Red Sea and Whiterain block sale of Gresham

THE Irish Takeover Panel plans to investigate further whether there are any links between two of Gresham Hotel Group’s largest shareholders.

In a short statement yesterday the Irish Takeover Panel said it has decided to conduct a hearing under Section 11 of the Irish Takeover Panel Act to find out if Red Sea Hotels, which owns 28% of Gresham shares, are acting in concert with Whiterain International, an 11% shareholder.

If they find that the pair are acting in concert then Red Sea could be forced to make a bid for the rest of Gresham under Irish company law.

The offer would also have to be pitched at a higher level than the current offer for the group, which is €1.30 per share.

The Panel said that no decision has yet been taken as to whether or not any of these parties are acting in concert.

Whiterain International is a company owned by the Hong Kong-based Indian businessman Chanrai Balrua. The shares were purchased through the Israeli Discount Bank.

Mr Balrua has been building up a large stake in Gresham over the past month since the formal offer for the company was launched and the Takeover Panel is understood to have been looking for any links between the pair for some weeks.

Precinct Investments, owned by businessmen Bryan Cullen, David Coleman and JJ Murphy, has tabled a €1.30 offer for Gresham.

Last week its offer attracted the support of 28% of shareholders. The offer will only be successful if they get 54% of investors to back the deal.

Support is believed to have surpassed 30% at this stage.

If the bid gets 80% backing, they will raise their bid to €1.35 per share.

If a link if not found between Red Sea and Mr Balrua it could still spell the end of the Precinct bid as he could use his stake to block the deal. Red Sea have also rejected the Precinct bid, saying it does not reflect the true value of the Gresham group and it has urged other shareholders to repel the takeover offer.

A spokesman for Red Sea Hotels had no comment to make on the Takeover Panel's statement.

A spokesman for Precinct welcomed the panel’s announcement.

“Precinct has been concerned at the series of transactions in Gresham shares that have taken place in recent weeks in which Whiterain, acting on behalf of Hong Kong based businessman Chanrai Balrua, has acquired its holding in Gresham through the Israel Discount Bank.”

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