Shares in Jurys drop on failed Precinct bid

Shares in Jurys Doyle shed almost 5 per cent yesterday after the company confirmed its board had withdrawn support for the Precinct Consortium's €1.1 billion takeover bid.

The stock consistently traded well below the €17.80 average price developer Sean Dunne has paid to build up an 18.23 per cent position in the stock.

It also traded below the €17.50 per share that Precinct has said it would pay for the hotel group, closing 85 cent weaker at €17.00.

Precinct told the Jurys board on Wednesday morning that its main financial backer, Anglo Irish, had removed its support from the bid. This prompted Jurys to seek proof of new banking facilities before the end of the day and, when this did not arrive, the board decided to take back its recommendation of the Precinct approach.

A spokesman for the consortium, led by developer Bryan Cullen and supported by London-based investor Simon Reuben, said yesterday that the group remains "hopeful" of securing new funding in time to make a firm bid. The group is thought to be seeking support from banks in Britain rather than in the Republic.

The main problem Precinct faces is that its current approach is based on approval in respect of just 50.1 per cent of Jurys shares.

At this level, a bank would not be able to secure its loan on Jurys property and would thus be taking comfort in shares alone. One option that could be open to Precinct, however, would be to offer other, unrelated, assets as security.

Mr Dunne's now-powerful position on the Jurys share register presents another substantial obstacle for Precinct's €17.50 approach. The developer, who paid €18.00 for a large portion of his holding, is unlikely to accept a takeover offer unless it comes at a substantial premium to this level.

At yesterday's closing price, Mr Dunne is sitting on a basic loss of about €9 million on his overall €205 million investment.

This does not take account, however, of the special dividend that he would draw, as a shareholder, if his proposed purchase from Jurys of 4.84 acres in Ballsbridge proceeds. If, for example, the special dividend amounted to €200 million, Mr Dunne would receive a windfall before tax of about €36 million, or €3 per share.

The developer, who is now the largest individual shareholder in Jurys, has not commented so far on his objective in building up a stake in Jurys, but it is thought he wants to buy more of the firm's properties without launching a takeover.

While Precinct is the only group to have shown its hand in the takeover process, at least two other parties - Quinlan Private and developer Paddy Kelly - have expressed an interest in developments.

The exit of Anglo Irish from Precinct's approach leaves open the prospect of the bank supporting a rival bid.

Jurys Doyle made no comment on Precinct yesterday but the company did issue a technical statement to say Mr Dunne would not now be able to vote on his proposed €260 million purchase of the Ballsbridge site. The size of Mr Dunne's shareholding means he is defined as a "related party" of Jurys Doyle and thus must remain independent in any transactions involving himself.

As a result, the majority of shareholders needed to approve the Ballsbridge sale is now in respect half of the 81.7 per cent of shares left when Mr Dunne's position is excluded.

The developer said on Wednesday that he planned to seek meetings with the Jurys board "within the next seven days" but it is thought no contact was made yesterday.

He also said he wanted to make contact with the firm's main shareholders, thus suggesting he wants to meet the Doyle and Beatty families, who together control 30 per cent of the company and have opposed Precinct's approach.

Mr Dunne is precluded, under Takeover Panel rules, from buying any more shares in Jurys until the middle of next week.