Outsized business ventures shaped our economic story

Tony O’Reilly’s spectacular success was followed by series of downfalls, writes Donal O’Donovan

In hindsight, Tony O’Reilly’s most enduring business legacy might be his first: the creation of the Kerrygold brand to market Irish butter internationally in 1962 when he was still in his 30s. Kerrygold is the only Irish food brand worth more than €1bn a year in sales, and rivals much older brands for international reach and recognition.

Ironically, for a man who came to be defined as a captain of capitalism, O’Reilly’s early success was in the public sector. He led the then Bord Bainne from shortly after it had been set up by the Lemass government to promote Irish agriculture – and before what’s now Ornua had been acquired from the State by farm groups.

Even if he had never gone on to do anything else, it would have secured O’Reilly a footnote, at the very least, in the annals of Irish industry. A genius for branding and marketing had been noticed, though, and he did go on.

First into Irish Sugar, then another state company and this time on a much bigger scale. The youthful O’Reilly’s replacement there of War of Independence veteran General Michael Costello made him emblematic of a generational push against the conventions of post-independence Ireland.

In the late 1960s, the O’Reilly vision was in the ascendant, not only in Ireland, and after agreeing a tieup between Erin Foods and Heinz, he eventually made the leap to the private sector, joining the global food group and ascending rapidly to become global chief executive running its global empire from Pittsburgh.

The move to Heinz put O’Reilly on course to join America’s corporate elite and to become spectacularly wealthy, though at the cost of a potential political career at home. By the time he left Irish Sugar, the charismatic and successful former rugby international could have had his pick of fast-tracked political careers – Jack Lynch reportedly offered to make him a minister.

Where O’Reilly really departed from that of any other corporate high flier was his decision to essentially operate two parallel business careers at once. His day job was Heinz while at the same time he built an entirely separate business empire back in Ireland.

In 1971, two years after joining Heinz, O’Reilly and two partners – business journalist Nicholas Leonard and former Irish Sugar financial controller Vincent Ferguson – initiated a dramatic round of corporate deal-making under their Fitzwilliam umbrella that shook up the then sleepy Irish stock market. It laid the foundations for a putative conglomerate on a model then in the ascendant on Wall Street and in London. Financial engineering, spinning bank debt and raising equity to fund acquisitions became the hallmark of the business and eventually of O’Reilly’s other major Irish ventures, perhaps inevitably given his primary focus on Heinz, but initially boosted by an inflationary surge that rewarded acquisition over innovation.

The Irish empire suffered a big but not catastrophic setback after reversing Fitzwilliam into the venerable Irish fertiliser business Gouldings, where big debts proved incompatible with the volatile commodity prices.

In the meantime, in 1973 O’Reilly had bought the business he would become best known for in Ireland – the then Independent Newspapers Group. It was acquired from shareholders, including the family of William Martin Murphy, the by-then long-dead “Lockout era” tycoon who had been Ireland’s most powerful businessman before the O’Reilly era.

What became Independent News & Media made O’Reilly a major player in Irish life not only because its papers were the country’s biggest sellers, but in the pre-internet era they were massively profitable. The group underwent a debt-funded expansion to become a global mini-empire with papers in the UK, Australia, New Zealand and South Africa, paying huge money for new titles while generating big dividends for an army of investors who had come to back O’Reilly’s every move on the Irish Stock Exchange. It couldn’t last, and eventually it didn’t.

INM over-invested in acquisitions but under-invested in innovation. Its print plants were state of the art but managers ignored or misunderstood the internet. Too much debt and too little focus on the product probably also characterised the O’Reilly-led takeover of Eircom, the former stateowned Telecom Éireann, but there he and his backers reaped big financial gains having floated the business on the stock market before the effects of underinvestment bore their bitter fruit.

Debt wasn’t an issue at Atlantic Resources, which O’Reilly created in 1981 to scour Ireland’s offshore waters for oil and gas in the wake of Britain’s successful North Sea strikes. Again, his charisma and aura of success helped the businessman raise millions of pounds from investors captivated by the prospect that Ireland’s seas must have held almost limitless wealth.

Despite four decades and hundreds of millions of euro raised through a number of iterations, eventually centred on Providence Resources, the hunt proved fruitless. Even more fruitless was Waterford Crystal, the well-established glassware brand that O’Reilly bought into in the early 1990s and eventually came to control along with his brother-in-law Peter Goulandris. As the luxury business, which eventually included Britain’s Wedgwood and Royal Doulton brands, foundered in the 2000s, the two continued to pour hundreds of millions in to support it, without success.

That financial drain would cost O’Reilly when he eventually tried to face down Denis O’Brien for control of INM as it too struggled in the wake of the financial crisis. The two men had become bitter rivals and the younger O’Brien’s then cash-rich Digicel telecoms empire gave him the upper hand just as O’Reilly’s access to funding hit a low. Coming as it did in the wake of the financial crisis, the crisis for O’Reilly at INM echoed events happening in businesses and at kitchen tables across the country as the highs of the Celtic Tiger gave way to the lows of recession and austerity.

The O’Reilly family was forced out of INM in the ensuing bitter boardroom scrap, but O’Brien’s victory would be pyrrhic. As the media landscape soured, O’Brien lost around the same amount by winning the INM battle that O’Reilly had in losing Waterford Wedgwood.

As his assets ran out of time and money, O’Reilly lurched into bankruptcy. Too old to rebuild his shattered empire, he slipped quietly out of public life altogether.

If his own finances didn’t recover, some of the seeds he planted along the way have more than held up. Kerrygold’s huge success in the US means it returns hundreds of millions of dollars a year to Irish farmers, while Landis + Gyr, a once small Swiss metering business O’Reilly backed with his son Cameron, is now a major global player in the shift to renewables.

More than anything, though, it was the close ties O’Reilly forged between US business leaders and Ireland, and the then scale of ambition he carried back home with him that have proved transformative to the economy here.