The Irish Takeover Panel has given the so-far unnamed bidder until 5pm this evening to say whether it intends formally to make a bid for Gresham.
The bidder has indicated to the Gresham board that it is willing to pay €1.35 per share for the company, around €103 million, if 80% of the company’s shareholders accepted the offer.
“The board has been informed by a shareholder holding more than 20% that it would not be prepared to accept an offer if made at this time,” said Gresham.
“The board of Gresham has requested representatives of the consortium to remove this pre-condition to enable the board to consider this approach, or, failing this, to either increase their offer or withdraw their approach,” Gresham said in a statement last month.
As the Israeli company, Red Sea Hotels, owns 28% of Gresham’s shares, it will be difficult for any bidder to make an offer without the consent of Red Sea.
Around two years ago Red Sea used its sizeable stake to oust several Gresham board members, including the then chairman, Sean Henneberry, and installed its own candidates on the board. Brokers, though, believe it is a matter of time before Gresham is bought out. A previous offer last October by a Dublin property developer was rejected by Gresham as too low.
Gresham has netted close to €35 million in cash from the sale of its three Ryan-branded hotels.
While this money is expected to be used to pay off group debt, it makes the company attractive for any bidder who could use the cash to pay off the cost of buying the hotel group.
Analysts, though, are looking to the current management to use the money to expand the hotel group, believing it is too small to survive on its own.
Gresham shares closed at 1.05 on the Irish stock exchange yesterday, valuing the company at around €87 million, though the shares are still trading at a discount to the company’s new asset value.