The Irish Takeover Panel is to investigate whether Red Sea Hotels, the largest shareholder in the Gresham Hotel Group, and Whiterain International are acting in concert.
Whiterain, the vehicle used by Hong Kong businessman Mr Balram Chanrai, has recently acquired an 11 per cent stake in the hotel group. If the two groups were found to be acting in concert, they could be forced to make a bid for the company.
The move by the panel comes against the backdrop of a bid for Gresham by Precinct, a consortium of investors led by property developer Mr Bryan Cullen. Both Gresham and Precinct are understood to have complained to the panel about Whiterain's purchase of shares.
Red Sea, Gresham's largest shareholder with a 28 per cent stake, is opposing the €1.30 per share Precinct offer, which would rise to €1.35 if the acceptance rate reached 80 per cent.
As of last Tuesday, Precinct had obtained approval for its offer, which has been recommended by the Gresham board, from shareholders holding 28.25 per cent of Gresham.
But its task of getting acceptances from the 54 per cent of shareholders it needs for its bid to become unconditional has been made more difficult by the acquisition of an 11 per cent stake by Whiterain, further reducing the freefloat of the company.
Precinct, which is now understood to have acceptances heading toward the mid-30 per cent range, has extended the deadline for receipt of offers to June 29th in a bid to garner more support for its offer.
A Precinct spokesman welcomed yesterday's announcement by the panel, noting the consortium had been "concerned at the series of transactions in Gresham shares in recent weeks in which Whiterain, acting on behalf of Hong Kong businessman Balram Chanrai, had acquired its shareholding in Gresham through the Discount Bank of Israel."
If the panel were to find that the two parties were acting in concert, it could compel them to make an offer for Gresham equal to the highest price they paid for the shares. Mr Chanrai has paid as much as €1.34 per share to acquire his stake.
However, corporate finance sources in Dublin point out that it could prove difficult for the panel to find hard evidence of a link between Red Sea and Whiterain.
"It may look like a concert party, it may smell like a concert party but the question is, can you prove it?" one market source said yesterday. Shares in Gresham were at €1.28 yesterday.
