The late Christy Kelleher believed in family empires. In a 1987 Irish Times interview, when his own Blarney Woollen Mills empire was booming, he cited the examples of Levi Strauss and McIllhenny's Tabasco Sauce as examples of family empires he admired.

Three of his four sons, all three daughters, and two of his in-laws were then involved in the firm which was going from strength to strength. The business was based on the strength of the family unit.

Twelve years later Blarney Woollen Mills is back in the headlines as family feuding has split the once tight-knit family operation. Under a deal agreed in the High Court earlier this month, the Kelleher business will be broken up and divided between the siblings.

From the humble beginnings of selling knitwear and souvenirs from a thatched cottage on wheels outside Blarney Castle, Mr Kelleher oversaw the development of a business which consisted of a chain of nine shops, two knitwear factories, two hotels and a mail order firm.

The businesses had a turnover of more than £42 million (€53 million) last year and employed almost 470 people. The most recent returns at the Companies Office are for 1997 and show pre-tax profits of £1.173 million.

Under the agreement, the former chief executive Ms Marian O'Gorman (nee Kelleher), her husband, Michael, and sister Bernadette Kelleher-Nolan, will get the Kilkenny shops in Nassau Street and the Icon centre in Leopardstown, Dublin; the Blarney Woollen Mills stores in Killarney, Cobh and Kilkenny, and the Sweater Shop in Killarney. They will also get the firm's property portfolio.

The three Kelleher brothers, Pat, Frank and Kevin, will keep the Blarney Woollen Mills shop in Nassau Street, Dublin; the Blarney Castle Knitwear company, the mail order firm, the Blarney Woollen Mills shop, Christy's Hotel and the firm's share in the Blarney Park Hotel, all in Blarney; the Donegal Bay knitwear factory in Donegal and the Club Tricot shop in Grafton Street, Dublin.

As part of the deal the sisters will keep the Kilkenny brand, while the brothers will keep the Blarney brand. A valuation of the company is currently being undertaken and if one side is deemed to have received a financial share greater than their company shareholding, they will compensate the other side. The three brothers currently hold 56.5 per cent of the firm, while the two sisters and Mr O'Gorman have 43 per cent. A three-month period has been allowed under the deal for the fine details to be worked out.

"This is a sensible agreement which will be of benefit to our customers, our employees and our suppliers," Ms O'Gorman said. "We are very pleased at this outcome and it is in the interests of everyone concerned," the Kelleher brothers said in a statement issued this week.

Ms O'Gorman is to become chief executive of the Kilkenny entity, with Pat and Kevin Kelleher believed to be competing to become chief executive of the other side.

Prior to the split Ms O'Gorman was chief executive, Mr Pat Kelleher was company secretary, Mr Frank Kelleher was responsible for capital development, Mr Kevin Kelleher was marketing manager, and Ms Bernadette Kelleher-Nolan managed the firm's Dublin shops.

The division of the company has been on the cards for some time. Boardroom tensions resulted in Ms Freda Hayes (nee Kelleher) resigning in 1993. Acrimonious sibling disputes ended up in the High Court last year and again earlier this year.

The decision to break up the family business will mean an end to Christy Kelleher's dream of the Kelleher empire, but it should end the tensions which have dogged the firm's operations since he died in 1991, a source close to the business commented.

Mr Kelleher's rags to riches tale began in 1928 when, as a 13-yearold boy, he began work at Mahony's mill in Blarney as an apprentice machinist. By the time he left 22 years later he had risen to become a supervisor responsible for the day-to-day running of the heavy industrial machinery.

He departed to become an insurance salesman in Cork. But the first signs of his entrepreneurial streak were already evident. He charged to bring local harrier club members to their drag hunts around Munster and also operated a hackney service to ferry the local cycling club members to their races. On Saturday mornings he ran a vegetable round. Each summer he sold the apples from the family orchard.

In later years he purchased the local Emer cinema. He showed films during the week and then transformed it into a ballroom at weekends.

The seeds of his family business were sown in 1967. Mr Kelleher had watched tourists arriving in Blarney, kissing the Blarney Stone and then returning to their coaches and leaving. He believed there was business potential there to be tapped.

Unable to afford to buy a shop, he built a thatched cottage on wheels. Local people were paid to knit Aran sweaters which were then sold to visitors. He knew he was on a winner when his takings for the first day were £14.

Freda, then 16 years old, was taken out of school and employed in the fledgling business. The cinema was transformed into a knitwear plant to supply the thatched cottage and 10 workers were employed.

In 1974, Mr Kelleher bought Mahony's mill which had closed the previous year. The banks refused initially to provide the funding, so the cinema was sold, homes were re-mortgaged and personal loans were taken out by family members to raise the £70,000 required.

From her early involvement, Freda was the obvious choice of chief executive of the firm. As the business developed, Mr Kelleher encouraged his other children to quit their jobs and join the firm.

The sibling rivalry problems which resulted in the fragmentation of Blarney Woollen Mills this month, were controlled by Mr Kelleher.

"Nobody realised how important a role Christy played in gelling the family together," a source close to the family commented. "He managed the family and he allowed Freda manage the company. He did not think what might happen down the line."

These problems began to surface following Mr Kelleher's death in 1991. "It was simply a case of sibling rivalry - the one who is perceived to have the power is the one who is in the firing line, regardless of how good a job they may be doing," the family source said.

"At the end of the day it is extremely difficult for a family to be answerable to other members of the family, people they grew up with as equals."

The rifts quickly developed when Ms Hayes tried to bring in expertise from outside the family, as non-executive directors. Instead she was out-manoeuvered at board level and another family member, her brother Paschal, was appointed chairman. Ms Hayes resigned in 1993 and was reputedly paid £1.5 million for her share of the family firm.

She quickly established the Meadows and Byrne chain which now has stores in Cork, Galway and Bunratty. Her firm also owns the 60-bed Bunratty Castle Hotel and its adjacent shopping complex. The business is expected to have a turnover of £10 million this year.

Ms Marian O'Gorman took over as chief executive, but the disagreements continued.

In September 1998, Ms O'Gorman, her husband Michael and sister Bernadette, went to the High Court to prevent Pat, Frank and Kevin Kelleher ousting Mr O'Gorman from the board and replacing him with Frank Kelleher's wife, Esther.

Mr O'Gorman claimed the move was part of a secret agreement between the three brothers. If they had succeeded the next step would have been to replace Ms O'Gorman as chief executive. The High Court granted an injunction preventing Mr O'Gorman's removal and Ms Kelleher's appointment. It subsequently ruled that the attempt to remove Mr O'Gorman was invalid because it did not comply with company law procedures.

The two factions within the Blarney Woollen Mills company were back in the High Court in July when Mr and Ms O'Gorman and Ms Kelleher-Nolan were granted an injunction preventing an extraordinary general meeting from being held. They also secured an order preventing steps being taken to exercise voting rights attached to disputed shares in the company.