Crean confident of agreement on terms of bid for Inishtech

INDUSTRIAL holding group James Crean is understood to be confident that it can reach agreement with Inishtech on some modifications to the takeover bid for the Inishtech minority share holdings.

The Inishtech board met in Gibraltar yesterday to consider the 550p per share offer for the 28.2 per cent minority share holdings, but adjourned Fits meeting pending clarification from Crean on some of the terms and conditions attached to the offer.

Inishtech is seeking to have some of these largely technical conditions deleted or amended before giving a recommendation on the Crean bid.

But significantly, the Inishtech board has not taken issue with the 550p per share price being offered by Crean, and it seems likely that the offer will get a positive recommendation if the technical details at issue are resolved.

The Crean bid values the minority share holdings at £26 million and values Inishtech at over £90 million.

Apart from obtaining a recommendation from the Inishtech board, the main obstacle that Crean will have to overcome is getting the approval of three quarters of the minority shareholders before it can declare its bid unconditional.

While the normal condition of 80 per cent acceptances applies, the Crean bid is complicated somewhat by the need to get the approval of three quarters of the minorities. In effect, Crean will have to increase its existing 71.8 per cent to almost 93 per cent before it can go unconditional with its bid.

While some of Crean's own institutional shareholders have expressed their concern about the company buying 100 per cent control of Inishtech with the aim of then selling it on, it is likely that Crean shareholders will approve the Inishtech bid at an extraordinary general meeting.

One large institutional share holder has expressed fears that Crean may find it difficult to sell on Inishtech, with potential buyers fully aware that Crean is a forced seller. Crean's gearing will rise sharply following a buy out of the Inishtech minorities, and shareholders will be hoping that Crean will be able to pay down this debt and move into a net cash position through an early sale of Inishtech.

While Crean is offering 550p per share for the Inishtech minority shares, valuing the company at £90 million, Crean has paid nothing like this price for its existing 7.1.2 per cent. Crean bought the existing stake at 350p per share some years a go and this, combined with its 550p per share offer for the minorities, means that Crean will have paid an average of 395p per share if its current bid succeeds.