THE MANAGEMENT team at Ballsbridge-based stockbroker Merrion Landsbanki is believed to be preparing a bid to take back full ownership of the business after Icelandic financial group Straumur-Burdaras yesterday cancelled plans to buy the Irish company as part of a €380 million purchase of assets from its troubled compatriot Landsbanki.
Straumur-Burdaras said it had decided to withdraw from the deal after Landsbanki was placed into receivership earlier this week by Iceland's financial regulator, and the British government took measures to freeze Landsbanki's assets in Britain.
The €380 million transaction, which was announced on October 1st, included the purchase of Landsbanki Securities (UK) Ltd and Landsbanki Kepler.
"It has become clear that Landsbanki will not be in a position to fulfil its obligations under the share purchase agreement," a statement from Straumur said.
It is understood that Merrion's management team, led by John Conroy, is now preparing to put together a bid for the company.
Merrion was sold to Landsbanki in November 2005 in a deal that involved an up-front payment and three additional payouts based on certain performance targets being met.
In August, it emerged that Landsbanki had paid €41 million earlier this year for an additional 17 per cent stake in Merrion Landsbanki. This brought its total investment in the Irish stockbroker up to almost €90 million for an 84 per cent share of the business.
An additional payment of about €20 million was due next March for the remaining 16 per cent of Merrion.
It is understood that the value being assigned to Merrion as part of the Straumur acquisition was about €190 million. The Irish broker made a pre-tax profit of €25.5 million in 2007. It also owns the Irish investment management business Oppenheim, which was recently re-branded as Merrion Investment Managers.
Given Landsbanki's current financial woes, Merrion's management team will seek to acquire the Icelandic bank's share for a knock-down price.
The Icelandic bank could be prepared to engage in a fire sale of Merrion in a bid to generate much-needed cash-flow.
The 16 per cent of Merrion not owned by Landsbanki is held by the stockbrokers' management and senior management and New York-based investment bank Allen Co, which is thought to still own about 4.5 per cent of the Irish company.
This 16 per cent holding by Merrion management and Allen Co means it is highly unlikely that anyone could successfully mount a counter bid for the Irish stockbroker.
