Textile rental firm Connacht Court Group (CCG) has been sold to Dublin-based National Linen for £14.7 million sterling (€20.8 million) by British company Johnson Service Group.
Johnson purchased CCG five years ago for some £25 million but has since been disappointed by its loss-making performance.
A pre-tax loss of £0.9 million was recorded for last year on turnover of almost £18 million. The weak performance came in spite of substantial investment from Johnson, which will now exit the Irish market.
National Linen joint chief executives and founders, Mr Denis O'Callaghan and Mr Séamus Desmond, described CCG as "an excellent fit" for their company.
Mr O'Callaghan said National Linen planned to continue the investment programme begun by Johnson.
National Linen was established in 1998 to win business in the hotel sector and has since grown into a successful supplier of textile rental services to the hospitality, restaurant and workwear sectors.
The company operates mainly from Dublin but recently announced the construction of a facility in Cork.
Accounts filed with the Companies Office at the start of this year showed that the firm made a pre-tax profit of €613,000 in the year ending April 2002.
Turnover was in the region of €14 million.
The Guinness Ulster Bank Equity Fund has held a minority stake in National Linen since its foundation.
CCG specialises in the industrial, retail, healthcare and hospitality markets and is active mostly in the west of Ireland. The firm includes a specialist division providing services to hospitals and nursing homes.
It was established at the start of the last century in Galway by the Goodbody family, which has links to the stockbroking and legal firms of the same name.
The enlarged National Linen will see staff numbers rise from 220 to about 650 staff in 10 locations around the Republic. No job losses are expected, with the two firms operating in essentially separate market segments.
National Linen was advised on the deal by Deloitte & Touche in Cork and Cork-based law firm O'Flynn Exhams and Partners. The purchase was financed with borrowings from Bank of Scotland. Mr O'Callaghan said his company was taking on "very little" in the way of debt.
In a statement issued yesterday, Johnson said CCG's future prospects did not merit continued investment.
The British firm last year changed CCG's management structure and invested in technology. CCG's future was known to be under review at that time.
Johnson said yesterday that it would use the proceeds from the sale, which have been adjusted by £1.2 million to reflect pension liabilities, to reduce borrowings.
Johnson will take an exceptional charge of £10.5 million in respect of the write down of goodwill on CCG.
