Barlo closed 2.27 per cent up at 45 cents last night, valuing the company at almost €9 million more than the management buyout (MBO) offer, which will be put to shareholders at tomorrow's extraordinary general meeting (e.g.m.).
Almost 430,000 Barlo shares changed hands, with activity driving its price to 46 cents at one point. It closed at 45 cents, 2.27 per cent ahead of its 44 cents opening quote. This valued the company at €78.7 million, or €8.7 million higher than the 40 cents a share/€70 million offer tabled by Melgan, the MBO vehicle led by Barlo chief executive Dr Tony Mullins.
Barlo has consistently traded two cents or more higher than the MBO offer since it was announced on February 11th. Last week, Quinn Group bought 25.6 million Barlo shares from Mr Dermot Desmond, whose companies IIU Nominees and Bottin International had built up a 19 per cent holding in the company.
The purchase brought Quinn Group's stake from 2.4 per cent to just over 17 per cent. The move left market sources speculating that the group, controlled by Mr Seán Quinn, intended buying Barlo.
Melgan needs the support of shareholders with 80 per cent of the company if its offer is to succeed. Quinn Group and Mr Desmond's companies now control more than 21 per cent of the radiator and plastics group. Both have bought at more than 40 cents and are thought likely to defeat Melgan's offer.
There is also speculation that Quinn Group may deliberately keep its own holding at less than 20 per cent, as this would make it easier to get the necessary shareholder support should it launch a bid for Barlo.
Under the Irish Stock Exchange's rules, a bidder with less than 20 per cent of a listed company needs 80 per cent support to succeed. Getting the backing of institutional investors is generally enough to secure this.
If a bidder holds more than 20 per cent, they must win the support of 75 per cent of individual shareholders. This would mean getting the backing of large numbers of retail investors, which can be administratively difficult and take a longer time than getting institutional support. Barlo has a lot of retail shareholders.
Barlo will hold an e.g.m. in Dublin's Shelbourne Hotel tomorrow. The meeting is needed to allow shareholders to approve the participation of a number of the company's board in the MBO and to approve a parallel de-merger of its subsidiary, Athlone Extrusions.
Athlone chief executive, Mr Jimmy McGee, and a number of his management team, are planning to buy that business, along with two Barlo plastics plants in Newbridge and the Czech Republic for €68 million.
