The Irish Times Deal of the Year: The four finalists

Contenders include Coillte for its windfarm sale, and Smyths Toys buying a division of ToysRUs

 

For The Irish Times Deal of the Year Award this year, we’ve chosen four major transactions that have either rewarded their owners for years of hard work and risk taking, or could be transformative for the Irish companies in the years ahead.

Smyths Toys

Despite the troubling retail environment, the hugely successful Smyth family closed a transaction to see their toy empire almost double in size.

The four brothers pick up a nomination for their deal announced in April to buy its rival Toys R Us in Germany, Austria and Switzerland after that company’s central European division went bankrupt.

The deal, for an estimated €79 million, added a further 90 stores to the group’s network of 110 outlets located in Ireland and, mostly, the UK. They also took on the company’s head office in Cologne.

Having started the business more than 30 years ago, the Smyth family noted at the time of the acquisition that they were “convinced about the future of multi-channel specialist toy retail” and confident that their brand could be grown into continental Europe.

The move puts the company amongst the largest specialist toy retail chains in Europe and now more than 40 per cent of its network will be located on the continent.

Tony, Pádraig, Liam and Tom have been here before when they rapidly expanded into the UK and it would appear as though they’ll have no trouble ensuring this particular deal pays off.

Adapt Pharma

As sales go, Séamus Mulligan’s disposal of Adapt Pharma was a spectacular one.

The deal to sell to US company Emergent saw Mulligan and his fellow investors sharing in a windfall of $635 million (€562 million), the majority of which was in cash.

Established in 2014 with an investment of $115 million, Adapt developed Narcan, a naloxone nasal spray that revives people who have overdosed on opioids. More importantly, however, was that the drug was developed in the midst of an opioid crisis in the US and Narcan was seen as being attractive because of the simplicity with which it could be used.

Previously only available as an injection, the nasal spray aspect made it easier for non-medical personnel, like policemen, teachers, family and friends, to help reduce the 72,000 toll of lives lost to overdose in the US alone last year.

And while the deal was extraordinarily lucrative for Mulligan and his colleagues, the reason behind the sale was driven by the desire to expand the drug’s user base. The need for additional capital and resources to maximise the public health benefit was seen as one of the key reasons to sell.

One4all

The deal in November that caught our eyes was the sale of One4all, the gift voucher business, in a move which valued the company at €100 million.

Financial technology specialist Blackhawk Network bought the company in an agreement placing an enterprise value on Gift Voucher Shop – the company behind One4all – in the region of about €100 million. The term “enterprise value” embraces the figure paid for a company along with its liabilities.

Reports last year had suggested the company could sell for more than €60 million.

The deal gave both the company’s founder, Michael Dawson, and An Post a significant payout. An Post owned 53 per cent of the business and sold the vouchers through post offices around the Republic.

For them, the deal represented a “significant” return, given that they picked up their stake for €9 million in 2009.

Entrepreneur Michael Dawson was also a benefactor having founded the company in 2002, and growing it steadily to make profits in 2017 alone of €7 million.

Given its previous successes, this looks like a good deal for all parties involved.

Coillte

State forestry company Coillte’s sale of its stake in four wind farms to Dublin-listed Greencoat Renewables for €136 million was one of last year’s more significant deals. The price is unlikely to be repeated for similar assets, as regulators plan a change in supports offered to green energy projects.

Coillte sold 50 per cent stakes in wind farms at Raheenleagh, Co Wicklow, Cloosh Valley, Co Galway; and Castlepool, Co Cork, and 25 per cent of Sliabh Bawn wind farm, Co Roscommon, to Greencoat. Between them, the plants can generate up to 105 megawatts of electricity, enough at full throttle to power more than 100,000 homes.

The €136 million easily topped the €125 million target set by Coillte when it put its stakes in the wind farms on the market the previous March. It was also more than five times the €25 million that the State company invested in the assets in the first place, and put an overall “enterprise value” on the plants of €281 million.

Outgoing Coillte chief executive Fergal Leamy indicated that as well as paying the State a dividend, the business would reinvest some of the cash in further wind farms, which he said it would build and sell once they began operating and selling electricity. He explained that Coillte’s expertise was in identifying suitable sites and building the farms, rather than running them over the longer term.