Barlo chief executive, Dr Tony Mullins, is expected to table a formal offer of 40 cents per share for the radiator and plastics company at the start of February, having secured private financial backing for the deal some six months after making his first approach. Una McCaffrey reports.

Dr Mullins had previously indicated that his buyout offer would be formalised by the middle of this month, but this was delayed as he and management colleagues worked to secure funding for the deal. The offer, which will value the company at €70 million, will be backed by some €23 million in private finance, with the remainder drawn from bank debt.

It is understood that the MBO team has had to work hard to secure this private backing over the past few weeks.

It was reported in November that Dr Mullins' buyout vehicle, Melgan, had hired Bank of Ireland Private Banking to help source private investors to fund part of the transaction.

Dr Mullins, whose team is being advised on the buyout by IBI, did not comment on the matter yesterday but it is believed that his formal offer could emerge as early as next week. The formal offer is expected to include a demerger of Barlo subsidiary, Athlone Extrusions.

Analysts have been speculating over the past few days over how well Dr Mullins's offer of 40 cents values the company in light of the rebound on equity markets that has raised valuations on cyclical stocks such as Barlo.

NCB's Mr John Sheehan said the proposed 40-cent bid did not reflect the recovery potential of Barlo's business nor the progress made by management in de-leveraging over the past two years.

Some analysts believe the firm could justify an offer of between 45 and 55 cents per share. An offer of 45 cents would value Barlo at €78.75 million, while 55 cents would raise this to €96.25 million.

Dr Mullins and his MBO team made their first approach for Barlo last July when they indicated a readiness to pay 30 cents per share, or €52.5 million for the company. At that stage, Barlo was trading at 25 cents per share.

This approach was revised up to 40 cents per share in early December, with Barlo since having settled quietly around 39 cents on the ISEQ.

At that stage, Dr Mullins and his team had already negotiated the bank loans they needed to proceed with an offer, but private finance was yet to be put in place.

Barlo shares dropped 5 per cent to 37 cents yesterday. The company is considering Dr Mullins's approach through a committee comprised of board members, Mr Niall Carroll and Mr John Farrell.