UNILEVER'S takeover bid for Lyons Irish Holdings is a blow for Allegro. The expanding private distribution company was a strong contender for Allied Domecq's stake in Lyons.
Buying Lyons would have cleared the way for Allegro to become a publicly quoted company on the Irish Stock Exchange. Managing director Mr Dermot Divilly has made no secret of his ambition to take Allegro to the market.
Allegro was formed in 1988 when a number of financial institutions bought out the Irish operation of Albright and Wilson. The company imports and distributes branded products, including detergents, food and toiletries to the retail and catering sectors.
In 1994, Mr Divilly, who owns about 10 per cent of the company, led a £27 million management buy out of Allegro with finance director Mr Greg Lawless. The buyout was supported by two venture capital companies, ACT and Mercury Asset Management. Two institutions, Standard life and Norwich Union, took shares in the company.
The company has grown rapidly. Turnover has increased from £90 million in 1990 to over £180 million.
Lyons would have been a good business "fit" for Allegro. The company would have been able to get transport and administrative synergies as well as adding a high margin turnover of about £26 million. The acquisition would have given Allegro the scale to make it attractive as a publicly quoted company as well as allowing it access to a listing on the Irish market.
It is not clear why Allegro failed to acquire Lyons. Mr Divilly was not available for comment yesterday but market sources maintained the company had been in negotiations with the vendors until very, recently.
At 325p per share, Allegro would have had to raise funds to make the acquisition. But the price had fallen from the levels at which Allegro first showed interest and the company would not have had any difficulty in arranging banking facilities.
For Allegro, the loss of the acquisition opportunity will be a setback to its growth plans, but the company is expected to continue to look for new expansion opportunities.
