MBO team must increase its bid to win Alphyra

Alphyra management will have to offer considerably more than is currently thought likely if it hopes to win control of the group - with or without the presence of an alternative bidder - according to market sources.

The MBO team has indicated a bid in the region of €2 a share, but that is unlikely to persuade major shareholders - such as Bank of Ireland Nominees, which holds 24 per cent of the stock - to sell. Institutions representing 60 per cent of the shareholders are thought to be looking for a figure of around €2.50 a share.

Sources close to the company yesterday played down expectations of an early offer for the company from the management team led by chief executive Mr John Nagle.

The Alphyra board yesterday issued a short statement denying it had received any approach from US card payments group First Data. A spokeswoman for the US giant, which owns Western Wireless, also said it was not involved in any active discussions with Alphyra.

The news hit Alphyra shares, which had raced ahead in early trade yesterday to €2.45 on the weekend reports of First Data's interest. After the company dismissed the report, the stock fell back to €2 and closed just six cents ahead on €2.01.

Analysts believe the MBO may be designed to encourage other parties to bid for the group, which has been hit by poor market reaction to recent results' statements.

First Data, whose name cropped up over the weekend, has interests in Ireland, where it has a connection with e-commerce payments group Omnipay.

A spokesman for Alphyra confirmed that it had held many meetings over the years with companies, including First Data, over matters of interest to both but that there had never been any takeover approach.

Alphyra, formerly ITG, went public in 1997 as a telecoms group. The shares traded as high as €22.10 in early 2000 but slumped to a low of €1.40 earlier this year.

The company is well established in Ireland and Britain but is at the developmental stage in Europe. Analysts have said there is a logic to the company going private, where investors would have more patience with the pace of growth in new markets than the stock market would show. "Going private would allow them to focus on the roll-out in Europe," said one analyst.

Alphyra is the latest in a list of smaller cap Irish companies looking at life outside the stock exchange following poor performances by their shares since the arrival of the euro.

Apart from Bank of Ireland Nominees, which on its own holds a large enough stake to frustrate a takeover, Alphyra's key shareholders include Newton Investments with a holding of 10 per cent and Prudential, which holds 8 per cent of the company.