Maxol buys Estuary Fuels for €8 million

Maxol is understood to have spent €8 million acquiring the operations of Estuary Fuels, the Limerick-based petrol and oil distribution business, writes Arthur Beesley

The acquisition of Estuary's holding company, Busselle Ltd, was notified to the Tánaiste, Ms Harney, last month and she has referred it to the Competition Authority for investigation.

If sanctioned by the authority, the deal will add 42 petrol stations and 15 oil distribution businesses to the Maxol network. Estuary has operations throughout Munster, Connacht and parts of Leinster.

Neither Maxol nor Estuary Fuels would comment when contacted yesterday, although it is thought that Estuary had been on the market for some time.

The main beneficiaries of the sale are the company's managing director, Mr Tim O'Donoghue, and its commercial director, Mr Gerry O'Mahony.

About one-third of the shares in Estuary are held by ICC Bank, which was acquired last year by Bank of Scotland (Ireland). ICC backed a management buy-out in 1996, which split Estuary from Statoil, a condition of Statoil's acquisition of the Jet group. Statoil acquired Estuary from Aran Energy in 1995.

ICC's representative on the Estuary board, Ms Prisca Grady, resigned on June 7th, according to a document lodged at the Companies Office.

Ms Grady is a former investment director and partner with ICC Venture Capital.

Last month the Employment Appeals Tribunal gave her leave to have a case for constructive dismissal heard in October. She alleges sexual harassment and bullying. ICC denies the allegation.

Ms Harney has given the Competition Authority until September 23rd to provide its report.

She wants an examination of the possible effects of the acquisition on motor fuel consumers, particularly in Limerick and Clare.

The authority has encountered Estuary before. In October 2000, the company became the first in the State to be prosecuted for price-fixing.

It was fined €1,270 after pleading guilty in Limerick District Court to two charges of entering into and implementing an agreement to fix the price of fuel at a filling station in Tralee, Co Kerry.

Before the agreement, the filling station concerned had been selling unbranded motor fuels in early 1999 at a "significant discount" to the prices in the town. Thus the agreement had the object of restricting price competition, the authority said.

Margins in the fuel business are very low. The latest accounts in the Companies Office show Estuary Fuel Ltd, one of Busselle's biggest operating companies, increased its turnover to €85.6 million (£67.41 million) in 2000 from €55.86 million in 1999.

The company's pre-tax profit in 2000 was €893,896, up from €532,000 a year earlier. The retained profit at the end of 2000 was €1.24 million.

Ms Harney has referred the deal to the authority under the Mergers and Takeovers (Control) Acts.

From next year, such deals will be referred to the authority directly under the new Competition Act.

Neither the authority nor the Department of Enterprise, Trade and Employment would comment on the consideration.