Qualceram In Buyout Bid

By John Mulligan

Friday March 21 2008

Arklow-based bathrooms and bathrooms suites firm Qualceram Shires could be valued at as much as €25m if a preliminary approach made towards the company leads to an offer.

Releasing disappointing preliminary results for 2007 yesterday, Qualceram said it had received the approach from a third-party and stressed that no offer might ultimately be made.

Three directors at the firm, including chief executive John O’Loughlin, who own almost 40pc of the company between them, are not involved in the approach, which is understood to have been made by an industry player from outside the country. One name touted yesterday was American Standard, a supplier of kitchen and bathroom accessories.

However, sources were at a loss to pinpoint a potential interested party, pointing out that Qualceram has evolved into much more of a distributor than manufacturer, and as such it was difficult to ascertain where the appeal in the company might be. The firm has already disposed of its Arklow site for over €30m.

Qualceram said yesterday 2007 revenues fell 12pc to €90m, while operating profit for the year slumped €3m to €1.1m. It said annualised cost savings introduced since the start of 2008, and accrued for in 2007, amount to €3m.

Mr O’Loughlin said that management is confident Qualceram can weather the downturn and emerge as a “stronger group, positioned for growth”.

Qualceram has been hammered by the slump in residential construction in Ireland, where it generates about 45pc of its sales. Most of the remainder comes from the UK.

One analyst said while the downturn in Qualceram’s sales in the Republic were to be expected, the extent of the poor second-half performance in the UK was less anticipated.

Mr O’Loughlin, sales and marketing director John Byrne, and production and technical director Thomas Byrne, each own almost 14pc of Qualceram.

They could be in line for a payment of up to €3.5m each if an offer was secured at €1.13 per share, although such a figure could be impacted by a writedown of intangible assets.

The stock closed the day yesterday at €1, up just over 2pc.

– John Mulligan

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