Tony O'Reilly: "I Want More of Everything"
The retired billionaire finds there are empires to build after Heinz
Like many a jet-setting billionaire, Anthony J.F. O'Reilly is a tough man to pin down. When he's not hanging out at his pad in Normandy--the former home of William the Conqueror--he might be at his estate in his native Ireland, charming guests into the early morning with wry impersonations or pondering whether his wife's new Jackson Pollock is hung right side up. In New York, he can be found padding around the presidential suite of the St. Regis Hotel, which is where he was just before heading to Pittsburgh for the gala Dec. 9 opening of the $20 million O'Reilly Theater. "I am a maximalist," the 63-year-old freely admits. "I want more of everything."
Which may explain why, after stepping down as chief executive of H.J. Heinz Co. in April, 1998, O'Reilly has not exactly put his feet up and taken a breather. As corporate executives go, O'Reilly was a curiosity during the 19 years he ran Heinz because he insisted on having business interests outside the global giant. Now the gregarious brand builder is gearing up ambitious plans across his little-known empire. "If Tony was 40 years younger, you get the sense he would be working for an Internet company," says longtime Heinz watcher John M. McMillin of Prudential Securities Inc. "He can smell action."LAME STOCK. In fact, he is venturing onto the Internet--and a whole lot more. Across a swath of industries, O'Reilly is plotting spin-offs, new ventures, and acquisitions. With a fortune valued at $1.3 billion, money may not be the issue. At stake is O'Reilly's hard-earned legacy as a champion of shareholder value. In the past two years, the stock prices of his three biggest holdings--Heinz, Independent News & Media, and Waterford Wedgwood--have sputtered. O'Reilly's master plan is to have all three return to their previous heights. But it is also to refocus his interests and play an even bigger role on the world stage.
In the second act he has scripted for himself, O'Reilly will rule over interests ranging from hotels to supermarkets and financial services (table, page 160). But he'll pay closest attention to luxury goods and media, which promise to be among the new millennium's hottest realms. Indeed, that better suits this self-described historian, who hobnobs with world figures such as Nelson Mandela and Henry Kissinger. As O'Reilly's son Gavin puts it: "He has always been more interested in newspapers than ketchup or baked beans."
In some respects, though, Act Two borrows heavily from Act One. It was at Heinz that O'Reilly established himself as a marketing whiz--one who was slightly ahead of his time in obsessing about building brands and penetrating global markets. With Independent News, he has stitched together a string of 160 newspapers covering big chunks of the former British Commonwealth. He's now investing in Web and other broadband services in a bid to create an international information powerhouse. "I would like the papers to be a major force in world media over the next decade," he boasts.
With Waterford Wedgwood, a sleepy maker of crystal and ceramics that he and associates rescued from near-death in 1990, he is looking for deals to expand into everything from leather goods to watches to jewelry. O'Reilly is spending New Year's Eve with his wife and mother-in-law on Lyford Cay in the Bahamas (he has a place there, too), but he may have scored the marketing coup of the millennium by arranging for a 1,000-lb. Waterford crystal ball to take center stage in Times Square for the big moment.MERGER TALKS. Meanwhile, even though O'Reilly will step down from Pittsburgh-based Heinz as chairman and a director next spring, it has hardly been the smooth exit he might have wanted. What began as a triumphant passing of the torch--after compound returns of 20% per year during his reign as CEO--has been clouded by a food industry slump that has spilt ketchup on Heinz's stock price and presented a mighty challenge to O'Reilly's hand-picked successor, William R. Johnson (page 162).
Even with all his plans, O'Reilly has continued to spend a couple of months a year in Pittsburgh, and insiders confirm he was involved in recent merger talks between Heinz and Bestfoods. But leading many lives has never been difficult for O'Reilly. The accomplishment of which he may be proudest is not even business-related: It is his co-founding of the Ireland Fund, which has tapped more than $100 million from Irish people around the world since 1976 to help promote reconciliation in Northern Ireland.
Since retiring as Heinz's chief executive, O'Reilly also professes to be spending more time with Chryss, his second wife, of eight years. A major horse breeder, she always enters a mount in the Heinz 57, the annual race in Dublin around which the O'Reillys throw a three-day bash for 300 friends and colleagues. Through Chryss, O'Reilly has business as well as social ties: Her brother, Greek financier Peter J. Goulandris, is a partner with O'Reilly in several ventures.
The most recent of those is the 47.5% stake Goulandris and O'Reilly took in a money-management business, Lockwood Financial Group of Wexford, Pa. O'Reilly put money into the business in 1996 after an investment banker friend introduced him to Leonard A. Reinhart, the investing veteran who started Lockwood. Today, Lockwood manages more than $6 billion for high-net-worth clients such as actors and athletes. "This deal isn't going to make or break me, but it might you," Reinhart recalls O'Reilly telling him. "I never want you to regret doing business with me."
For his own account, O'Reilly's biggest holding is Independent News. O'Reilly founded the company in 1973 with a roughly $2.4 million investment in the Irish Independent. The company now includes the largest chains in South Africa and New Zealand, regional papers in Australia, and London's Independent.
The London-quoted company has seen its stock gain 81% in the past year, reaching a year high of $6.13 on Dec. 7. That is edging it closer to the $6.62 the stock reached in August, 1997, before downturns in some of its key markets, notably Asia and South Africa.
O'Reilly has had to refute the perception that buying London's Independent in 1998 was a vanity move--the paper has never made money in its 13 years. Without it, he argues, his company would be relegated to being a regional player. With daily circulation of 231,000 and a Sunday sale of 262,000, the paper ranks well behind rivals such as The Times and the Daily Telegraph. But O'Reilly says the Independent will break even by 2001. "I don't know that they can ever make much money out of it," says the head of one of its bigger rivals. "It's No. 5 in a very tight market." Retorts O'Reilly: "We punch well above our weight in Britain."HIGH PLATFORM. Certainly, the Independent gives O'Reilly a platform for his bigger plans. The paper has helped attract heavy hitters such as former Hong Kong Governor Christopher Patten and former Canadian Prime Minister Brian Mulroney to his corporate and advisory boards. Moreover, he contends that the content of the London paper is critical to his plans to expand online and through wireless and broadband information services.
Linked to those plans are two initial public offerings that Independent News is planning for next year. One will take public its Irish cable-TV and wireless joint venture with John C. Malone's Liberty Media Group, which is launching a free Internet service provider. Meanwhile, Independent News is also working on an IPO of OnTouch, a South African technology company in which it owns a 70% stake. OnTouch has developed software for transmitting data from Independent's newspapers to wireless phones in the markets where it operates. "There are very few companies that actually have that data in all these different countries," says Simon Mays-Smith, an analyst at Warburg Dillon Read Securities Ltd. in London.
But O'Reilly's Second Act is as much about glamour as it is about information. The Times Square ball is just the latest in a series of moves, spearheaded by Chris J. McGillivary, president and chief executive of Waterford USA. He has increased the company's share of the U.S. crystal market to 52% in 1998, from 24% four years earlier. Now, McGillivary and the rest of Waterford's execs are pushing O'Reilly's vision to reposition the company as a luxury-goods giant.STAKE IN A RIVAL. That has led the company to expand its product line to include everything from linens to fancy pens to jewelry and to pay $110 million to buy high-end cookware company All-Clad Inc. The shift couldn't come soon enough, as the porcelain business--accounting for about half the company's $835 million in sales--has been in a downturn. Depressed prices just led it to buy 14.9% of rival Royal Doulton. But as it diversifies, the company is hoping to attract the kind of trading multiples of 30 times earnings that luxury giants such as LVMH or Gucci enjoy, rather than the lowly 12 times it currently trades at.
As O'Reilly focuses more time on revamping his holdings, he's also making them a proving ground for his heirs. A minor ripple came with the sudden resignation in October of Cameron, the eldest of his six children, from Independent's Australian newspaper subsidiary. Cameron's departure raised questions about succession within the family, since two of O'Reilly's other sons, twins Gavin and Tony Jr., have taken growing roles in his businesses. O'Reilly says his son's decision was not linked to any family dissent and that whatever Cameron does next, the family will back him. "Working is fun," says O'Reilly. "Working with your kids is great fun." And, by the looks of it, the next phase of O'Reilly's work has just begun.By Richard Siklos in County Kildare, IrelandReturn to top