Buyout bid row at Barlo AGM

BARLO’S management faced a barrage of criticism at the plastics and radiators company’s annual meeting yesterday, with the possibility of an impending management buyout vexing shareholders.

The recent approach from managing director Tony Mullins to take the company private has raised the ire of analysts and shareholders alike. Made public two weeks ago after fluctuations in the share price, his 30c per share offer was termed 'derisory', 'insulting' and 'opportunistic' yesterday.

Chairman Niall Carroll said the board was constrained by stock exchange rules and that he could not elaborate on any details of the approach, which may or may not lead to an offer.

Mr Mullins, who is leading the attempt to take Barlo off the stock exchange without revealing who else is acting with him, came in for the brunt of the onslaught.

"This employee of the firm has seen fit to denude shareholders and gain the company for his own enrichment," one shareholder said. "Most people realise what's going on he is talking down the prospects of the company. He wouldn't buy it if he thought it was going to fall," he continued.

This elicited a large clap from the gathering of shareholders, which was far larger than the typical Barlo AGM attendance. Noting this, Mr Carroll said he expected just half the people present were shareholders.

Mr Carroll told the meeting in Dublin's Burlington Hotel that the entire process was at a very early stage and dialogue still had to take place. Any information required would be passed on to the MBO team.

Another shareholder alleged Mr Mullins' position was untenable, saying: "He should be standing aside, there is a conflict of interest." Mr Carroll replied that the board was ensuring there was no diminution of Mr Mullins' attention to the company while the MBO attempt was proceeding and his position was not untenable.

After the meeting, Mr Mullins said he had noted comments from analysts who claim the 30c per share offer valuing the company at €52.5 million is too low. Some suggested 40c to 55c per share. "It is not for the chief executive to discuss the value for the share price," he said. "Analysts are entitled to their view."

Mr Carroll said the process was unlikely to be resolved within the next few weeks. Barlo has established a board sub-committee to evaluate any bid.

The board is being advised by AIB Corporate Finance, while Mr Mullins is being advised by IBI Corporate Finance.

Bank of Ireland Asset Management, which owns IBI Corporate Finance, is Barlo's largest shareholder, with 14.5% of the company. AIB has 5.5% while Dermot Desmond's International Investment and Underwriting has 4.9%. London-based Ennismore Fund Management holds about 6%.

Mr Mullins and his family hold 2.3%, and founder Aidan Barlow holds 5.5%.

In a presentation to shareholders, Mr Mullins said trading in the first quarter to the end of June had been satisfactory, but the plastics division had suffered a decline in order bookings and less sales visibility in recent months.

On the radiators side, the last year had been tough and the company had focused on making factories efficient, Mr Mullins said.

There has been volume growth so far this year, driven by a new radiator design, although market conditions remain tough.