Due diligence to start on ICG bid

The rival consortium considering a possible €530 million bid for Irish Continental Group (ICG) is expected to start due diligence this weekend, though no final offer is expected for at least a month.

One51, the Philip Lynch-led investment vehicle, and Doyle Group, the Cork-based shipping company, spent €9.5 million on Thursday increasing their combined stake in the owner of Irish Ferries to 20.21 per cent.

The 460,000 shares were bought at a price of €20.75 each in the open market. Under Takeover Panel rules, any offer must exceed this figure, which is itself a 12 per cent premium on the €471 million offer currently on the table in the form of a management buyout led by ICG chief executive Eamonn Rothwell.

The share purchases, which were announced yesterday to the stock exchange, were made on the same day that ICG's management cast doubt on the potential of the company to be worth more than €471 million.

However, should it materialise, a higher offer is likely to be welcomed by shareholders, some of whom are concerned that the company's real value lies in the land it owns at Dublin Port.

South Wharf, which owned a site in Dublin's docklands, last year sold the land for more than €17 million an acre.

At an extraordinary general meeting on Thursday, which was called for the purpose of approving the management buyout but was postponed to allow the independent directors to enter into discussions with the potential rival bidders, ICG chairman John McGuckian told shareholders that a €471 million bid fairly reflected the value of the land in Dublin Port.

Mr McGuckian said the Dublin Port property was held on a long lease, which includes a condition preventing it from being used for anything other than a ferry terminal. This, he said, limits the property's value.

Trading in ICG shares was muted yesterday, with only 270,000 shares changing hands, though the stock did close at a record high of €20.80.

It is unclear whether the One51-Doyle consortium added to their holding yesterday, though it wouldn't take much to bring them to the 20.52 per cent holding that it is believed would block the proposed management buyout. Once due diligence has formally begun, the group will be unable to buy any more shares in the open market.

Aella, the management team led by Mr Rothwell, has control of 14 per cent of ICG's stock. One51 has 11.1 per cent, and the Doyle Group 9.07 per cent.

Until the emergence of the possible second offer, the Aella bid, which is worth €18.50 a share, had the backing of the board.