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• Corporate memory at Cadbury is short and selective

  November 16, 2009 @ 11:17 am | by John Collins

  As Fiona Walsh wrote in her London Briefing column last week, after an eight week phoney war the battle between Kraft and Cadbury over the American conglomerate’s £10 billion (€ billion) hostile takeover bid for the British chocolate maker, now becomes a formal three month battle of wits.

  Following the move into the formal takeover period Cadbury chairman Roger Carr wasted no time in dismissing the Kraft bid as derisory and labelling its American suitor as a “low growth conglomerate”. There is of course a slight undertone of snobbery here. On its corporate website 185-year old Cadbury trumpets its Quaker roots, its commitment to fair-trade and the wholesome milk that goes into its flagship chocolate product. Clearly the approaches from the maker of Capri Sun, Handi Snacks and Kraft Easy Mac Cups (don’t ask) are unwanted.

  Watching one of those Saturday night top 50 shows on Channel 4 I was reminded just how short the corporate memory at Cadbury must be. Anyone remember Cadbury’s Smash from the 70s?

  

  Cadbury and Kraft may have more in common than one side wants to admit. This is going to be a long and interesting battle.

• Elan’s trouble with dates

  January 13, 2009 @ 8:12 pm | by Dominic Coyle

  Elan president Carlos Paya entered the JP Morgan Healthcare Conference hoping to put behind him the controversy over statements attributed to him over a possible extension to the duration of Phase III trials for the company’s Alzheimer’s drug bapineuzimab  currently slated to last 18 months.  Unfortunately, as he moved to clarify -referring to recent confusion – he again alluded to 24 months before hastily correcting himself.

• Crossed lines at Elan

  @ 7:59 pm | by Dominic Coyle

  Irish drugmaker Elan is suffering a significant attack of mixed messages. Just days after chief executive Kelly Martin stated categorically that the maker of multiple sclerosis breakthrough drug Tysabri “isn’t negotiating to sell the company to Pfizer or any other drugmaker”, the company announced a strategic review to assess a range of alternatives (sic) that include . . . a merger or sale.

  That announcement came just after the company put out a statement “clarifying” about an “erroneous report” in news service Bloomberg that said the duration of a Phase III clinical trial for the company’s Alzheimer’s disease drug bapineuzimab could be extended. “The planned [18 month] duration of the trials has not changed since the program was announced in December 2007. There are currently no plans to extend the duration of the Phase III trials,” it said curtly.

  Fair enough, except that the Bloomberg story quotes both Elan president in charge of strategy Carlos Paya and head of corporate relations Mary Stutts (both appointed in recent months, but industry veterans).

  “There are a number of discussions going on, including what is the right duration of the trial,” Paya said in a telephone interview with the news service. “The length is now 18 months. There are also some discussions of making a number of changes in the protocol: should they be 24 months, or 18 months with an extension?” Stutts was reported as saying the discussion about the length of the trials is occurring within the company, and hasn’t been broached with either the Food and Drug Administration [the regulator] or partner Wyeth.

  So just who needs clarification then?

• Will Lenihan seek banker resignations in return for capital?

  December 15, 2008 @ 11:04 am | by Simon Carswell

  Minister for Finance Brian Lenihan said in an interview with RTE yesterday evening that there would be some “tough” decisions ahead for the banks in response to a question about management changes at the institutions. He’s clearly hinting that some of the senior management teams at the banks may not be around after the State injects capital through this recapitalisation programme of up to €10 billion announced yesterday evening. It’s no surprise therefore that some of the banks have been resisting private equity investments and even any potential capital raising from their own shareholders over recent months.

  The prospect of shutting down lending in a bid to bolster capital is not finding favour within Government at a time when credit rationing is the last thing that most small and medium-sized businesses are struggling to keep cash flowing.

  There is much at stake at present. The State is setting up a mechanism where €10 billion should get the banks up to capital ratios of the 8.5 per cent which will appease the market as these levels have become the norm since the UK bank capitalisation. However, the State is setting conditions on its investment “in order to safeguard fully the interests of the taxpayer.” (more…)

• Is French bank BNP Paribas eyeing an Irish investment?

  @ 10:35 am | by Simon Carswell

  Weekend press reports suggest that BNP Paribas is being sounded out for a possible investment in one of the guaranteed financial institutions, with one newspaper reporting that EBS building society was in its sights.

  We understand that local Dublin management at Postbank, the Irish savings bank which is jointly by An Post and French BNP Paribas, made contact with EBS in recent days to ask tentatively about a possible alliance with the building society, though EBS appears to be far more focused on a potential merger with Irish Life & Permanent and both parties are still in talks.

  It is not clear whether BNP Paribas is itself interested in an Irish investment or if the local managers at Postbank are just seeing what potential mergers are out there. BNP Paribas would appear to have plenty on its plate taking control of the Belgian-Dutch financial services group, Fortis, without seeing what else is out there in terms of other investments.

• Consolidation – the banking ballroom of romance

  December 4, 2008 @ 11:45 am | by Simon Carswell

  As various US private equity firms and Middle Eastern sovereign wealth funds circle the Irish banks (and Bank of Ireland and Irish Life & Permanent in particular) and a home-ground solution to recapitalisation has emerged in the form of a rival group of local institutional investment funds, Anglo Irish Bank has said mergers are not for it.

  David Drumm, chief executive of the bank, said at Anglo’s full-year results yesterday that “consolidation was not on our agenda”. Asked if he saw the six Irish-owned banks and building societies being merged into two big banks, Drumm said he would “struggle to see” a need or rationale for consolidation or a two-bank Irish system. Drumm sent an email around to staff on November 21st about this topic when there was much debate around consolidation in the banking sector. Here’s what he said: (more…)

• Bank of Ireland continues talks with Mallabraca group

  November 24, 2008 @ 9:46 am | by Simon Carswell

  Bank of Ireland held discussions with Irish representatives of the Mallabraca consortium of US private equity firms last Friday as the bank confirmed that it had received “unsolicited approaches from a number of parties wishing to make an investment in the group”. We are told that the bank and Mallabraca are continuing to hold talks this week, described not as formal due diligence but a type of diligence where the bank’s management would meet representatives of the consortium. It sounds like both parties are weighing each other up.

  (more…)

• How are things in Maulabracka, sorry, Mallabraca?

  November 22, 2008 @ 10:18 am | by Simon Carswell

  There have been fascinating developments in the Irish banking sector this past week. The emergence of this grouping of private equity firms, led by Nick Corcoran and Nigel McDermott of Cardinal Asset Management and Bryan Turley of Dublin firm Sorrento Asset Management, with advisory help from New York-based investment bank Sandler O’Neill who are also investing in the consortium, is intriguing. Even more interesting is the consortium’s desire to buy into Bank of Ireland and possibly a merged group comprising that bank and Irish Life & Permanent.

  Corcoran and McDermott (who have both worked with IIU, financer Dermot Desmond’s investment company), have brought in private equity giants JC Flowers (which has a predilection for buying into troubled banks) and The Carlyle Group as well as some two sovereign wealth funds from the Middle East (if they are needed for any major stake-buying in the banks). Curiously, they have chosen to the name the consortium after Mallabraca, a townland near Dunmanway in Co Cork and the birthplace of one Sam Maguire, whose name is emblazoned on the GAA All Ireland football trophy.

  (more…)

• Radical shake-up of the Irish banking sector on the way

  November 21, 2008 @ 9:14 am | by Simon Carswell

  Minister for Finance Brian Lenihan has signalled to the State’s six guaranteed banks and building societies what his officials have been assessing privately since the summer – a radical re-shaping of the Irish banking market with mergers. Mr Lenihan spoke of “structural” changes to the banking sector and a major reform of the market during his discussions with the chief executives and chairmen of the four banks and two building societies at Farmleigh in the Phoenix Park yesterday.

  The feeling among participants at these meetings, though nobody is commenting, is believed to be that the Government will re-mould the banking sector into two enlarged banks based on the big two players – AIB and Bank of Ireland. This would mean six institutions being hammered into two – in tandem with private equity and possibly State co-investments.

  This “Farmleigh Framework” is all part of the three-pronged Government’s strategy to fix and strengthen the Irish banking sector. Part one involved the guarantee. Parts two and three are consolidation and recapitalisation, though not necessarily in that order.

  (more…)

• Woolly thinking from Woolies

  November 20, 2008 @ 1:43 pm | by Laura Slattery

  It would be easy to view Woolworths’ decision to accept calls from distressed company specialists Hilco as further evidence of the economic malaise that’s sweeping the retail sector just in time for Christmas. And it is, to some extent. But it is also a glaring example of what happens when companies fail to innovate and respond to new competition.

  The 800-store strong British retailer, affectionately known (until now) as Woolies, has no direct equivalent in Ireland’s shopping precincts, so if you haven’t graced one, here’s an idea of what they sell: DVDs, toys, baby buggies, hair straighteners and the occasional book. My first Sindy doll hailed from the Torquay branch of Woolworths circa 1985. She wore, as I recall, a monochrome animal print dress with hot pink PVC leather jacket. This is probably about as racy as Woolworths has ever been. Since then, like Sindy herself, the company has been overtaken by fitter and leaner rivals – most obviously when the likes of Tesco discovered they could trouser super-margins by stocking their shelves with non-food items.

  Times, and consumer habits, changed. Woolworths’ fondness for offering cut-price CDs stopped being quite so smart when music sales migrated online, while selling sweets and the kind of tat that can be found for cheaper in pound shops became increasingly anachronistic. Now Woolworths itself, just one year shy of its centenary, may be purchased for £1.

  There is an Irish connection. The key players in any Woolworths sale will be GMAC Commercial Finance and a company called Burdale Financial. The latter is a division of Bank of Ireland. Together they lent Woolworths £385 million last January, which must have seemed like a good idea at the time.

   In what seems like a tragic mistake in hindsight (although the deal may not have been completed in time), Woolworths rejected a bid approach worth £50 million for its stores in August. The approach came from a consortium led by Icelandic investor Baugur, which thanks to the collapse of the Icelandic economy is now in the business of flogging off parts of its retail empire rather than adding to it. Now Burdale and GMAC have appointed Deloitte to represent them in talks with the stricken shops. They may have more success trying to spark a Sindy revival.

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