Unilever bids for Lyons' minority holdings

UNILEVER has made a public cash offer of 323.3p per share for the 25 per cent minority shareholdings in Lyons Irish Holdings, after completing the purchase of the 75 per cent of Lyons held by Allied Domecq for a total of £76.4 million.

Unilever has also offered the minority shareholders the alternative of a five year loan note which carried an interest rate of 6.5 per cent.

The offer price is the same as that paid by Unilever to Allied Domecq and represents a 6.7p discount on the Lyons share price at the time the Unilever bid was announced in January and a 1.7p discount on the current Lyons share price.

The £76.4 million being paid by Unilever to Allied Domecq is made up of £72.75 million for Allied's shares in Lyons and a £3.66 million adjustment in respect of Lyons' current assets.

The size of the cash offer suggests that a successful acquisition of the minority shares cannot be taken for granted, especially as Unilever will require 80 per cent acceptances in respect of the shares held by the minority shareholders to be able to compulsorily acquire the remaining shares.

The Lyons board will now be taking its own independent advice before issuing a recommendation to the minority shareholders.

While industry sources believe that Unilever could live with the prospect of having minority shareholders in its Irish tea business, the Anglo Dutch foods group will be keen to get full control of Lyons - and its estimated £50 million cash hoard.

For years Lyons has been accumulating cash and Unilever will want to get its hands on that cash to reduce the overall cost of the acquisition. Whether or not it gets full control, the acquisition of a controlling share of Lyons gives Unilever an immediate 55 per cent of the Irish tea market.

A company of Unilever's size having such a large part of the Irish tea market was one factor that exercised the minds of the Competition Authority when it was assessing the takeover.

As it turned out, the Competition Authority only approved the takeover by a two to one majority. That decision was subsequently endorsed by the Department for Enterprise and Employment.