No McInerney MBO despite 17% stake

Management at McInerney is not planning a management buyout (MBO) of the company, despite building up a 17 per cent stake in …

Management at McInerney is not planning a management buyout (MBO) of the company, despite building up a 17 per cent stake in the housebuilding group in recent days.

Managing director Mr Barry O'Connor told shareholders at yesterday's annual meeting that it was not management's intention to do an MBO.

"Our objective is to grow the business and an MBO is not compatible with that," he said.

More than a third of the company has changed hands since last Friday, fuelling speculation that some form of corporate action, including an MBO, might be in the offing. Bank of Scotland sold its 24.7 per cent stake in the housebuilder on Friday while Harcourt Developments sold a further 10.5 per cent on Tuesday.

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Management bought 9 per cent of the shares on offer to take its stake to 17 per cent, with the balance placed with institutional investors, among them Bank of Ireland Asset Management (BIAM) and Standard Life.

Mr O'Connor said the decision of directors and management to increase their shareholding solidified the shareholder base, and aligned management and shareholder interests. He also admitted it would make it harder for the company to be taken over without management consent.

Management could now get on with growing the business, particularly in Britain where it wants to develop an operation of similar scale to its Irish housebuilding business, he said. "We want it to be at least the same size as the Irish business. If you look out three years, we want to see the business heading for the numbers of the Irish business," he said.

In addition to making land purchases to fuel organic growth in the UK, McInerney is keeping an eye out for acquisition opportunities, particularly in the east around Newcastle and further south towards Birmingham.

Meanwhile, chairman Mr Roy Ferris told shareholders that the group anticipated a strong result for the full year. In an upbeat trading statement, Mr Ferris described the first half of 2003 as "an exceptional selling season" for its Irish housing business.

At the end of May, more than 850 deposits were on hand compared with just over 600 deposits at the same time last year. He said the Irish housing land bank was in good shape, with a wide geographical spread, and was adequate for current trading levels.

In Britain, demand remained "buoyant", Mr Ferris said, noting the number of deposits on hand in the UK business at the end of May was 267. The group is on target for 450 completions in Britain this year, up from 257 in 2002. McInerney also expects a continued strong performance from its Spanish business in 2003.

Deposits on hand at the end of May were 101, up from 77 a year earlier, while the group has recorded sales as far out as early 2005.

Mr Ferris also said the group planned to continue its policy of increasing its dividend to a level that would be in line with its peers. McInerney is also looking at paying a dividend twice a year.