Gresham's Red Sea under pressure

Gresham Hotel Group's dominant shareholder Red Sea is coming under pressure to address potential bids for the group.

The group's board is considering an offer from a consortium represented by Deloitte's corporate finance division. The consortium, mainly comprising property investors and developers approached Gresham after the collapse of a previous approach.

Its offer is understood to be significantly higher than the €1.25-€1.30 a share put forward in the earlier approach.

Gresham Hotels, which is being advised on the potential sale by AIB Corporate Finance, refused to comment yesterday.

Sources suggest the current negotiations have been difficult, with the Red Sea hotel group said to have been blocking progress. It owns 28 per cent of Gresham.

The Irish group's board is fragmented following Red Sea's hostile acquisition of its controlling stake.

One source indicated that there were signs that Red Sea was moving close to addressing the Deloitte-led consortium's offer. "It may be that they are coming to the table either with a counterproposal or to negotiate on price," the source told The Irish Times.

The discussions began shortly after a previous consortium, believed to have included property developer Mr Paddy Kelly and other investors, abandoned its approach. Mr Kelly has been involved in a number of high-profile deals in Dublin. In company with fellow developer, Mr John Flynn, and the McCormack family-controlled Alanis Ltd, he developed the Clarion Hotel in the IFSC and a large apartment complex in Smithfield.

Gresham confirmed that offer but stated that it had not led to formal discussions with the unidentified bidder. Red Sea separately said it had not been in discussions with this party about a takeover but signalled that it would consider offers put to it at an "appropriate" price level.

The previous consortium made a formal offer valuing the hotel group at €99-€103 million. The current bid is said to be significantly better and fully funded with backing believed to have come from Anglo Irish Bank.

Gresham had a stock market valuation of €84 million.