Heavy trading in Barlo stock following Desmond purchase

Management buyout (MBO) target Barlo attracted heavy buying activity again yesterday as it emerged that Mr Dermot Desmond's IIU was behind the purchase of 1.2 million shares on Friday.

IIU bought the shares at 42 cents - two cents above the offer price tabled by Barlo chief executive and leader of the MBO effort Dr Tony Mullins.

Barlo's shares have closed above the offer level in six out of nine trading sessions since Dr Mullins presented his formal bid earlier this month.

IIU's Friday purchase lifted Mr Desmond's holding in Barlo to 10.86 per cent, according to a stock exchange notification.

If he was behind yesterday's trade of some 3.5 million shares, his holding would have since risen to almost 13 per cent.

Mr Desmond held just 5 per cent of Barlo when Dr Mullins tabled his firm offer but has been building his stake since then. Market sources believe he could be trying to force a higher bid.

Some analysts have concluded that Dr Mullins's offer does not reflect the full value of the company, with some suggesting that 45-55 cents would be a better price.

The MBO is dependent on Dr Mullins's offer attracting acceptances in respect of 80 per cent of Barlo shares.

Yesterday's activity spanned at least seven different trades, with the largest coming in a transaction of 1.5 million shares.

The stock reached a high of 43 cents before easing back to close unchanged at 42 cents.

Under the terms of the buyout offer, Dr Mullins is committed to accepting or matching a bid of 44 cents per share for the group if such an approach should emerge.