Electrical firm's Irish interests to be sold

The Irish interests of Dutch electrical equipment company Hagemeyer are to be sold as a condition of EU approval for its €3.1 billion takeover by French group Rexel, the world's biggest distributor of electrical parts. Arthur Beesley, Senior Business Correspondent, reports.

Hagemeyer's main Irish asset is Eastern Electrical in Dundalk, a business whose operations include Portlaoise Electrical Wholesale, Athlone Electrical Wholesale and Gen-Weld Safety Equipment.

The financial scale and commercial performance of this business could not be immediately assessed as Hagemeyer's Irish entities have unlimited liability and have no obligation to publish any accounts in public.

A business-to-business operator, Hagemeyer has operations in Europe, North America and Australia.

While the other aspects of the deal will now go ahead, the competition directorate general of the European Commission had anti-trust concerns about overlaps between Hagemeyer's Irish unit and the Irish interests of Rexel.

Paris-based Rexel owns Kelliher's Electrical, a Tralee-based distribution business which has 28 branches throughout Ireland. Rexel bought Kelliher's in 2006 when it acquired GE Supply from US group General Electric.

Accounts for the entity that runs the business, M Kelliher 1998, show it had a turnover of €131.15 million in 2006 and pretax profits of €14.65 million.

In a statement yesterday, the EU Commission said the proposed transaction "would have given rise to competition concerns in Ireland as it would have strengthened the current leading position of Rexel in a very fragmented market where competitors would not have had the size and the geographic coverage to exercise a competitive constraint on the merged entity".

Rexel offered a concession to resolve the concerns a fortnight ago.

"To address the commission's concerns, the parties agreed to divest the entire wholesale distribution of electrical products of Hagemeyer in Ireland, thereby entirely removing the overlaps brought about by the proposed transaction in this member state," the commission said.

"After market testing these remedies, the commission concluded that they would be suitable to address the competition concerns."

Rexel's chief spokeswoman declined to put a possible valuation on the Irish assets.