Anthony O’Reilly

Over the last fifty years, Ireland's first home-grown international billionaire, Sir Anthony O'Reilly, has built business empires around the world. There have been ups and downs along the way, and the last two years have seen several reversals in his personal fortune, but is it fair to judge fifty years of achievement on the latest setbacks?

Feature image

In a 2006 web-cast interview with American journalist Charlie Rose, Sir Anthony O’Reilly made a profound observation that may provide a clue to what has driven his incredibly motivated and successful career. “It is the ambition of every boy in Ireland and Europe,” he said, “to come to America, as I did in 1971, to ascend to the high altar of being CEO of an American Fortune 500 company. America is seen in the business sense as the most level playing pitch – tough, highly competitive, tremendously mobile but very fair. If you are good, you get to the top. You get to the top not by any old school tie, not by who you know, not by where you went to college, but because you were lucky enough to perform well in your given theatre.”

O’Reilly himself carried not only the perceived disadvantage of growing up in what was then one of the poorest countries in Europe, but also the stigma of being born to unwed parents in a strictly Catholic society, where illegitimacy was something of consequence. Some observers have suggested that it was the revelation that O’Reilly senior had an estranged wife and four children at the time of Anthony’s birth, delivered to him by a Jesuit teacher when he was 15 years of age, that has driven him to prove his worth ever since.

O’Reilly has his own views on the source of his motivation and success. “I don’t think I really know what made me determined to be successful,” he says. “You just don’t know what the motivational aspects are. It’s like a race horse. What made a horse like Rock of Gibraltar put its head down and go for the line? It’s a cliché, but life really is the luck of the draw.”

His first proving ground was on the sporting fields of Dublin, and later the world.  During his school years he played soccer, cricket and tennis competitively and to a high standard, but eventually decided to concentrate on rugby. Between 1955 and 1970, O’Reilly played for Ireland, the British and Irish Lions, and the Barbarians, setting several scoring records, two of which are still unbroken.

His success in rugby brought his first taste of fame, and introduced him to the inner circles of the rich and powerful. The game also taught him, he says, many lessons that served him well in his later business career. “You learned Kipling’s famous lines, ‘to meet with triumph and disaster and treat these two impostors just the same’, because you learned to lose,” he told Rose. “You also learned that rugby is a collegial exercise, as is business.”

Being a largely amateur game, rugby left plenty of time for O’Reilly to pursue his studies in Law at Trinity College, Dublin, and his later career as a brilliant marketer. By the age of 25, he was Managing Director of Bord Bainne, the Irish milk marketing board. This was a fortuitous position to be in, as the agricultural sector was the major driver of the Irish economy and dairy was the key industry in the sector. O’Reilly repackaged Irish butter, branded it Kerrygold, and generated sales of over £20m in three years. He used this experience as the basis for his later PhD thesis, in which he pointed out that the sector had been over-reliant on cash payments and not on commercial marketing.

From there he took over as Chief Executive of the Irish Sugar Company where he worked on putting together a joint venture with HJ Heinz to apply Irish ADF technologies to develop a line of dried soups. In 1969, he faced a pivotal decision: Irish government Minister, Jack Lynch, suggested that O’Reilly join the government where Lynch would like him to become Minister for Agriculture, while at the same time Heinz offered him the position of Managing Director of its UK operations. O’Reilly decided to join Heinz. “It’s not that I am not interested in politics and the political process. Having been with Bord Bainne and the Irish Sugar Company, I was aware of the enormous impact of politics at local and national levels [and] the Minister for Agriculture was a supreme figure,” he noted. “But I did not want to become a party politician.”

In 1971, Heinz promoted him to the position of Senior Vice President for the North America and Pacific region and he moved to Pittsburgh, Pennsylvania. At the time, O’Reilly made it clear that although he was totally committed to the responsibilities of his new role, he wanted to retain his close contact with Ireland, and his outside investment interests. As he tells it, “I talked to my first boss at Heinz and said I have a business in Ireland that I might go back to one day, do you mind? And he said, ‘Tony, let me tell you about America. If the price of Heinz stock goes up, you’ve got a job.  If it goes down, you’ll be back in Ireland picking potatoes again.’”

So for the next thirty years, O’Reilly rose up through the ranks to become CEO and finally the first non-family member to be Chairman of Heinz. In his own words, he transformed the business ‘from a paternal to a professional company’, taking the market capitalisation of HJ Heinz from $900m to over $15bn in the process. During that time, he also sat on the boards of companies like Mobil, The Washington Post, the New York Stock Exchange, and GEC, and built a vast business empire through his Irish investment interests. It was perhaps due to his punishing schedule and commitments around the world that he developed the habit of populating his board with people he could trust, a practice that has raised shareholder concern in his media business.

Ties to Ireland
In what some have suggested was a personal mission to introduce modern management, finance and marketing techniques to Ireland [Aaron O. Patrick, The Wall Street Journal, 22/01/2009], O’Reilly bought into a wide range of Irish businesses, from manufacturing and food to mining and energy exploration. In 1990, he turned his marketing expertise to helping Ireland’s most famous brand, by buying into Waterford Wedgwood. Another investment in 1973 became the beginnings of his media empire, Independent News Media (INM), when he purchased Dublin’s Independent newspaper. By 2007, through acquisition and diversification, he had transformed this €1m domestic newspaper business into a leading global media and communications group worth €1.6bn.

But he didn’t just invest in the country’s businesses; he invested in its future.  Although O’Reilly decided not to enter Irish politics, he did remain committed to the country’s welfare, and worked tirelessly to bring about his dream of peace. He was clear in his mind that what was needed was education, opportunity and prosperity, and that isolationism was not the way to achieve this vision. “We invited in American capital in a big way when we lowered the corporation tax rate to 12.5 percent,” he tells Rose. “Foreign investment in the Republic of Ireland grew to $27bn in 2004, and per capita income shot up to be the highest in Europe.”

That affluence, he said, made people realise that “true freedom, true sovereignty was the ability to feed, clothe and educate our people of our own volition,” and he has been trying to persuade the UK government to enact the same tax rates in Northern Ireland. His dream is not of a unified, but a ‘communified’ country. “The old flames of nationalism… have now been quenched by prosperity and partnership in Europe, so Northern Ireland is an anomaly. Politically it will want to be different but I see the two economies becoming ever closer together,” he told Rose.

Backing up his dream and rhetoric, O’Reilly has been a generous benefactor in both communities, always in support of his ideals of education and opportunity. His philanthropic endeavours have seen him personally fund a number of projects at educational institutions including trinity College Dublin, University College Dublin and libraries at Dublin City University and Queen’s University in Belfast. His O’Reilly Foundation supports a programme of scholarships to provide world-class educational opportunities for young Irish scholars, both north and south. He was also instrumental in establishing the non-denominational Ireland Fund dedicated to peace, culture and charity for all of Ireland, for which he was knighted in 2001. To date, the fund has administered almost $300m to many good causes.

The O’Reilly era
No one who has met Sir Anthony would deny that he exudes charm, but charm alone will not build million pound businesses into billion pound businesses. In an article written for the New York Times in May 1988, colleagues at HJ Heinz praised O’Reilly’s management, style and attributed senior staff loyalty and performance largely to him. One senior vice president commented, “Tony sets tough goals, but they are consistent, unambiguous and fair.” David Sculley, then President of Heinz USA, was quoted as saying, “Tony is very competitive, and his scorecard is the bottom line. But he is also motivated by friendship. He’ll go that extra mile for people, so we’ll go that extra mile for him.”

Looking back, Sir Anthony himself has observed, “In all of the companies I have run, I have been able to assess the quality of management over a term of years, in terms of effort, creativity, innovation, perseverance and collegiality.” [press office] Perhaps the most telling aspect of this assessment is the idea of the longer term perspective, which seems to underlie his approach to business development overall. Combine that willingness to take the long term view with a willingness to make mistakes – he once said “a company has got to have room to lose money to make money” – and you have the modus operandi of someone who creates huge shareholder value when it works, and is the subject of much public criticism when things go wrong.

The last twelve months seem to be one of the periods when things are going wrong. The global economic slump has seen the value of O’Reilly’s investments in several mining and energy companies more than halved, and is responsible, he suggests, for some of the foreign exchange and cash flow problems that led to the demise of his beloved Waterford Wedgwood, which was put into administration in January of this year.

No doubt his biggest headache of the year so far has been brought on by an on-going dispute with a critical shareholder in his INM news media group. Denis O’Brien, another Irish media industry tycoon, has been airing concerns publicly since he first began to acquire shares in 2006. Claiming the composition of the board, which includes three of O’Reilly’s children and several trusted friends, raises serious corporate governance concerns, O’Brien has been steadily acquiring a larger stake, and demanding sweeping changes. Backing up his claims, recession induced falls in both readership and advertising revenues have exposed debt worries and underperforming assets.

Matters came to a head with the news that INM had to redeem a €200m bond in May, triggering a drop in the price of INM shares of over 80 percent. With shareholdings in excess of 25 percent each, both men suffered major personal losses and at last entered discussions to resolve the situation.

The solution, announced on 13 March was that Chief Executive, Sir Anthony O’Reilly would retire on his 73rd birthday in May, after 36 years with INM. The INM share price doubled on the Dublin Stock Exchange at the news, signalling relief in the markets that the board can finally turn its attention to restructuring the business and sorting out its debt issues.

It is doubtful that a man with O’Reilly’s passion and energy will retire fully from public life, but this is certainly the end of an era. INM Chairman Brian Hillery summed up the feeling of many people in Ireland when he said, “Tony has been a significant business leader for more than 45 years and has been a key figure in the making of modern Ireland.”