Management buyout of Barlo blocked

THE management buyout (MBO) of the plastics and radiator group Barlo was effectively blocked yesterday after it emerged that businessmen Sean Quinn and Dermot Desmond hold enough shares to block the takeover.

In a surprising twist to the long-running MBO, Mr Desmond yesterday sold 25.6 million shares to Mr Quinn, the owner of Quinn Cement and Quinn Direct insurance, at 48 cent per share. This is 8 cent higher than the offer for Barlo by chief executive Tony Mullins.

Mr Desmond retains a 4.55% stake in Barlo and, when combined with Mr Quinn's 17.03% shareholding, this is enough to stop Dr Mullins taking Barlo private as the offer must be accepted by 80% of all shareholders. Given the price Mr Quinn paid, there is no chance he will take the MBO price.

He may even launch a bid of his own for the company. Last Friday, had Mr Quinn wanted to acquire Barlo he could have offered the lower price of 44 cent, which Dr Mullins would have had to accept.

Some brokers believe that Melgan, Dr Mullins' bid vehicle, has offered too low a price for Barlo and that it could be worth double his offer.

Next week, Barlo will hold an extraordinary general meeting to ask shareholders to approve the disposal of its Athlone Extrusions division, with the proceeds being used to finance Melgan's bid. If this is rejected by shareholders, as is now the case, then the entire offer falls.

Melgan said earlier this week that it had received acceptances from investors representing just over 36% of shareholding and had extended its offer until April 1. It is not known whether Dr Mullins will come back with a higher offer if his bid fails.

This is not the first time that Mr Quinn has done business with Dermot Desmond. Last year, Mr Quinn bought the 20% stake in NCB Stockbrokers held by the financier.

The Cavan-based Mr Quinn paid Mr Desmond's International Investments & Underwriting €12.3 million for the shares. This means that Mr Desmond made a profit of about €1.5 million on his recent stake-building in Barlo.

Mr Quinn's family-owned businesses are involved in many areas ranging from hotels to cement manufacturing and the Quinn Direct insurance business. Its turnover is in excess of €700 million and has profits of €100m.

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