Sherry FitzGerald considers going private

Sherry FitzGerald has received an approach from its management team about taking the company private less than four years after it floated on the Irish Stock Exchange.

Renlin, a company owned and controlled by Sherry FitzGerald chief executive Mr Mark Fitzgerald and finance director Ms Mari Hurley, made the approach last Thursday.

It is understood that the other members of the company's management team, Mr Ross McParland, Mr Philip Sherry and Mr James Meagher, are also involved.

The approach was made public at the request of the Irish Takeover Panel after shares in the property group jumped by nearly 19 per cent to €1.45 yesterday. They had been unchanged at €1.22 for the previous month.

Sherry FitzGerald has set up an independent committee comprising its chairman, Mr Donal Chambers, and non-executive directors Ms Louise English and Mr Jim Walsh, to consider any offer that may emerge.

Market sources said the move came as no surprise. Given the number of shares controlled by management and their associates, any offer stands a very high chance of success, they said.

Management and staff own some 64 per cent of the company. This includes Mr FitzGerald, who holds a 12.5 per cent stake. It is believed that former directors and franchisees hold a further 12 per cent with the remaining 24 per cent mainly in the hands of private investors.

The big question is at what level any offer will be pitched. Davy analyst Mr Florence O'Donoghue suggested the flotation price of €1.99 provided "a reasonable barometer" but noted the company was due to release its 2002 results on Thursday, which should help to value the company.

"I am expecting them to be cash positive at the end of 2002. They have no debt, it's a reasonable business and a reasonable franchise," he said, noting it was a very different business to when it floated, having almost doubled in size.

Sherry FitzGerald took a listing on the Developing Companies Market of the Irish Stock Exchange in April 1999 but the shares have proved a disappointment since. After briefly hitting a high of €2.45, they have fallen back steadily to a low of 85 cents last year.

However, as recently as last September, Mr FitzGerald, who became a paper millionaire via the flotation, insisted that going public was the right move and said that going private was not on the board's agenda.

"We maintain that we have a very significant brand," he told The Irish Times, noting the company had 5,000 boards on houses across the State. "The stock exchange is the right place for a business with that spread."

However, sources close to the company said yesterday that management felt the performance of the company was not reflected in the share price.