Independent directors at Barlo knew a week ago that the Quinn Group was considering a bid for the listed company it now looks set to buy for €84 million.
Following an extraordinary general meeting (e.g.m.) yesterday, Barlo chairman Mr Niall Carroll told The Irish Times that the Quinn Group's advisers met himself and fellow non-executive director Mr John Farrell a week ago yesterday.
"They indicated then that they might be interested in buying the company," he said.
Quinn Group showed its hand at the end of last week when it emerged that it had bought 14.63 per cent of Barlo from IIU Nominees and Bottin Investments, two companies controlled by Mr Dermot Desmond.
Quinn Group has since acquired Mr Desmond's remaining 4.55 stake along with the 2.9 per cent held by London-based Ennismore Fund Management and now controls 29.95 per cent of the company. It needs 80 per cent for its offer to succeed.
On Tuesday, it announced that it intended to offer 48 cent a share, or €84 million, for Barlo. That offer trumped the 40 cent a share offered by management buyout (MBO) vehicle Melgan for the radiator and plastics manufacturer. Barlo chief executive Dr Tony Mullins is the lead partner in Melgan.
The independent directors have said they intend recommending the Quinn offer, to be tabled by group subsidiary Sarcon, when it materialises.
Angry shareholders forced Mr Carroll and Mr Farrell to defend their earlier decision to back the Melgan offer during yesterday's e.g.m. One shareholder, Mr Tom Rice, stormed out of the meeting after questioning the independence of both men.
Mr Rice also described Mr Desmond and Quinn Group managing director Mr Seán Quinn as "white knights".
However, not all shareholders agreed with this description. "Dr Mullins might have been trying to get the company on the cheap, but Mr Quinn is getting it nearly on the cheap," another told the meeting. He argued that Barlo was worth up to 60 cents a share.
Mr Carroll responded to attacks on his and Mr Farrell's relationship with Dr Mullins and the company by stressing that both men were independent. He also pointed out that the shareholders themselves had voted for them at the company's annual general meeting nine months ago. The e.g.m., which related to the effectively defunct Melgan offer, was adjourned.
Mr Carroll told reporters that, before the MBO approach, the company had hired an unnamed merchant bank to find a buyer. "No trade buyer anywhere in the world showed any interest, despite us making efforts the previous year to find buyers and to find ways of getting our debt down," he said.
Melgan's 40 cent offer was partly based on Barlo's average debt of €123.6 million rather than the €115 million it reported at last year end, March 31st, 2003.
