Investor Dermot Desmond has increased his holding in Barlo, the Dublin-listed industrial group that is the subject of a €70 million management buyout (MBO) bid. Barry O'Halloran reports.
And The Irish Times also learned last night that the MBO bid values Barlo subsidiary, Athlone Extrusions, at €68 million.
It was revealed yesterday that Mr Desmond had increased his stake in the radiator and plastics group to 6.3 per cent, through the purchase on Thursday of 1.22 million shares at 39 cents each, or €475,000.
His move followed a swoop the previous day for 1.26 million shares at the same price.
Before details of the MBO were announced this week, Mr Desmond held 4.9 per cent of the company. He bought the stock through his vehicle, IIU Nominees Ltd.
He paid just 1 cent shy of the 40 cent a-share offered by the MBO, led by chief executive, Mr Tony Mullins. If shareholders accept that deal, Mr Desmond would realise little over €20,000 on the transactions. Last night, he had not contacted either the MBO team, or the company itself through its non-executive directors, according to those parties.
There was some speculation that Mr Desmond intended to hold out for a higher bid. If another party offers 44 cents a share or more before March 12th next, then the MBO has to match this within 14 days or accept it. Some analysts believe that 40 cents a share undervalues the company.
It is understood the management of Barlo subsidiary, Athlone Extrusions, has agreed to pay €68 million to de-merge that company from the parent. That deal, vital to the MBO's success, means that Barlo is selling the business at a loss.
Barlo bought the company three years ago for just under €70 million. But the de-merger agreement includes the two Barlo plastic sheet manufacturing plants in Newbridge and Czechoslovakia.
The Mullins MBO has to raise over €200 million. Of this, €70 million will cover the cash offer to shareholders, while €123.6 million will be used to cover Barlo's debts.
The balance will cover the expenses associated with the overall transaction. The €68 million contributed by the Athlone de-merger is part of a three-way fund-raising exercise. The other elements are private equity and debt.
Both deals are inter-dependent. If shareholders fail to support one, the other cannot go ahead. Each side has its finance in place. The MBO is backed by Bank of Ireland and a number of high net worth individuals.
The Athlone de-merger is being led by the company's managing director, Mr Jimmy McGee. Anglo Irish Bank is providing the loan capital needed to support that element of the deal.
Shareholders should receive a full offer document within three weeks. They will have the opportunity to vote on both deals at an extraordinary general meeting next month.
