Desmond raises stake in Barlo

FINANCIER Dermot Desmond has once again raised his stake in the plastics group Barlo, which is the subject of a management buy-out (MBO).

IIU Nominees, which is owned Mr Desmond, announced yesterday that it now holds 14.08% of Barlo shares, purchasing nearly 2 million shares at 42 cent, which is 2 cent higher than the bid for the company by its chief executive Dr Tony Mullins.

It is still unclear whether Mr Desmond intends to block the MBO at the current 40c price. To do so he would need 20% of Barlo’s shares as the offer requires the approval of 80% of all shareholders.

Since the formal offer for Barlo was announced earlier this month, Mr Desmond has increased his stake from 4.9%, prompting speculation he was unhappy with the MBO price and was looking for a higher offer.

The possibility of a higher offer being made for Barlo is possible.

It has emerged in the offer document sent to shareholders yesterday that Dr Mullins’ bid vehicle Melgan will accept a competing offer of 44 cent per share.

However, Dr Mullins’ attempt to gain control of the company has been boosted, with shareholders owning 36% of Barlo giving an irrevocable guarantee to accept the offer.

Melgan plans to raise part of the finance for its offer by selling off its Athlone Extrusions division to its management for around €67.8 million.

Athlone was acquired by Barlo four year ago.

The offer document reveals that if the MBO goes through, Dr Mullins will own 15.1%.

The remaining shares will he held by other member of the MBO team and private investors.

Dr Mullins first approached Barlo last July with a possible offer of 30 cent per share.

After months of negotiations it was raised to 40 cent.

But analysts at Merrion Stockbrokers said Barlo shares could be worth as much as 80 cent per share.

Barlo shares closed down 1 cent at 41 cent yesterday.

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