Desmond’s IIU buys out fellow shareholder in One51 for €36m

Financier Dermot Desmond's International Investment and Underwriting (IIU) has bought out fellow One51 shareholder, Pageant Holdings, for more than €36 million, turning up the heat on a prospective bidder for the group.

It emerged last month that private equity group Capvest told shareholders it was willing to pay €1.80 a share – €282 million – for the plastics and hazardous waste recycling business and signalled it would bid if this received enough backing from investors.

However, IIU has bought out the group’s biggest shareholder, the Furlong family’s Pageant Holdings, for €1.85 a share, a total of €36.3 million. Mr Desmond’s company bought 19.6 million shares late on Thursday.

A Pageant spokesman confirmed it sold its entire stake in One51 on Thursday at €1.85 a share. He did not speculate on the buyer’s identity. The transaction was handled by a broker.

However, sources have confirmed the buyer was IIU. The purchase means Mr Desmond’s vehicle is now the biggest shareholder in One51, with a stake approaching 20 per cent.

IIU has not said if it plans to launch a counter bid to Capvest’s offer. Recent reports say Mr Desmond is simply interested in increasing its holding in One51 as he believes that it offers value at its current price.

Pressure

The sale still raises the prospect of a bidding war, as it will put pressure on Capvest to increase any offer it might make as other shareholders, including the group’s original co-op backers, are thought likely to seek a similar price for their holdings.

The private equity fund is also likely to have to deal with IIU at some point if it continues to seek control of One51, with which it has been in talks since February of this year.

Capvest, led by Irishman Séamus Fitzpatrick, has said it will settle for control of One51, rather than buying it out entirely and is offering shareholders the option of keeping part of their equity.

Its offer puts a €282 million price tag on the group, which would be worth €290 million at €1.85 a share. Merrion Stockbrokers analyst Darren McKinley suggested €2.18 a share, or €342 million, was a fair price for the group as it now stands.

Good value

Pageant is understood to have sold because it saw the price offered by IIU as good value for its stake. The company bought into One51 after its shares fell sharply a number of years ago following a period where losses from its investments mounted.

Under chief executive Alan Walsh, who took over at the group's low point, One51 has turned around, focusing on plastics manufacturing and hazardous waste recycling and selling off businesses and assets unconnected with these activities.

Many analysts see it as a flotation candidate on the basis of its recent performance and potential for growth. Mr Walsh has indicated that it could go this route within the next two years.