IWP has all the characteristics of an MBO-in-waiting. It is one those small-cap stocks unloved by institutional fund managers. It operates in a dull-as-ditchwater business that is hard to classify, ranging from toilet cleaners to cosmetics. It has a chairman who has made no secret of his dissatisfaction of the treatment of IWP by the market while at the same time almost trebling his stake in the company over the past three years. And finally, it is closing a deal that will dramatically improve the balanc

For the best part of three years, Joe Moran has mulled over the possibility of taking IWP private and the market is in little doubt that the planned €110 million-plus sale of the group's household products division may speed up that process.

IWP's balance sheet is currently a bit of a mess, with March 2002 debt forecast at some €150 million, according to house broker Goodbody - almost 50 per cent more than the group's current market capitalisation. Interest cover might still be relatively comfortable but the size of IWP's debt and the slow pace of running that debt down means that the group, as it is currently constituted, will struggle to make progress on the business front.

But there are a number of reasons why IWP shares are seen as compellingly cheap at their current bombed-out €1.50. For a start, the sale of the household products division will bring debt down to €40 million or less, giving Joe Moran the sort of balance sheet he could use to expand the group's cosmetics business in Britain and the Netherlands. If you think that Joe can drive the slimmed-down business forward, then IWP at €1.50 looks a reasonable prospect.

But for this observer, the prospect of an MBO - significantly increased by the sale of the household products division - is a more compelling reason to buy into IWP. Given his previous comments and the amount of money he has spent increasing his stake in the company to more than 11 per cent, it seems a reasonable bet that Joe Moran will make some sort of buyout move. It's certainly hard to see how a public listing for a slimmed-down company is justified in the long-term.

And even if Joe Moran doesn't rush to his investment bankers to put together a buyout offer, anybody buying IWP shares at €1.50 is getting a yield of 7 per cent based on the expected 10.5 cents dividend for the year to the end of March.