Arnotts shares gained a further 9 per cent yesterday as analysts and fund managers said an offer of at least €13 per share would be required to buy the company.
Shares in the retail group added a further 95 cents to €11.20 as the company's board confirmed it had categorically rejected last June's €11.50 per share offer from Carrgran "as it failed to adequately value the company's business and prospects".
Noting its surprise at Carrgran's announcement late on Monday, the board added that there had been no formal contact with Carrgran since the rejection of the approach. "There are no ongoing discussions, formal or otherwise, with Carrgran or its representatives," it said.
Carrgran is a bid vehicle for corporate financier Mr Peter O'Grady-Walshe, former Arnotts trading manager Mr Mark Delaney and Lehman Brothers. Its statement on Monday is understood to have been made on the instructions of the Irish Takeover Panel following a 5 per cent rise in the Arnotts shares.
In it, it said there had been "a number of informal discussions with certain individual members of the Arnotts board" regarding its approach. It also said it continued to review its options including making an offer for the company.
Analysts and fund managers said yesterday that the company was worth at least €13 per share.
Merrion analyst Mr Peter Frawley said it was possible to justify a price in excess of €13 per share, a view echoed by one institutional investor who felt an offer of €13.50 would be needed to win control of the company.
NCB analyst Mr John Kelly was even more bullish, believing an offer of at least €15 per share was needed to gain control of Arnotts, which owns the largest department store in the country.
"It's a premium business with no debt and a pension fund surplus," he said.
Meanwhile, trade unions at the company expressed concern over the €68 million surplus in the Arnotts pension fund. Although the surplus is understood to be ring-fenced, SIPTU warned yesterday that it was not "for sale".
"Our members are very concerned that the latest proposed takeover bid by Carrgran could be partly motivated by the fact that Arnotts has a very healthy staff pension fund, which owns almost 13 per cent of the company," the union said.
Mandate, the largest union within the company, was already due to meet management next week to discuss ways of improving pension fund benefits and the issue is expected to be raised.
A Carrgran spokesman said last night that the SIPTU statement had been noted but he declined to comment further. However, it is understood that the pension fund surplus does not form any part of Carrgran's plans.
