Fexco, the Kerry payments company, is in advanced discussions to acquire the loss-making business-to-consumer division of CNG Travel Group, the Kerry-based online hotel booker backed by Dr Michael Smurfit.
A due diligence exercise on CNG's "Places to Stay" online unit has been underway for some days, although a deal is not expected to be finalised until next month at the earliest.
It was unclear last night whether CNG founder and former chief executive Finbarr Power, who was mooted as a possible bidder for the unit, was involved with the Fexco approach.
Mr Power, who led CNG's flotation on London's Alternative Investment Market in May 2004, was suspended last June after he expressed an interest in acquiring Places to Stay.
Crucial in the dialogue between CNG and Fexco is the fate of the unit's 54 staff, some of whom may lose their jobs if the sale goes ahead. This part of the discussions is said to be legally complex.
With both companies declining to comment last night, the price under discussion was not disclosed.
In addition to Dr Smurfit, the company's other backers include Menolly Homes owner Séamus Ross.
It is understood that the talks with Fexco are not directly connected to discussions with the separate unnamed suitor who made an "informal and unsolicited" approach last month for the entire CNG business.
Those mentioned as possible bidders in that process include the US travel and real estate group, Cendant. A spokesman for the firm said: "We do not comment on rumour or speculation in the marketplace."
The status of the discussions with the suitor was unclear last night, as was the suitor's attitude to prospect of a divestment of Places to Stay.
Losses at Places to Stay led CNG to put the unit on the market last June, less than a year after it paid $12.5 million (€10.11 million) in cash for the business in a deal with US group World Re.
CNG said at the time of this deal last August that it expected Places to Stay would boost its earnings within a year. However, the company said in June that the integration of the brand and software "has been slower than anticipated".
While the company said the business would make a contribution in 2005, it attributed the underperformance to the unit lack of scale vis-à-vis some of its biggest rivals.
CNG is believed to have received a number of tentative approaches for Places To Stay. It was unclear last night if the company would be able to recover the money it paid for the unit.
