British Telecom pays €15m for Cara technology group

One of the Republic's oldest technology companies has been bought by British Telecom in a deal valued at €15 million.

BT Ireland said yesterday it had purchased Cara Group, which was established more than 30 years ago by Aer Lingus. It was sold to management in 1994 for £6.3 million (€8 million), before being sold on to French IT company Groupe Bull for €18 million.

In 2001 it was the subject of another management buyout - this time valued at €33 million - which was backed by Hibernia Capital Partners, the venture capital group controlled by Shane Reihill.

BT Ireland would not reveal the purchase price, as chief executive Danny McLaughlin said the company was in a closed period in the run-up to releasing its results next week. However, informed sources said it paid in the region of €15 million for the company.

BT bought a similar company in Northern Ireland last year, BIC Systems. It paid £17 million sterling (€25 million) for that business. Both Cara and BIC are the same size in terms of turnover and assets, but the latter firm has a larger workforce.

Cara employs 134 people in Cork, Belfast and Dublin. According to BT, it had sales last year of €38 million and its assets at December 31st 2004 stood at €10 million.

BT did not reveal if the group made a profit in 2004. Cara's returns to the Companies Registration Office show that it lost €1.3 million before tax in 2003 on sales of €36.2 million, and just over €1 million in 2002 on sales of €44 million.

The main beneficiaries of the deal are Hibernia Capital Partners which, along with Trinity Venture Capital, was established by Mr Reihill after he sold his stake in Tedcastle, the family fuel business, in the later 1990s.

Cara was originally part of Aer Lingus before a management buyout. Maurice Foley, one time head of GPA, is a former chief executive. David Little is its current chief executive and was involved in both buyouts.

Merging BT Ireland and Cara will create one of the largest networked information technology services companies in the country. The group supplies and services a large number of State and Government bodies. Mr McLaughlin said this was one of the attractions of buying Cara.

"Up to now, BT Ireland has got a very, very small share of Government business," he said.

"We think this will give us the right skills, capabilities and scale we need for that."

Mr McLaughlin explained that the purchase was intended to help it achieve its target of being the largest supplier of networked IT services in Ireland.

BT employs 3,900 people north and south. Its local subsidiary, BT Ireland, is due to publish results for the first half of the year next week, at the same time as its multinational parent.

In the year to the end of March, the group had sales of more than €27 billion and profits before tax of €3.4 billion.