Plans by property group Dunloe Ewart to buy back 34 million shares at #0.55 each have been dashed after the group's biggest shareholder indicated that it will vote against the buyback at next Monday's extraordinary general meeting.

Mr Liam Carroll, who is one of Dublin's biggest apartment developers through his Zoe Developments company, has built up a 27.3 per cent stake in Dunloe but has advised the company that he intends to vote against the special resolution on the share buyback. As this special resolution needs a 75 per cent majority, Mr Carroll's opposition means that it is set to fail.

If the buyback of 34 million shares had gone ahead, the reduced number of issued shares would have increased Mr Carroll's stake in Dunloe from 27.3 per cent to 29.9 per cent, the maximum he could hold without being forced to make a mandatory bid for the remaining shares.

Mr Carroll, however, is supporting Dunloe's plans to sell 20 properties in the Republic, Northern Ireland, England and Scotland. In any event, as this ordinary resolution at the e.g.m. only requires a simple majority, Mr Carroll would have been unable to block the property sales without enlisting the support of other shareholders.

Dunloe chairman Mr Noel Smyth - who owns 22 per cent of the company - was not available for comment and Dunloe did not expand beyond a brief statement which outlined Mr Carroll's voting intentions.

Mr Carroll, supported by loans from the Irish Nationwide Building Society (INBS), has spent around #50 million (£39.3 million) building up his 27.3 per cent stake in Dunloe and is currently sitting on a #10-million loss on his investment. Some of Mr Carroll's borrowings from INBS are secured against his Dunloe shares.

Market sources believe that Mr Carroll has never harboured any ambition to take over Dunloe Ewart, but has a strategy of using his position as largest shareholder to try to buy some of Dunloe's development properties for his own use, particularly the large site at Sir John Rogerson's Quay in Dublin's dockland area. This is seen as one of the most valuable sites in Dunloe's development portfolio and sources believe that Dunloe would be loath to part with such a prize asset.

On that basis, it seems that an impasse between the Dunloe board and its largest shareholder is likely to continue indefinitely with Mr Carroll's 27 per cent stake putting him in a powerful position to block any major strategic move by the board. The third-biggest Dunloe shareholder is developer Mr Phil Monahan with a little over 6 per cent of the shares.

Dunloe shares traded at #0.42 yesterday so it will come as something of a blow to many shareholders that the tender offer at #0.55 a share is now unlikely to go ahead unless Mr Carroll changes his mind between now and Monday's e.g.m. The buyback would have cost Dunloe #18.7 million out of the proceeds from the property disposals.