With a management group expected to mount a buyout of the packaging group next week, Bank of Ireland Asset Management has emerged as a major buyer of Adare Printing shares in the past week.

BIAM has disclosed that it holds 14 per cent of Adare - up from 8 per cent and indicating that BIAM recently bought about one million shares.

This makes BIAM by far the biggest shareholder in Adare and in a pivotal position to influence any bid for the company, whether it is from the management group headed by finance director, Mr Peter Lynch, or some third party. Any bidder will require 90 per cent acceptances to be able to compulsorily acquire any remaining shares, so BIAM's 14 per cent stake is clearly a key shareholding for any bidder.

Adare shares are tightly held, with five institutions controlling 45 per cent of the equity. Apart from BIAM's 14 per cent, Fidelity and AIB Investment Managers both hold 10 per cent, Standard Life 6 per cent and Aberdeen Asset Managers 5 per cent. In addition, Adare chief executive Mr Nelson Loane - who is not part of the MBO group - holds 6 per cent with a further 2 per cent held by Mr Loane's family.

Adare shares are trading steadily at €8.50 and this values the packaging group at €119 million (£94 million). Market sources believe this is the very minimum the management group will have to pay and may have to pay significantly more to get the support of fund managers such as Aberdeen's Mr John Lawrie, who has a long history of rejecting offers he believes undervalue companies.

Adare has risen sharply off its €6.55 low for the year as a result of the disclosure of the management approach but is still a long way off its high of more than €13 of mid-1998. How high a management group will be able to go will depend on how its bid is structured, but MBOs are inevitably highly geared and thus require steady cash flow to meet debt repayments and bank covenants. However the management group, or indeed another bidder, could lower the net cost of a buyout by selling assets.