UNILEVER has been given the go ahead by the Competition Authority to acquire Lyons Irish Holdings, Ireland's biggest tea distribution company, for a price of around £95 million.

Unilever has already agreed to acquire the 75 per cent of Lyons owned by Allied Domecq and intends to make a formal offer to the minority shareholders following clearance for the bid from the Department of Enterprise and Employment.

It is understood the decision of the Competition Authority was by no means unanimous and it is understood that the members of the authority split two to one in favour of approving the Unilever proposal.

It is also understood that had Unilever not decided to withdraw its Liptons brand from the Irish market last month, then the takeover proposal would probably have been vetoed by the authority.

Informed sources have also indicated that senior executives of the authority felt that the Unilever proposal should be rejected, irrespective of the withdrawal of the Liptons brand. This view was taken on the basis that the arrival of a company of the size of Unilever in a market the size of the Irish tea market would not be good for competition and that it would have been better if Lyons was taken over by a smaller company.

The Irish food distribution company, Allegro, had been favoured to buy Lyons and the successful bid by Unilever came as a major surprise, not only to the market in general, but to Allegro in particular.

The original offer for Lyons was made last February at 325p per share and valued the Allied Domecq holding at £73 million and the entire company at £97.5 million. Since then however, Lyons has paid dividends to its shareholders totalling £2.3 million, so the total consideration will be reduced by that amount. The net cost of the deal to Unilever will be reduced, however, by the estimated £47 million in cash and bonds held by Lyons.

Unilever said yesterday that it aims to complete the deal with Allied Domecq within the next week and as soon as possible afterwards will make a formal offer to the minority shareholders. This offer price would reflect the adjusted price paid to Allied Domecq as a result of the dividend payment earlier this year.

Since the Unilever bid was announced last February, the tightly held Lyons shares have hardly traded and are currently valued at 330p per share on the Irish market. The institutional shareholders who hold the minority 25 per cent of the shares have little alternative but to accept the Unilever offer, although it will require acceptances in respect of 80 per cent of those shares to allow Unilever to compulsorily acquire the remaining shares.

It is expected the Lyons board will now take independent advice before making a recommendation to the minority shareholders.

The clearance of the Unilever bid for Lyons was seen as likely since the decision last month by Unilever to withdraw its own Liptons brand from the Irish market. Liptons only ever built up a 4 per cent share of the Irish tea market, but that market share coupled with Lyons dominant 56 per cent share would undoubtedly have caused problems with the Competition Authority.

Unilever is now buying a huge share of the Irish market that it could never have hoped to reach through the launch of its own brand.

Unilever spokesman, Mr David Lewis, said once the acquisition was completed, Unilever as the world's biggest tea company would aim to use its expertise to enhance the development of the Lyons brand". He described the Dunkin Donuts operation as a good business" but added. "It's too early to assess what we will do with Dunkin Donuts."