The Irish Stock Exchange is examining trading in Dunloe Ewart shares ahead of yesterday's announcement of a €167 million offer for the company by executive chairman Mr Noel Smyth.
The offer, which is pitched at 42.5 cents cash per share, has been recommended by Dunloe's independent directors.
It represents a premium of around 2 per cent to Dunloe's net assets per share at the end of June. It is 46 per cent above the average closing price of Dunloe shares in the 12 months to yesterday.
However, shortly before the offer was published yesterday, a sizable block of Dunloe shares was traded.
Market sources said some 10 million shares or around 2.5 per cent of the company, were dealt in the hour before the announcement. Around nine million shares traded at a price of 40 cents, up 11 per cent on the opening level of 36 cents.
The timing of the trades has prompted the Stock Exchange to examine the deals more closely.
Mr Smyth's offer for the 78 per cent of Dunloe that he does not own is being made through Valdot, a company he controls with his wife, Anne Marie.
It is seen as an attempt to break the stalemate that has developed between Mr Smyth and the company's largest shareholder, property developer Mr Liam Carroll.
Mr Carroll holds 28.5 per cent of the company but has consistently voted against Dunloe's plans since he bought into the company when Mr Smyth tried to take it private - at a price of 51 cents per share - more than two years ago.
Most recently, he was joined by developer Mr Phil Monahan, who owns 7 per cent of Dunloe, and Mr Dermot Desmond, who holds around 2 per cent, to block Dunloe's proposals to buy British Land's 50 per cent share of their Cherrywood joint venture in south Dublin.
Against this background, the company's three independent directors are recommending the offer as "fair and reasonable" to the company's 4,000 small shareholders, who have been caught in the middle.
"Having regard to the impasse affecting Dunloe in the past two years and the various unsuccessful initiatives by the board of Dunloe to resolve it and also having regard to the price that Dunloe shares have traded at during that period, the independent directors believe this offer now represents the best means of returning value to Dunloe shareholders," said Sir David Fell, senior independent non-executive director of Dunloe.
Auctioneer Mr Stewart Harrington, the only one of the independent non-executive directors to hold shares in the company, intends to accept the offer in respect of his own shareholding, which represents around 1 per cent of Dunloe.
Mr Carroll, however, who could not be reached for comment yesterday, is considered unlikely to accept the offer. His stake in Dunloe was built up at a price of around 50 cents per share so accepting the 42.5 cent per share offer would leave him sitting on a hefty loss.
In the event that the bid succeeds, Mr Smyth will continue to run Dunloe's business with the present management of the company, which includes finance director Mr Tim Kenny and marketing director Mr Noel Murray.
