Mr Dermot Desmond has raised his stake in Barlo to almost 17 per cent, just 3 per cent shy of the level he would need to guarantee the failure of the management buyout (MBO) bid being led by the firm's chief executive, Dr Tony Mullins.

Mr Desmond reached a level around 16.9 per cent yesterday when he purchased a block of 3.25 million shares in the radiator and plastics company. He had earlier informed the stock exchange of the purchase of 181,000 shares on Tuesday. All the stock was bought at 42 cents per share, two cents above the MBO offer level.

The success of the buyout depends on the MBO vehicle, Melgan, winning support in respect of 80 per cent of Barlo shares.

This now looks to be almost impossible, with Mr Desmond thought to be certain to use his holding to effectively block the bid and push for a higher offer.

Some analysts have valued Barlo at up to 55 cents per share, although others have rejected this by saying such a level does not fully take into account the firm's high debt levels.

Melgan, in its offer document, has undertaken to match or accept an offer of 44 cents per share or higher if one should emerge. It is unclear at this stage how willing or able Dr Mullins and his team would be to find financial backing for a raised bid.

They declined to comment on the matter last night but are thought, so far, to be proceeding with their offer as it stands.

Barlo shareholders are due to decide on the MBO at an extraordinary general meeting on March 24th. Melgan has already won acceptances in respect of slightly more than one-third of the company's shares, with large institutional shareholders and Barlo board members having accepted the bid on an irrevocable basis.

Barlo closed unchanged at 42 cents last night.