Belfast Telegraph

View from Dublin: takeover could usher in a new era for INM

CEO Gert Ysebaert and chairman Thomas Leysena of Mediahuis in Dublin
CEO Gert Ysebaert and chairman Thomas Leysena of Mediahuis in Dublin

By Richard Curran

The speed with which Belgian newspaper publisher Mediahuis moved to nail down its proposed takeover of Independent News & Media (publisher of this newspaper) took some by surprise. It was all over before breakfast.

The company, led by chief executive Gert Ysebaert and chairman Thomas Leysen who were in Dublin last week, has newspaper and online publishing assets in Belgium and the Netherlands, and already looks pretty much over the line having secured the backing of Denis O'Brien and Dermot Desmond, who together held almost 45% of the company.

While some shareholders at the AGM were unhappy that INM was being sold too cheaply, the price has to be seen in the context of unknown costs relating to the legacy issues being investigated by Irish High Court inspectors.

Big challenges remain, from that ongoing probe, to taking the plunge on a paywall for digital editions of newspaper titles. Mediahuis has the advantage of being a privately-owned company with the experience of successfully making the transition to digital paywalls. It doesn't look like it is in it for a quick buck, but is more likely to be a long-term player.

The inspectors' investigation will drag on but for the prospective new owners it is a matter of putting a number on the possible cost and finding a way to balance management's time between this legacy issue and important decisions about the future.

The takeover should usher in a new era for the company, but it will also see it disappear from the stock exchange where it floated in 1973. On that front, the last few weeks have seen other imminent departures from the exchange.

Last month financial services firm IFG Group said it had agreed a takeover offer from UK private equity firm Epiris. IFG listed in Dublin in 1996.

Just a few weeks later, Green Reit surprised the market by saying it was effectively putting up a 'for sale' sign and exploring options for bidders for its assets or the company itself.

Either way it is likely to lead to it de-listing from the exchange.

The imminent takeover of INM becomes number three in less than two months.

And others may well be on the way. Datalex is now attracting the dreaded word 'troubled' before its name appears in newspaper headlines after announcing that its chief executive Aidan Brogan has quit with immediate effect.

Its biggest shareholder Dermot Desmond has shored things up by effectively making €10m available to the company through new equity and a loan.

But three senior departures in a row are significant.

Mr Brogan becomes the third of the top three executives in the firm to leave. Chief financial officer Donal Rooney said in February he would be leaving.

Just over a week ago, chairman Paschal Taggart announced his departure from the firm and this was closely followed by Mr Brogan.

Deputy chairman Sean Corkery has stepped into an executive role. The hunt may be on for a new chief executive but given the findings of accounting irregularities, and the loss of a CFO, CEO and chairman, it will be a long, hard road to rebuild both the business and investor credibility.

- It has been a bad week for the 4,000 or so Northern Ireland employees at aerospace giant Bombardier. The parent company said it plans to sell its Belfast operations.

Brexit was hardly the cause, given Bombardier group's wider challenges to cut costs and restructure. However, Brexit uncertainty was probably a factor in the discussions about the future for the operations at four different plants in the Belfast area.

The company came out in favour of backing Theresa May's Brexit withdrawal deal (backstop and all) earlier this year.

Bombardier's northern operations have a future as an outsourced manufacturer for the Canadian parent group, so jobs are safe. The question is - how many? The business has huge investment and skills built up over a very long time. Shorts has been there since 1936.

When it comes to outsourcing, price is the big factor and the pressure to continually cut costs on contracts is very real.

Deliver the next contract more cheaply or lose the gig is very real for outsourced manufacturers.

Bombardier in the north does work for other companies, outside the parent group, but accounts for the Belfast-based division show this declined sharply in 2017 from $206m (€184m) of revenues in 2016 to $146m the following year. Work for Bombardier generated $536m in 2017.

The other big issue for staff is pay, pensions and conditions. Bombardier, formerly Shorts in the north, was seen as a model employer. Average pay in 2017 was €51,497 per employee, when the average pension contribution of €12,205 is included.

The workforce is almost exclusively on a defined benefit pension scheme. Bombardier has been reducing headcount for a couple of years, with 1,080 redundancies in 2016. Average severance was €41,450. Headcount was reduced by another 375 in 2017, with an average severance cost of €52,757.

Uncertain times for a business that accounts for 8% of Northern Ireland GDP and 40% of its manufacturing output.

Belfast Telegraph

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