Clothing and hotel group Blarney Woollen Mills will be broken up into two separate competing entities. Its owners, the Kelleher family, reached agreement yesterday to end a long-running boardroom dispute which has continued since last June, when three directors tried to remove Mr Michael O'Gorman, husband of Mrs Marian O'Gorman, their sister and group chief executive, from the board.

Under an agreement reached yesterday in a private negotiation, brothers Pat, Frank and Kevin Kelleher are to assume complete control of the businesses retained by Blarney Woollen Mills.

The remainder of the businesses, which will trade under the Kilkenny brand, will be owned by Mrs O'Gorman (nee Kelleher), her husband and her sister Ms Bernadette Kelleher Nolan.

Neither party would disclose which of the businesses would be siphoned off to the new Kilkenny entity.

Before yesterday's deal, the group included four Blarney clothes outlets, in Dublin, Killarney and Kilkenny; two Kilkenny shops, in Nassau Street and Leopardstown in Dublin; and the Club Tricot shop on Grafton Street in Dublin.

The group also owns two hotels in Blarney, a mail order business, two knitwear factories and a number of investment properties. Blarney's annual turnover is about £42 million (€53.4 million).

Asked if the Kilkenny businesses would still trade under that name and whether the Blarney businesses would remain within the group, spokesmen for both parties said they could not comment.

In a High Court judgment last September, Mr Justice Carney held that formalities relating to the lawful removal of Mr O'Gorman from the board had not been observed. Mr O'Gorman had claimed that differences in the board had polarised himself, his wife and Bernadette on the one hand, and Pat, Frank and Kevin.

Mr O'Gorman claimed the brothers had made an agreement to remove him, appoint Frank's wife, Mrs Esther Kelleher, to the board and then remove his wife as chief executive.

It emerged during these proceedings that Mrs Marian O'Gorman owned 25 per cent of the company, before deciding to transfer 40 per cent of her shares to her husband last April. Mr Pat Kelleher held 20 per cent of the company at the time while his brothers Frank and Kevin held 18.125 per cent each.

At a further High Court case last July, Mr O'Gorman, his wife and Ms Bernadette Kelleher Nolan, secured an order preventing steps being taken to exercise voting rights attached to disputed shares in the company.