Mr Dermot Desmond's stake in management buyout (MBO) target Barlo has risen close to 18 per cent after the purchase of a further 1.75 million shares yesterday.

The transaction leaves Mr Desmond in a position to block the MBO if he can gain support from investors holding just 2.2 per cent of Barlo shares.

Yesterday's purchase came one day after Mr Desmond spent €1.3 million on a block of three million shares in the company.

The stock changed hands at 42 cents, two cents above the MBO offer level.

While yesterday's seller has yet to be identified, it has emerged that UK investment house Gartmore sold its entire holding in Barlo to Mr Desmond on Wednesday.

Gartmore had previously written a non-binding "letter of support" for the MBO team, which is being led by Barlo chief executive Dr Tony Mullins.

The withdrawal of this support means that Wednesday's transaction could be doubly damaging for Dr Mullins, who will have seen the support of a crucial 1 per cent shareholder disappear and be transformed into added opposition to his MBO bid.

Dr Mullins did not comment on the matter last night but the MBO vehicle, Melgan, is likely to make a statement on the Gartmore disposal this morning.

It is thought that the investment house sold its holding for internal reasons unrelated to the MBO or Mr Desmond's buying activities.

Melgan has secured irrevocable acceptances for its offer in respect of 36 per cent of Barlo shares.

An announcement to the Stock Exchange confirmed yesterday morning that Mr Desmond's stake in the firm had risen to 16.74 per cent before yesterday's trade.

It has now climbed to 17.7 per cent, with Mr Desmond spending some €735,000 on yesterday's purchase. Barlo closed one cent higher at 43 cents last night.

The MBO offer of 40 cents per share values Barlo at €70 million; however, some analysts believe the firm could be worth as much as 55 cents per share.