Mr Noel Smyth is to withdraw his offer for Dunloe Ewart and sell his 26 per cent stake in the company to Mr Paschal Taggart for a profit of €30 million.
Dunloe's executive chairman amassed his stake for around €15 million and will realise €46 million from the sale of the shares at a price of 45 cents each. But he has spent €1 million on his bid for the company to date.
The deal is expected to be executed early next week.
Mr Taggart said last night that he was buying the shares in his own name and paying for them from his own resources. He also said he did not have any agreements with the other large shareholders in the company, Mr Liam Carroll and Mr Dermot Desmond, but declined further comment.
However, there was a feeling in the market last night that Mr Taggart's involvement was "a stepping stone" toward some sort of resolution of the logjam created within the company by rival groups of shareholders. "He might be able to do a deal, act as a middleman," said one market source.
Mr Taggart, who is chairman of Bord na gCon, was the man behind the development of the Jervis Street shopping centre and is a well-known businessman. Dunloe's board also said last night that they hoped Mr Smyth's decision to sell his stake was "another step towards resolving the shareholder impasse that has affected the company for the past two years." Progress has been hindered in recent years by the stand-off between Mr Smyth and Mr Carroll, the largest shareholders.
The media-shy apartment developer bought into Dunloe two years ago and remains the company's largest single shareholder with a stake of 29.9 per cent. He has used his shareholding to block a number of Mr Smyth's proposals for the company, including its proposals for its Cherrywood joint venture in south County Dublin.
Mr Desmond has recently built up a stake of nearly 17 per cent in Dunloe. Along with another large shareholder, Mr Phil Monahan, who owns 6.7 per cent, he has requisitioned an extraordinary meeting to remove the existing board of Dunloe with the exception of two executive directors.
The two men are also proposing to use Dunloe's surplus cash to buy back shares at 50 cents per share and to sell the company's remaining assets. But Mr Carroll has signalled his opposition to their proposals.
The Irish Takeover Panel said it had been informed by the directors of Dunloe that the extraordinary meeting would be held on a date between December 9th and December 20th. A notice will be posted to shareholders no later than November 22nd.
The panel has also agreed to the request from Mr Smyth's bid vehicle, Valdot, to withdraw its offer for Dunloe, which was pitched at 42.5 cents per share, valuing the company at €167 million, provided the share sale to Mr Taggart proceeds and the extraordinary meeting is held as planned.
The Valdot bid was widely believed to have little chance of success as it was unlikely to be accepted by the other three large shareholders, who now control more than 53 per cent of the shares between them.
No sums will be payable to Valdot following withdrawal of the offer. Mr Smyth, who was appointed chairman of Dunloe in August 1995 and became executive chairman in September 1997, remains as chairman until the extraordinary meeting takes place.
But if, as is likely, he is removed at that meeting, his involvement with Dunloe will be at an end. He has a number of private property interests and it is understood he will consider his situation over Christmas.
Dunloe's shares closed unchanged at €0.43 last night.
