The question is, why has Denis O’Brien sold Topaz now?

Couche-Tard will be significant force in Irish market

Topaz, which has been sold to Canadian company Couche-Tard, came under the control of businessman Denis O’Brien in December 2013, when he bought loans attached to the business from the IBRC liquidator. The loans were valued at just over €300 million and Mr O’Brien reportedly paid around €150 million for them, following a tender process in which his bid emerged as the winner. Mr O’Brien was previously a minority shareholder in Topaz.

There has been considerable investment in the stores in the meantime and the purchase price by Couche-Tard has not been revealed, so it is matter of speculation how the financial calculus works out for Mr O’Brien.

Topaz recently got competition clearance to buy Esso for €75 million, creating a business with annual revenues of some €3.5 billion. The enlarged company will have 464 service stations, 162 of which are company owned, and a commercial fuels operation.

No sale speculation

Following the purchase of Topaz, Mr O'Brien reshaped the company's board, appointing long time associates such as Lucy Gaffney and Sean Corkery, the Siteserv chief executive, as well as former Taoiseach Brian Cowen and former AIB chief executive Colm Doherty. With the Esso expansion planned, there had not been any speculation that Topaz was soon to be sold. Mr O'Brien recently sold 10 per cent of the company to his nephew, Emmet O'Neill, the Topaz chief executive.

So the question is why has Mr O’Brien sold now, at a time when the Esso acquisition was just about to be completed and the company could have hoped to make progress in a growing Irish economy.

The recent flotation of Applegreen at a market capitalisation of €300 million shows that there is considerable value in these businesses, now based more on the retail trade brought in by drivers coming to the forecourt than the petrol sales themselves.This retail opportunity will have been what attracted the Canadian buyers, who will now be a significant force in the market here.

€400-€450m

Given the price paid for Esso and the market valuation of Applegreen, it would be a surprise if the sale valued Topaz at less than €350 million, and it is more likely that it was upwards of €400 - €450 million. Some premium would have been expected, based on the company’s strong position in the marketplace. There will also have been some debt in the company which would be part of this valuation, meaning the cash proceeds would be that much lower.

Mr O'Brien's purchase of Topaz followed the wind-up of IBRC in February 2013. His previous purchase of Siteserv, one of the factors leading to the now stalled Commission of Investigation into IBRC, was made from IBRC before it was liquidated. The sale of the Topaz loans falls outside the time period covered by the Commission, though as previous correspondence released under FOI has revealed, Topaz had been one of the issues discussed in correspondence between the Department of Finance and the IBRC before its liquidation. This means the judge heading the Commission can, if he so chooses , examine any issues arising from this.