Gresham move rejected by shareholder

THE impasse at Gresham Hotels took another twist yesterday when the company revealed that a recent approach from a potential buyer had been rejected by its major shareholder.

Gresham said it had been in discussions regarding a possible takeover with an unnamed consortium. The consortium valued Gresham at €1.35 per share, but said a formal offer for the company would be conditional on receiving 80% support from shareholders.

In a statement to the stock exchange yesterday, Gresham said a shareholder holding more than 20% of the company was not prepared to accept such an offer “at this time”.

Red Sea Hotel Group, an Israeli hotel operator, holds 28% of Gresham and is the only shareholder with a stake in excess of 20%.

Gresham shares were up five cent at €1.15 yesterday. The share price has doubled since January, when the company, which operates hotels in Ireland, Britain, Germany, Belgium and the Netherlands, was valued at 57c.

The group has been the subject of continuing speculation concerning its future since Red Sea took a stake in the company over three years ago.

Dolmen Securities analyst Stuart Draper said the €1.35 approach was slightly higher than anticipated by the market.

He said the proposed takeover would only proceed if the consortium behind the approach raised its price, or if the consortium could agree a mechanism with Red Sea to allow the Israeli group retain a minority interest in Gresham after a takeover.

“Looking at the profitability of the group, it’s a surprisingly high bid,” said Mr Draper, adding that €1.35 represented a substantial premium on the price Red Sea paid for its stake in Gresham. The Gresham board said it had asked the consortium to remove its condition regarding the 80% acceptance figure.

"Failing this, the consortium was asked either to consider increasing its offer price or withdraw its approach. The consortium has not responded to the company’s request.

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