MR Jim Rice, chairman of Unilever Ireland, has shot himself in the foot. Not once, but twice. And both incidents were avoidable.

First, Unilever, in January, did not buy the 75 per cent of Allied Domecq's shareholding in Lyons Irish Holdings direct. Instead, his company purchased Lyons Irish Enterprises which owned the 75 per cent stake. That move would have made it very difficult for Unilever to compulsorily acquire the outstanding 25 per cent.

Second, Unilever knowing that there would be resistance from some of the minority shareholders, compounded the problem, three weeks ago, by offering them 323p per share, the same price offered to Allied Domecq. And the Lyons Irish board is strongly resisting the offer.

Mr Rice has said: "We would have no problem living with minority shareholders if some want to hold on to their shares". That statement can be viewed as a face saving exercise, in the event of Unilever being left with a number of minority shareholders to contend with. But his statement: It would be our preference to own 100 per cent," must be his corporate goal.

It cannot be in its long term interests to have minority shareholders in cash rich Lyons Irish Holdings which has about 56 per cent of the Irish tea market. It has enjoyed dividend increases for the past 30 years. Any change in that trend could be quickly challenged by the minorities.

If Unilever ended up with a 100 per cent of Lyons Irish it could do whatever it wanted with the tea group. Also, it could use the £50 million cash hoard entirely for the benefit of Unilever. With minority shareholders it could still consolidate Lyons Irish into its group accounts thereby enhancing the balance sheet. However, Unilever could use the cash but it would have to pay Lyons Irish a commercial rate of interest. Further, it would want to be careful that it did not run Lyons Irish in a way that would be considered detrimental to the minority shareholders.

Unilever's move last January appears to have been tax driven. If the Lyons Irish shares had been purchased by Unilever, Allied Domecq would have faced a capital gains liability. But by buying the company, which owned the shares, this liability would have been avoided. Had the shares been bought, Unilever would have been obliged to make the same offer for the outstanding 25 per cent stake. To compulsorily acquire the shares from investors opposed to the offer, Unilever would have needed to get acceptances from 80 per cent (of the 100 per cent), in value and 75 per cent of the number of shares. The first requirement would have been easy, entailing only an extra 5 per cent, the second requirement would have been more difficult.

But by buying a company, rather than the shares, the offer for the 25 per cent was treated as a separate bid. A compulsory acquisition is now considerably more difficult as the 80 per cent and 75 per cent rules now apply to 25 per cent.

As Unilever knew it would face opposition to an offer of 323p from some investors, it is surprising that it did not increase its offer, or at least suggest a special dividend payment. In its defence, Unilever could argue that Lyons Irish is having difficulty in growing its core business. Also, with low interest rates, it is receiving a lower return from its cash hoard. And the latest results, from Lyons Irish bears this out. They showed a drop in pre tax profit from £4.7 million to £4.5 million in the six months to March 2nd 1996.

However, Lyons has kept up the pattern of increasing dividends with a rise in the interim from 7.35p to 7.8p. The consideration is on 13.6 times historic earnings but this falls to 10.4 without the cash. In isolation that does not appear to be a bad price but it could never be termed generous.

With the offer at a 1.7p discount to the market price, the Lyons Irish board had little alternative but to reject the offer. There are plenty of precedences for offering a substantial premium for companies with household brand names. For example, Jacobs' minority shareholders were well treated with the 500p per share bid (market price was 285p) from BSN.

Investors would be right to view Unilever's offer for the minorities as penny pinching. Indeed, it could be argued that the price being offered is, in effect, lower than that offered to Allied Domecq, because the minority shareholders, unlike Allied Domecq, have no shield to protect them against capital gains tax.

It is pretty obvious that Unilever will have to offer a reasonable amount more otherwise it will be left with an alert and vocal block of minority shareholders.