Musgraves head scoops € 40 mln from sale of stake

The chairman of Musgraves, the Cork retailer that owns the SuperValu and Centra brands, earned between €35 million and €40 million from selling 10 per cent of the company. The sale of Hugh Mackeown's shares, which value the company at between €350million and €400million, was completed last year.

Mackeown reduced his shareholding in Musgraves from 11.5 per cent to just over 1 per cent. He sold more than six million shares back to the group in 2004, leaving him with 622,221 shares at the end of the year.

Mackeown's cousin Peter increased his stake slightly to just over 14 per cent last year, valuing his holding at between €49 million and €56 million. The other major shareholders are Stuart Musgrave and former managing director Seamus Scally, who own 4.5 per cent and 1.7 per cent respectively.

John Bailey, a retail analyst with London finance house SG Securities, said that Mackeown's disposal of 10 per cent of the company would improve the earnings per share for the remaining shareholders. Bailey said it was a tactic used by a number of large privately-owned business.

“Buy-back schemes are becoming increasingly common,” said Bailey. “It switches the company's equity into debt and has a positive effect on the balance sheet. “It improves the relationship between the company's equity and its debt.”

Although Musgraves is privately-owned, its shares are traded among senior staff at different rates. They were trading at between €3.50 and €3.75 per share about 12 months ago. At those rates, Mackeown's shares would be valued at about €22.5 million. However, it is thought that he negotiated his own price independently of those valuations.

Last month, it emerged that former Musgraves executive, Eoin McGettigan received €1.073 million in “compensation for loss of office'‘ when he left the group earlier this year. The compensation related to the purchase of his shares in the group.

Another former Musgraves executive, Michael Nason, who was managing director of the SuperValu/Centra franchise for the Republic, has launched a High Court action against the company over the valuation of his share options.

Musgraves recorded pre-tax profits of €68.5 million from sales of €3.76 billion. There are more than 220 SuperValu and 430 Centra outlets in the 32 counties. The group increased its dividends by more than €2 million to €14.22 million, representing a return of 24 cent per share.

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