NTR buyout puts fresh focus on One51
The decision to boot NTR off the West Link toll road may not be the smartest move ever by a Government, but it looks like to pay handsome dividends for One51, formed out of the transformation of IAWS Co-op into a private limited company.
The move could be worth €500 million to NTR.
That may be on the optimistic side, but NTR can expect to net at least €300m from the deal. Now One51 has 26% of the equity in NTR it means One51 is looking at massive gains from its investment.
It was initiated in October 2004 and completed in January last year.
At the time the move caused huge interest. What were One51 chief executive Philip Lynch’s intentions?
Some argued his investment would stymie any move to float the fledgling wind and waste management business because of the overhang of the NTR stake.
However, it seems Mr Lynch anticipated the Government buyout.
Overall his investment in share price terms is worth about €40m more than he spent while the added value to the group resulting from the buyout could add another 20% to the value of NTR, whose shares are trading at €3.50 having been split into eight-for-one back in June 2005.
After the NTR annual general meeting last year Mr Lynch insisted his move was never hostile.
Mr Lynch said his decision was driven by “value” in the shares.
The buying spree convinced analysts he was attempting to make a play for the group.
NTR chairman Tom Roche, whose family owns over 40% of the company, went into the market and spent €1.3m mopping up stock in a move seen at the time as a blocking measure against Mr Lynch.
But Lynch dismissed suggestions that he had a strategic plan for the business that he cannot now deliver on. Any such speculation was “wide of the mark”.
In the case of his new project Mr Lynch has identified waste management and wind farming as two strategic directions he intends to drive the business and his swoop on the established group, with a quote on the grey market, served to highlight his belief in the sector.
Talks are currently taking place with several players in those markets that may lead to some acquisitions over the next few months.
Oxigen, operational in the waste business since 1988, has been linked with Lynch for some time, but nothing has emerged to date.
NTR’s waste management wing, Greenstar, was thought to be a possible target by Mr Lynch but that he too denied as nonsense.
At this point the NTR deal looks to have been inspired. Mr Lynch will deliver value to his own shareholders on that score and indeed when coming to the market this investment may prove to be his calling card at this point.
Unless he starts to string some deals together in the waste and wind energy areas fairly soon, if he has a flotation date of mid-summer in mind, it may prove to be the only solid bit he has in his armoury unless current talks deliver something in the coming months.
Mr Lynch had a good innings with IAWS Plc, which also emerged out of IAWS Co-op.
And if he achieves a fraction of what he managed with IAWS Plc with his latest venture then shareholders will again get a very solid payback, something that is very important to the 30-plus co-ops with holdings in the business.
At a time when turnover and strategic options face increasing pressure in the agri area, Mr Lynch’s strategic shift in emphasis is already giving the former co-op a new lease of life.
And the word in the market is that analysts are beginning to take notice after the latest NTR move by the Government, suggesting a second coming by Mr Lynch on the stock market is looking more assured now than it had been.
