The group of investors seeking to buy the Gresham Hotel Group has reduced the price that it is prepared to pay for the company from €1.45 to €1.35 per share after carrying out a due diligence process.
Gresham said yesterday that it had received a revised approach from the consortium on March 30th at the €1.35 level. This would value the group at €107 million compared to €115 million at the €1.45 level.
The consortium appears to have cut the price it is prepared to pay after its expectations regarding the value of Gresham's property were not met in the due diligence process.
"The consortium indicated to Gresham that its reason for revising its approach was because the level of uplift in the property valuation exercise did not meet the expectations they held at the outset," the hotel group said.
Gresham said discussions were continuing and a further announcement would be made in due course.
The fate of the approach, which is conditional on the receipt of at least 80 per cent acceptances, now lies in the hands of 28 per cent shareholder, Red Sea which is in a position to block any bid.
Red Sea could not be contacted for comment last night but market watchers said it was hard to see the Israeli group, which has already rebuffed an earlier approach from the consortium at the €1.35 level, now accepting an offer at the lower level.
"It comes down to Red Sea and how prepared they are to accept the revised offer," one market source said, noting that conditions in the hotel sector had improved since the €1.35 offer was last mooted.
Gresham is due to release results in the next week which should provide an update on current trading conditions and the level of forward bookings.
The group of investors, which has been circling Gresham since last November, includes Jackson Homes owner and property developer Mr Brian Cullen who is believed to hold a 66 per cent stake in the consortium. He is joined by Dublin solicitor Mr David Coleman of Lavelle Coleman and builder Mr JJ Murphy.
Market reaction to the announcement of the revised approach was muted with the shares giving up just one cent to €1.22. However, earlier this month shares in the group lost 16 per cent amid fears that the takeover talks had foundered.
This is the second attempt in recent months to take the company private.
A previous consortium, which included property developer Mr Paddy Kelly, abandoned its takeover approach last year. That consortium is believed to have offered to pay between €1.25 and €1.30 per share for the group, valuing it at between €99 million and €103 million.
Gresham has hotels in Dublin, Cork, London, Brussels, Amsterdam and Hamburg, having recently disposed of hotels in Killarney, Galway and Limerick.
