Shares in telecom's group Alphyra jumped by 26 per cent to €1.95 yesterday as the market priced in a management buyout (MBO)approach at a 25 per cent premium to the closing price before the offer was mooted.

However, Davy Stockbrokers believes the management team, which is being led by chief executive Mr John Nagle, may have to offer more to persuade long-term holders of the stock to come on board.

"We believe that this is an opportunistic bid...for a company which is emerging from a period of uncertainty in terms of earnings," said Davy analyst Mr Barry Dixon. He believes that a multiple in line with non-financial Irish stocks would point to a price of about €3.00.

"A price of €3.00 represents a significant premium to the recent share price but a mediocre return for longer term holders of the stock," he said.

The outcome of the takeover offer will be determined by a number of large shareholders including Newton Investments, with nearly 10 per cent of the company, and Prudential, which holds more than 8 per cent.

Bank of Ireland Nominees has a 24 per cent stake which it holds on behalf of a number of investors.

The 10-member MBO team, which also includes finance director Mr John Williamson, is understood to be finalising its offer and funding. It is not clear what financial backing management has lined up but it will probably need the support of a private equity house to fund an offer that is likely to cost over €60 million.

Markets sources expect the offer to be made early next week.

Meanwhile, the company said yesterday that a holder of 1 per cent or more of the shares may have disclosure obligations under takeover panel rules. It was not clear to which shareholder it was referring.