Yesterday, AIB and FEXCO issued short statements revealing they have signed an agreement which will result in FEXCO acquiring AIB’s entire shareholding in Goodbody Holdings Limited and associated companies, including Goodbody Stockbrokers for a cash consideration of approximately €24m.
The deal is subject to the regulatory approval of the Central Bank and Financial Regulator.
News of the deal was first revealed by the Irish Examiner in June and it is expected that final approval could take as long as three months. FEXCO and AIB refused to comment further on the deal yesterday, pending regulatory approval.
The sale price is a fraction of the €316m management buyout at rival Davy Stockbrokers when Bank of Ireland sold it off in 2006.
Killorglin Co Kerry-headquartered FEXCO, founded by former AIB bank official Brian McCarthy, already has a stockbroking arm with 15 staff. It is expected this will be subsumed into the larger Goodbody entity.
It is anticipated that Goodbody chairman AIB Capital Markets head of investment banking Mon O’Driscoll will step down and a FEXCO-appointed person, to be approved by the regulator, will be appointed. Former tánaiste Dick Spring, who is executive vice-chairman of the FEXCO and a board member of AIB, is currently chairman of FEXCO Stockbroking.
Goodbody is believed to have made losses in recent quarters and a putative management buyout never got off the ground because of a lack of finance.
It is understood that Goodbody’s current managing director Roy Barrett, 46, and other senior staff will remain with the company in a golden handcuff arrangement. This will see them get an initial 25% stake in the company, rising to 49% subject to certain performance criteria being attained.
FEXCO still has to get over regulatory hurdles requiring it to have significant liquid assets in place and to be in a position provide significant long-term securities to have the acquisition approved. FEXCO is well positioned to provide these assurances having sold its money transfer operations to Western Union for €123m early last year.
It is expected that as many as 55 of Goodbody’s current staff of 270 people will leave the company when the deal is completed.
AIB has also put in place a structure that ensures they get more cash if FEXCO sells Goodbody Holdings or certain assets of the group within a three-year time frame. AIB said the positive impact on AIB Group’s capital position as a result of the transaction is “not material”.
Founded in 1981 FEXCO is a privately owned global provider of business, merchant, consumer and international services.