Waterfall approach may thwart merger of rival leisure groups

Waterfall Holdings, the leisure group, has made a take-over approach to rival European Leisure, in what is seen as an attempt to thwart the agreed £65 million (€82.53 million) all-share merger between European Leisure and Allied Leisure. No formal offer has been made by Waterfall. However, senior executives from Waterfall and European Leisure met this week to discuss the possibility of a merger of the two companies.

This followed a brief statement from Waterfall, which said it noted the speculation in the press that Waterfall may be interested in merging with European Leisure. "Waterfall confirms that it is seeking to discuss with European Leisure the commercial and financial rationale for a merger of the two companies," it said.

A spokesman for Waterfall told The Irish Times that European Leisure was a better fit with Waterfall than with Allied. Rationalisation benefits would exceed the £1 million savings envisaged by Allied, according to industry sources.

But Waterfall is understood to want board and management control. Waterfall became interested in doing a deal with European Leisure when the European Leisure/ Allied merger document revealed that the two senior executives of European Leisure were prepared to resign following the get-together. An indicative offer by Waterfall is understood to have offered the European Leisure shareholders better terms. One industry source said European Leisure would now sound out its institutional shareholders.

However, another source said the approach is not being treated seriously by either European Leisure or Allied. European Leisure bought an 18.5 per cent stake in Waterfall last year in what was seen as a prelude to a take-over bid. But Waterfall at the time said it was "not seeking to be taken out".

The proposed merger of European Leisure and Allied Leisure, giving European Leisure shareholders a 52 per cent stake in the amalgamated group, is already under way. This will go ahead as planned unless Waterfall makes a formal offer before Easter that is capable of acceptance by European Leisure shareholders. No one was available for comment at European Leisure.