A company led by former Allegro Group boss Dermot Divilly has bought distributor King Ireland for €20 million.

DG Distribution and Vendors Ltd - which is controlled by Mr Divilly, former stockbroker Greg Lawless and King Ireland's managing director Brendan Cooney - announced yesterday that it had bought the company, which supplies the catering and hospitality industries.

Neither of the parties published a purchase price but, according to industry sources, the deal valued King Ireland at €20 million.

King Ireland (formerly Irish Merchants Ltd) has a turnover of €38 million and employs 140 people at its headquarters in Coolock, Dublin, and other distribution centres in Belfast, Cork and Limerick.

The three businessmen established DG specifically to buy King Ireland. Mr Divilly and Mr Lawless led a management buyout of another catering-related business, the Allegro Group, in 1993.

Mr Divilly bought Roma Foods from Allegro in 1999 and sold it to IAWS in 2002. He also sold Allegro Professional to Bunzyl in 2001.

However, yesterday he indicated that he was unlikely to look for a quick sale of King Ireland.

"I'll stay with King for a bit longer," he said.

"What we intend to do is develop it and possibly find a few bolt-on acquisitions."

He added that the company had the potential to grow through its existing network of accounts and portfolio of products. It specialises in non-food and table-top supplies.

Mr Cooney, who has managed the business for 15 years, will continue as managing director.