Oglesby & Butler shares rise after MBO approach

Irish Stock Exchange minnow Oglesby & Butler has received an approach from two directors that may lead to a management buy-out (MBO).

Chief executive Mr Peter Oglesby and research and development director Mr Paul Oglesby own between them a total of 42 per cent of the Carlow-based soldering equipment-manufacturing company.

The two design engineers, who were among the company's founders, are the sole executive directors of the listed group.

The company issued an announcement yesterday afternoon following a request from the Irish Takeover Panel, which intervened after the share price jumped 35 per cent to 27 cents on a deal where only 1,000 shares changed hands.

It was a reversal of the trend for Oglesby & Butler, which has seen its share price more than halve from 49 cents at the beginning of the year to 20 cents at the start of trading yesterday.

The Oglesbys have indicated that their approach is dependent on arranging appropriate funding for an MBO.

They have indicated that they will offer no more than 40 cents a share for the company, a level that would value it at around €4.89 million.

With Mr Peter Oglesby owning 23 per cent of the company and Mr Paul Oglesby a further 19 per cent, the pair are looking to raise a maximum of €2.84 million to fund the deal.

Non-executive directors - chairman Mr Nevin Dowling and Mr Tom Byrne, former managing director of Davy Corporate Finance - have established an independent committee to consider any approach.

Oglesby & Butler had net assets of €6.2 million at the end of last year, with cash in hand of €2.4 million.

The company, which employed about 110 people at the end of last year, sells soldering tools and glue guns, primarily in the north American and continental European markets.

Last year, sales in Ireland accounted for just €82,444 of group turnover of €5.55 million.

It has been shedding jobs this year as part of a cost-cutting programme in the face of what Mr Peter Oglesby called a "deterioration in world markets".

In the company's most recent annual report, he warned of "continuing erosion of margins due to price competition and a necessity to absorb the spiralling cost of employment".