TIFCO TO BE SOLD IN DEAL WORTH UP TO €600M - US private equity firm Apollo Global Management has agreed to acquire Ireland's second-largest hotel chain Tifco in a deal said to be worth up to €600 million.
Goldman Sachs-backed Tifco owns 18 hotels and sites for two new hotels in Dublin. Several of the properties operate under the Crowne Plaza and Travelodge brands. Tifco also manages a number of other high-profile hotels around the State, including Clontarf Castle in Dublin, the Heritage Resort at Killenard, Co Laois, and the Metropole in Cork, says the Irish Times. The value of the portfolio has not yet been disclosed but is understood to be €500-€600m. The Competition and Consumer Protection Commission has been notified of the transaction. Documents submitted to the commission show Apollo has set up a designated company, Trident Bidco DAC, to take control of the Tifco group of companies, which have been amalgamated for the purpose of the deal. A spokesman for Tifco declined to comment. Tifco is the State's second-largest hotel operator behind the publicly listed Dalata Hotel Group and operates more than 1,800 bedrooms in Ireland. The hotels it manages for others involve just under 800 rooms. It reported a pretax profit of €4 million for 2016, a rise of 22% on the previous year.
***
MALIN SHAREHOLDERS VOTE TO REJECT GOLDEN HANDSHAKES - Shareholders at State-backed Malin Corp rejected its 2017 remuneration arrangements yesterday, in a sign of investor discontent at a company trading at half its IPO price.
The vote is non-binding but is embarrassing for Malin which has embarked on a review of its remuneration policy. Shareholder advisors ISS had previously expressed discontent with severance arrangements for executives, as well as share awards which ISS said should be distributed to executives over a longer time period, says the Irish Independent. Former CEO Kelly Martin exited the business with a €3.2m cash severance. The State backed the life sciences investor to the tune of €50m at its 2015 IPO via the Ireland Strategic Investment Fund (ISIF). ISIF has said this was on the basis of "significant commitments" to invest in Ireland, saying Malin had set targets for backing companies with Irish operations. Since the IPO at €10 a share Malin is now trading around half that level. It has recently excluded its two major Irish investments from its "core" portfolio. CEO Adrian Howd told the company's AGM yesterday that four investee companies - Poseida, Immunocore, Kymab and Viamet - are the "cornerstone" of its portfolio. "Our strategy is to focus our resources on these core assets, with the potential to deliver significant value for our shareholders," Dr Howd said.
***
LOW VAT RATE VITAL TO CORK AND KERRY TOURISM - The hotel and tourism industry has repeated calls to keep the 9% VAT rate, saying regions outside Dublin will be the biggest loser, especially Cork and Kerry, and with jobs at risk.
Despite the fact that hotel room prices have surpassed Celtic Tiger levels and that the exchequer is missing out on €500m yearly from the tax incentive, industry bodies are insisting there is more at stake, including thousands of jobs. According to Department of Finance figures, estimates show that restoring the 13.5% rate for all businesses favoured by the lower rate since 2011 would result in an additional €527m in revenues to the State. Reducing the 13.5% VAT rate, to 9%, was originally envisaged as temporary to bolster industries ravaged by the recession. It has cost the State €2.7 billion since its introduction, according to the department assessment. Opponents of retaining the 9% rate say that it has more than met its original target and that it should be removed, now that the hotel and tourism industries are thriving. However, chief executive of the Irish Tourism Industry Confederation (ITIC), Eoghan O’Mara Walsh, said thousands of jobs in Cork and Kerry could be adversely impacted, if Vat was increased, with 34,000 employed in the industry in the south-west.
***
EY REJECTS CALL TO BREAK UP BIG FOUR - The global chief executive of EY has hit back at calls for the Big Four accounting firms to be broken up in response to mounting criticism of the severe lack of competition in the audit market.
Mark Weinberger said EY, which on Thursday reported record global revenues of nearly $35 billion, needed to draw on expertise from across its business in order to conduct high-quality audits for multinational clients. His comments come in response to pressure in Europe and Australia for some form of government intervention in the market, which is dominated by four companies: EY, KPMG, PwC and Deloitte. In the US, the Big Four audit 99% of members of the S&P 500 index, says the Financial Times. Mr Weinberger, who has run EY's global business for five years, having previously worked in its tax practice, said he understood why there was strong scrutiny of auditors and that "would love to encourage more entrants and have more choice [in the audit market] in the UK and around the world". But he added: "When we bring an audit team out to a client, it is made up of a team of technology experts, tax experts and valuation experts, who all sell time into that audit. We audit Google, Amazon, Facebook, Salesforce and Oracle - you could not serve those clients without a multidisciplinary group of people to assess their risks going forward as a business, and [those employees] don’t all sit in our audit practice. People lose sight of that. I believe that a multi-disciplinary practice enhances our audits," he said. EY’s results showed that its audit practice remained its most important division in the financial year ending in June, accounting for 36% of global revenues.
