Well-known motor dealer Eugene O’Reilly’s family faces being drawn into a dispute in Ukraine involving Irish building materials giant CRH, local rival Kovalska and the country’s mergers regulator.
The anti-monopoly committee of Ukraine last year allowed CRH to buy cement maker Dyckerhoff Ukraine from its previous owner Italian group Buzzi.
This sparked legal challenges by the local building materials business, Kovalska, and protests over the deal’s likely impact on competition in the market for a vital building material.
It emerged this week that Divinereach Ltd, controlled by the O’Reilly family, owner of Hyundai Ireland motor distributors, has bought 25 per cent of Dyckerhoff from CRH, which was obliged to sell the stake to an independent third party as a condition of being allowed to buy the manufacturer.
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The news comes as Kovalska prepares to appeal the anti-monopoly committee’s original decision to allow CRH to buy Dyckerhoff, which runs two cement plants, to Ukraine’s supreme court next month, arguing that the deal threatens competition.
The Irish group, the world’s biggest building materials maker, said its purchase of Dyckerhoff was completed in line with international practice, in full compliance with the law and the regulator’s approval.
The anti-monopoly committee approved the sale of the minority stake to Divinereach in June. It is understood that the transaction followed an independent competition to find a buyer for the shares, and the company has no connection to CRH.
However, a local industry body, the confederation of builders of Ukraine, wrote recently to Minister for Foreign Affairs Simon Harris, saying Divinereach was registered in March and had no “documented experience” in cement manufacturing.
“This raises legitimate concerns among the business community about its role in the transaction,” says the confederation’s letter.
Divinereach did not comment at the weekend. Company filings confirm it was registered in March. The directors are Eugene O’Reilly jnr (43), group managing director, Hyundai Ireland, Susan Jones and Niall O’Hanlon. Stephen Gleeson, managing director, Hyundai Ireland, is company secretary.
Eugene O’Reilly snr (76) founded the Hyundai business. He is best known for his motor trade involvement, but he and his family have backed other ventures, including property development.
Next month’s supreme court hearing of Kovalska’s challenge to the anti-monopoly committee’s decision to approve CRH’s takeover of Dyckerhoff will be the final round in litigation the local player began last year.
The company won in the Kyiv commercial court in February, but that was overturned on appeal. Kovalska then took its claim to the supreme court.
Kovalska argues that the acquisition gives CRH 46 per cent of Ukraine’s cement market on average and up to 99 per cent in some regions. Ukraine defines market dominance as 35 per cent, while the European Union benchmark for this is 40 per cent.
Ukraine faces a €506 billion bill to rebuild after the war with Russia and cement will be critical to those efforts. It will need 20 million tonnes of the material a year, but even before the conflict could only produce 11 million.
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Kovalska chief executive Sergii Pylypenko told The Irish Times that his business simply wants “normal market competition”.
CRH described the company as an “unsuccessful bidder” for Dyckerhoff. However, Mr Pylypenko denied any interest in this, saying the company’s plants were “old, inefficient Soviet-era” factories.
CRH has invested €600 million in Ukraine since 1999, including €80 million since Russia’s invasion.
“We have continued to invest in our business and support our 2,000 employees in Ukraine throughout the conflict,” said the company.
It added that Ukraine was a strategically important part of its European business and said the acquisition of Dyckerhoff’s Volyn and Pivden plants allowed further investment in modernising production to meet demand for critical infrastructure and housing.
