KELVINSIDE Holdings, an acquisition vehicle set up by a consortium headed by former Inishtech managing director, Mr Brian Molloy, is on the verge of clinching its first deal. It is at an advanced stage of negotiations with a north of England printing company. An announcement is scheduled for next week.
The deal could involve the payment of around £1.25 million, which would be financed by equity and bank finance. The target company is involved in design and printing, and industry sources say it has a lot of potential. Sales are understood to be in the region of £4 million sterling.
Mr Molloy left Inishtech in July, not long after the outstanding shares were acquired by James Crean, the industrial holding company. His resignation was not announced as he was not a director of the publicly-quoted Crean, which has now put Inishtech up for sale.
Kelvinside was established by Mr Molloy, who is credited with spearheading Inishtech's rapid expansion in the paper, print and packaging sector, and Mr Fred Rangolan, former managing director of Droyhurst, the Colchester-based commercial printing subsidiary of Inishtech. These are the sectors now earmarked by Kelvinside.
The initial objective of Kelvinside is to acquire a 100 per cent, or a controlling stake in British or Irish paper, print and packaging companies. Its criterium is to target further bolt-on businesses once a core business has been acquired. The target businesses will have to be in growing markets with a capacity to increase their market shares, according to Kelvinside.
Mr Molloy and Mr Rangolan founded Kelvinside with an equity injection of £5 million. They have a 14 per cent stake between them. Mr Tom Toner, former chairman of lnishtech (and chairman of a number of other companies such as Arnott, Irish Continental Group and Tullow Oil), has a 5 per cent interest, while a number of Irish institutions have holdings of some 5 per cent each. However, the largest individual stake, 20 per cent, is held by Delta Partners, a venture capital company, operated by Mr Frank Kenny who, along with Mr Toner, is on the Kelvinside board. There are also a number of private investors.
Kelvinside operates with a skeleton staff from ICL House in Leopardstown. It has already circulated over 300 mergers and acquisition brokers in Ireland and Britain with a profile of what it is looking for. It says it has substantial bank funding available which provides it with around £15 million to make acquisitions.
Kelvinside is looking for companies making profits of between £200,000 and £1.5 million.
Crean last week announced disappointing results. These showed marginally lower pre-tax profit of £9.5 million in the six months to June 30th, 1996. Sales in its paper, printing and packaging division were up 19 per cent to £46 million while operating profit grew by 7 per cent to £5.3 million. A number of companies have expressed an interest in acquiring Inishtech.
