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Bank of China leads country's renewed interest in Goodbody but Davy still in mix

Bank of China Ltd. is ahead of rival bidder Davy Corporate Finance in its bid to acquire Goodbody Stockbrokers, according to media reports.

Goodbody employs about 300 staff and is being sold by FEXCO Holdings Ltd., which owns 51% of the business. The Irish firm's management and staff own the remainder.

Bank of China's interest comes after a previous bid from a Chinese group came to nothing. Davy is also said to be interested, though a tie-up between the two Irish rivals is likely to result in job cuts, The Irish Times reported.

Fresh offer from China

Bank of China is reportedly the leading bidder for the Irish brokerage with an offer of €150 million. The bid comes just months after a deal with another Chinese group, a consortium called Zhong Ze Culture Investment Holding, fell through after a long period of negotiations.

Known as ZZ, this consortium included China's state-owned aerospace and defense firm Avic. The two sides discussed a sale for two years after originally considering a joint venture.

Goodbody's management, led by Managing Director Roy Barrett, and Fexco decided at the start of this year not to take the Zhong Ze-led bid any further due to doubts about the makeup of the consortium, which had changed after the initial approach, according to the newspaper.

Three in the running

Although Bank of China is lead bidder for the group this time, two other groups are also in the running. Davy is still a potential acquirer of its rival, while the remaining bidder is Irish Life, though it is described as a distant third out of the three, The Irish Times said. A successful bid from Davy would be likely to result in job losses as the combined group would seek to trim overlaps, according to the report.

Fexco acquired Goodbody for €24 million in 2010 from Allied Irish Banks PLC after the financial crisis. The firm received a major boost after the Irish Stock Exchange was sold to Euronext NV in 2018. The exchange had been owned by Goodbody along with four other groups including Davy. Goodbody's share of the sale came to €45 million, while Davy received €60 million.

Strategic moves

Both Goodbody and Davy have used those funds to expand their operations. Goodbody has had a capital markets and corporate finance operation in London since 2015, while Davy has focused on its wealth management business and has previously described its role in the U.K. as that of a potential consolidator. Last year, Davy recruited Bernard Byrne, CEO of Allied Irish Banks, Ireland's largest lender, to add to its executive firepower.

Meanwhile, China's interest in Ireland has been considerable in recent years and Ireland has worked hard to ensure Chinese firms are made welcome. Ireland did not back a Franco-German plan in 2017 for tougher European Union screening of China's investments in the bloc, while various Irish ventures have benefited from Chinese investment, including its pharmaceutical industries and the aircraft leasing sector. Bank of China, meanwhile, already has a wholesale banking operation in Ireland.

Goodbody and Davy declined to comment while Irish Life and Bank of China did not respond to requests for comment.