Shares in Barlo traded as high as 44 cents yesterday - 10 per cent above the offer tabled by a management buyout bid - as speculation continued about the firm's future. Some 1.25 million of the stock changed hands on the Irish market yesterday.

It was also confirmed that investor Mr Dermot Desmond now holds more than 10 per cent of the company following a purchase of 4.2 million shares on Thursday. He has doubled his original 5 per cent holding in the company since details of the 40 cents-a-share/€70 million MBO offer were tabled last week. Mr Desmond bought the shares through his companies, IIU Nominees and Bottin Investments at 39-42 cents.

A formal notification to the Irish Stock Exchange confirmed that IIU bought 4.2 million shares on Thursday at 42 cent. The purchase brought his holding to 10.15 per cent of the company. While this is a significant stake, it does not confer any extra rights on Mr Desmond. He needs 20 per cent if he wants to be guaranteed to prevent the MBO - which requires acceptance from 80 per cent of shareholders to become unconditional.

Barlo closed at 42 cents last night, but traded as high as 44 cents during yesterday afternoon. The stock consistently traded at more than 40 cents during the week, but the 44 cents mark that it hit yesterday marked a new peak.

In all, a further 1.25 million shares in the company changed hands. The sale sparked speculation that Mr Desmond was once again mopping up shares in the firm. If he is responsible, then yesterday's purchase would bring his holding close to 11 per cent.

The principal of the MBO vehicle, Melgan, is Barlo chief executive Mr Tony Mullins. Last week, it said it would offer 40 cents a share for the combined radiator and plastics group, valuing it at €70 million. Melgan would also effectively take over the firm's debts of €123.6 million. Melgan is understood to have irrevocable commitments representing some 27 per cent of Barlo stock and letters of support from other shareholders which could bring this to around 36 per cent.

Overall, Melgan is raising over €200 million to cover the cost of the cash offer, debt and the transaction's associated expenses.

The deal depends on a simultaneous de-merger of Barlo subsidiary, Athlone Extrusions.Neither Melgan nor Barlo's independent directors, who will recommend its offer to shareholders, would comment on yesterday's dealing in the stock.