Barlo shares rise 7% as Desmond ups stake

BARLO shares rose over 7% to 44 cents yesterday in response to financier Dermot Desmond bringing his stake in the plastics and radiator company above the 10% level.

Mr Desmond’s investment vehicle IIU told the stock exchange that Bottin, another Desmond company, bought over four million Barlo shares on Thursday, bringing his total spending on the company in recent days to over €3.5 million. His stake in the company is now valued at approximately €7.5 million.

Mr Desmond’s increasing interest in Barlo turned up the heat on chief executive Tony Mullins, whose management buyout team valued the business at 40c per share, or €70 million, when details of its takeover offer became public last week.

Barlo’s independent directors recommended the Mullins offer to shareholders, saying it was “fair and reasonable”.

Yesterday saw further heavy trading in Barlo as over 2.5 million shares changed hands during the day, before slipping back to 42 cents. Mr Desmond would be obliged to inform the stock exchange on Monday if he bought these shares. This would bring his stake to 11.5%.

Dr Mullins needs the support of 80% of shareholders for his bid to succeed at the extraordinary general meeting planned for next month. Shareholders are due to receive a formal offer document, outlining the terms of the proposed takeover, within two weeks.

Merrion stockbrokers have valued Barlo at between 45 cents and 55 cents per share and said shareholders “should not feel compelled to accept a 40 cents offer”. Mr Desmond’s recent stake-building has fuelled speculation that Dr Mullins would need to make a higher offer to take the company private.

Directors and management of Barlo subsidiary Athlone

Extrusions will watch the latest developments with particular interest. Dr Mullins’ takeover offer is conditional on selling Athlone to its management, headed by Jimmy McGee, who was chief executive of Athlone when Barlo acquired the company for €55 million in early 2001.