Ignominious end to career of Ireland’s first business superstar

Sir Anthony O’Reilly faces key High Court judgment relating to €195m debts

It was British politician Enoch Powell who said that “all political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs”.

It’s a quote that could be applied ot the business career of Sir Anthony O’Reilly, who today faces a key High Court judgment relating to his €195 million debts.

O’Reilly was born in Dublin in May 1936 to Jack O’Reilly, a civil servant, and Aileen O’Connor. The couple pretented to the outside world to be married, but Jack had been married before, with children. Tony wouldn’t learn of this for some years.

O’Reilly was educated at Belvedere on the northside of Dublin. While he didn’t excel academically, he developed a flair for sport, playing rugby, cricket and soccer. He shot to public prominence in 1955 when he was selected to play for Ireland against England in the then Five Nations championship. His dashing performances as a winger earned him a call-up to the Lions tour of South Africa that year, where he scored 16 tries in 15 matches.

O’Reilly would earn 29 caps for Ireland and score a record number of tries for both the Lions and the Barbarians. Yet he never played in a team that won a cup or a championship.

He returned to Ireland to take up a role in Cork but his big break came two years later when appointed as the first general manager of Bórd Bainne. He launched Kerrygold, the first premium branded butter product the State had produced, something that he often referred to it as his biggest success.

In 1966, then taoiseach Jack Lynch persuaded him to take over the Irish Sugar Company, which was State owned. This would bring him into contact with US food giant Heinz for the first time with O’Reilly travelling to Pittsburgh to persuade them to partner with Erin Foods, which was struggling at the time.

In 1969, Heinz poached him to run their UK business, beginning a successful 30-year association with the American company.

His career could have taken a completely direction at the time as Jack Lynch sought to persuade him to remain at home, suggesting an appointment as minister for agriculture via a Taoiseach’s nomination to the Seanad. O’Reilly was drawn to politics but decided to join Heinz.

In 1962, he married Australian Susan Cameron, whom he had met in Sydney on a Lions tour. They had six children born in the first four years of marriage.

They would establish homes in Glandore in Co Cork, Castlemartin in Co Kildare and in Pittsburgh. The marriage broke down in the 1980s and they divorced. O’Reilly would find love again with Chryss Goulandris, a New York-born, Greek shipping heiress, with a passion for horse breeding.

He was fast-tracked for promotion at Heinz, rising rapidly up the ladder and being appointed as chief executive in 1979 – the youngest CEO of a major company in the US at the time and also one of the best paid.

His strong work ethic, eye for a deal and slick patter made him a darling of the investment community in the US. Among his key deals was the acquisition of Weight Watchers for Heinz, one of its best ever purchases.

High-profile investment

On joining Heinz, O’Reilly secured permission to pursue investments in Ireland via a vehicle called Fitzwilliam Securities, later to become Fitzwilton.

In 1973, he acquired the Irish Independent newspaper, which was to grow to become the State’s biggest media group. Atlantic Resources was another high-profile investment in Ireland. Oil exploration was hot in the early 1980s and Atlantic tapped into the huge appetite from investors for a piece of the action. Its share price initially soared but it ultimately came acropper due to poor drilling results.

O’Reilly was later involved in Arcon, which was behind the Galmoy lead and zinc mine in Kilkenny. It was sold to Lundin Mining in 2005. More recently, his family have enjoyed some success with Providence Resources but to date, it has yet to prove a commercial find off the coast of Ireland.

In 1989, O’Reilly became the first non-Heinz family member to be appointed as chairman. It was arguably his finest hour.

The two biggest financial bets of O’Reilly’s career – INM and Waterford Wedgwood – proved the catalysts for his downfall.

With his brother-in-law Peter Goulandris, O’Reilly lost more than €400 million trying to save Waterford before it collapsed into receivership in 2009. He also wasted €350 million buying shares in INM prior to its restructuring, in a vain attempt to ward off the advances of Denis O’Brien.

At Waterford, O’Reilly formed a consortium in 1990 with Morgan Stanley that paid €102 million for a 30 per cent stake, and was appointed deputy chairman.

To the ire of its local workforce, the company began slashing labour costs, brought out cheaper product lines, and targeted new markets. By 1992, the strategy began paying off when the company returned to profit. Two years later, O’Reilly became chairman and for the next seven years, Waterford posted double digit growth. By 2000, along with Goulandris he was taking annual dividends of €7 million from the company.

Then came the 9/11 terrorist attacks in the US. Overnight, the US market choked up and never recovered, and the group’s cost base was exposed. From 2002, O’Reilly and Goulandris, who ended up controlling more than half of the business, began propping it up by writing cheques.

By 2008, it was unable to meet the repayments on its €540 million debts and its banks were closing in. O’Reilly failed to convince the government to guarantee a €39 million loan that might have saved the business. It was placed into receivership in January 2009 – a crushing financial blow for O’Reilly.

Walter Cullen, now retired, was a trade union official with Unite throughout O’Reilly’s tenure. It collapsed, he says, because of a litany of “bad decisions” by its leadership, including O’Reilly.

Might there be a smidgen of sympathy for O’Reilly from Waterford’s workers – most of whom lost their pensions – especially considering he put his money where his mouth was in a vain attempt to save the business?

“There is recognition for what he did. But sympathy? I doubt it. Whatever happens to him, he will still be better off than the workers who lost their jobs and pensions,” said Cullen.

‘A patriot’

Ivor Kenny, a management expert and author who first met O’Reilly in 1962, takes a different view. “In the best sense of the word, Tony O’Reilly was a patriot. He loved Waterford and wanted to save an Irish brand which gave a message to the world about what we could do. He lost an awful lot of money.”

O’Reilly’s woes continued in 2009, but the battle moved to INM, where he was chief executive and the largest shareholder.

He had been engaged in an increasingly bitter dispute for more than two years with Denis O’Brien over strategy. The two had first clashed in a bitter battle for Eircom after its first listing, a confrontation from which O’Reilly emerged the winner.

Two months after the collapse of Waterford, the two men struck an uneasy peace accord which, in hindsight, would spell the end of O’Reilly’s influence at INM. INM’s dividend was once considered the safest in town. O’Reilly relied on it to maintain his lavish lifestyle and it was worth an average of €14 million annually to him in the decade until the economy crashed.

In 2007, he drew almost €30 million from the company and his stake was valued at close to €1 billion. Under a peace deal with O’Brien, O’Reilly stood down from his €2 million a year executive post . INM cancelled its dividend and his income was decimated, along with his ability to service his loans.

By 2012, the peace deal with O’Brien had unravelled and the younger billionaire had overtaken him as the largest shareholder. O’Brien seized control of the board and oversaw a debt restructuring that shrunk O’Reilly’s stake yet further. Since then, O’Reilly has been seeking to cut a deal with his lenders, selling off various assets.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column