subsidiary in the UK.

Siteserv has six business divisions – Sierra, Deborah Services, Holgate, RoanKabin, Eventserv and Siteserv Access and Formwork.

Its clients include Irish Water, for which it is installing water meters in homes around the country. Amongst the products and services it provides are concrete sound barriers on the M50, and temporary structures for events such as the Bloom festival in the Phoenix Park. It also builds temporary schools for the Department of Education.

According to its latest accounts, part of the group's long-term aim is to position itself as an industrial services company to O'Brien's Caribbean and Oceania telecoms group, Digicel. Already it has begun work in Jamaica and Papua New Guinea.

In a smaller transaction, O’Brien has recently purchased and refurbished Ballynahinch Castle in Recess, Co Galway. The purchase involved a Dublin-based firm, Yelsea Ltd, which is in turn owned by DNA Event Design Ltd, with an address in Nicosia, Cyprus.