In his first interview since launching his MBO, John Nagle tells Jane O'Sullivan his side of the FDC story.

Internal bickering at First Data Corporation and not the attitude of Aphyra's management were behind the US group's decision to abandon its bid for the Irish electronic payments company, according to Alphyra chief executive John Nagle

Before Christmas, Alphyra's management had agreed the outline of a joint venture deal with First Data Corporation (FDC) which would have seen the US group back the management buyout being lead by Mr Nagle. FDC would have taken a 25 per cent alongside the management and financial backers, Benchmark, he said

But First Data walked away from the deal, deciding instead to make an indicative offer of €2.80 to take full control of the company, which it abandoned just a few days later.

In his first interview since the MBO process was announced last November, Mr Nagle said the deal would have seen the amount offered to shareholders increased from €2.45 being offered by management to between €2.60 and €2.80. "There was a big corporate fight at FDC. There were two departments looking at it and it fell between the two stools. Instead, they came out with an indicative price offer of €2.80."

Mr Nagle, whose controversial MBO offer faces its next closing date on Wednesday, believes shareholders don't know the full facts behind the MBO process and is keen to put management's side of the story.

As of last week, the MBO vehicle Rendina had received acceptances in respect of 60 per cent of Alphyra's shares but needs to increase this to 80 per cent if is to succeed in taking control of the electronic payments group.

However, some shareholders, angered by management's behaviour during the buyout process, have to date refused to accept the offer. They believe Mr Nagle and his team put management's interests before those of shareholders by frightening off FDC and other bidders.

The criticism centres on a statement issued by the MBO team in mid-January saying it would regard any bid for Alphyra as "hostile and most unwelcome".

But Mr Nagle insists that rather than driving off FDC, management opened negotiations with them and "looked at a mechanism to allow FDC into the pre-paid space and allow us the opportunity of acquiring the business".

"We had a deal done with FDC, a letter of understanding to drive heads of agreement."

"I'm not the big bad wolf who frightened off FDC. Could we have been nicer to them? Yes," he says, but goes on to point out that as a $2.8 billion (€2.6 billion) company, the Denver-based firm is "the Microsoft of our industry " and no shrinking violet.

However, Mr Nagle admits that the decision to adopt a hostile approach to any offer from FDC, which was taken against advice, was a mistake.

"Should we have said that? In hindsight, no. Shareholders can be correctly miffed at that statement. Did it frighten them away? No," he says.

He also defends his offer, originally pitched at €2.45, against charges of opportunism.

"I know there is a view that the share price is at an all-time low, that it's opportunistic and you know, if there's an opportunity there, I've no halo on my head."

"But what's lost in all this is the attempts made by the management, and particularly by myself and (finance director) John Williamson in the months prior to the MBO, to get shareholder support for what we were trying to do."

However, institutional investors, increasingly wary of small technology stocks, were not keen on the company's rapid expansion strategy.Mr Nagle says Alphyra's board, conscious of the lack of shareholder support, vetoed joint ventures in Poland and Hungary.

"This company needs to expand aggressively and with high levels of risk. The public markets lost faith with that level of risk and with management ability to steer the company through that level of risk," he says.

With Benchmark as sole backer, taking a long-term view, Mr Nagle says Alphyra will again be looking at expansion into cash societies like Jordan, a controversial move.

"Any cash society is manna from heaven for us. We will be targeting low hanging fruit in the pre-pay mobile business."

The ability to pursue an aggressive expansion strategy is one of the reasons why Rendina decided against offering any partial share alternative, as has happened in the MBOs at Riverdeep and Conduit.

"We took the view that most shareholders would prefer cash," Mr Nagle says. "The share alternative is complicated. If we do want to go to China, South America, Australia, we're better off with a single shareholder."

And what of the price on offer, which still undervalues the company in the minds of some investors?

Mr Nagle believes that FDC "muddied the waters" by making an indicative offer of €2.80 which it didn't pursue.

He says the conditional offer created a lot of confusion among shareholders "because their expectations were managed up to €2.80".

Rendina's subsequent decision to raise its own offer to €2.70 from €2.45 in a bid to ensure success has riled some fund managers who sold out at the lower price, only to find 10 per cent more on the table a few weeks later.

"We did it to appease shareholder sentiment toward what I believed to be a fictitious €2.80," Mr Nagle says, adding that he felt €2.45 was a fair price and €2.70 is "a very fair price".

"At a certain level, things are close to value. I would prefer to stay as a plc than pay more than that for it."