Will Minstrels tap right beat in the North?

JUST one simple question answers it all will the Minstrels, with their song and dance routine, capture Northern Ireland?

Their vibrant and catching theme succeeded in giving - Lyons Irish Holdings that virility to make it number one in the Republic's tea market. Now taking a River Dance type of jingle, their twinkle toes appear to be tapping the right beat.

Lyons' marketing nuances may appear trivial to the Lyons minority shareholders who, this week, will again be advised by their board to reject the offer by Unilever (Ireland). But how Lyons performs in Northern Ireland will be crucial to its future over the next decade.

As any analyst can see, the offer does not reflect the basic value of the company. And those who do not need the cash immediately should consider rejecting the offer.

Unilever was wrong is raising expectation that the offer might be increased. But it has now made it quite clear that the offer, of 323.5p per share, is not going to be raised and has given a final date for acceptance.

Up to now, the minorities were not sure on two fronts. And the blame for that lies squarely in Unilever's court.

. The confusion arose first when the Financial Times quoted Deutsche Morgan Grenfell, adviser to Unilever, as saying that the offer would not be raised. Had that statement been allowed to stand, Unilever, under the take over rules, would not have been allowed to increase its offer.

But Deutsche Morgan Grenfell quickly scotched that. It did so by stating that the article "attributes statements inaccurately to a spokesman at Deutsche Morgan Grenfell". That left the door open for the offer to be raised, thereby raising hopes that it might be.

. Secondly, the confusion arose when it did not nominate a closing date. That created a fear that it might be left open for an unspecified period.

These unsatisfactory scenarios have now been closed. That is good but Unilever could have gone a bit farther and revealed the level of acceptance. With a minimal acceptance rate, it is probably too embarrassed to do so.

But now that the air is clear, what should shareholders do? The independent directors of Lyons will, this week, stand by their original advice that the offer is too low and should be rejected.

Clearly shareholders who badly need the cash should either accept the offer or sell their shares in the market. The market price is a little above the offer price, but those considering divesting should take the dealing expenses into account before deciding which route to take.

And what does the future hold for those shareholders who do not need immediate cash? They can have a dividend yield of more than 5 per cent which compares more than favourably with what is on offer for deposits.

In addition, the downside potential appears limited while there is an upside potential. This upside will come from a greater return on its cash mountain of over £50 million when interest rates start to move up again. But Lyons' real potential is in the Northern Ireland market.

As market leader in the Republic, with a 56 per cent share, there is not much scope to increase this further. Liptons was launched by Unilever but that endeavour was a failure. Liptons may have gained 5 per cent, so Lyons could pick up 3 percentage points of that. However, with static tea consumption, the future for the domestic market looks very flat.

Lyons will, therefore, be looking to the Northern Ireland market to provide growth over the next decade and beyond. So will the Minstrels sing the appropriate tune?

The Northern Ireland market is about half the size of the Republic's tea market. But, unlike the Republic's which is dominated by two players - Lyons and Barrys - it is more fragmented. Punjana, the market leader, has some 35 per cent, Namosa and Nambarrie, controlled by the Weston group, have 28 per cent between them, and Tetley has 15 per cent. While Lyons has a meagre 3 per cent, it is determined to substantially expand its share.

It appears clear that Unilever is resigned to living with a large minority shareholding in Lyons it could be more than 20 per cent. It appears to be committed to helping Lyons grow and that sort of policy can only be good for Unilever and for the minorities.

Lyons has not been among the most exciting companies over the past three decades. Nevertheless, it has consistently increased its dividend and has gone from an overdraft position to a very rich cash group.

Indeed, it has been among the best performers. While its growth over the next decade is unlikely to emulate the past, it should record acceptable growth. This should also be reflected in the dividends.

So what is in store for those minority shareholders who this week will be told to say no? Little change, but maybe that's not such a bad scenario.