Mr Seán Quinn may be about to bid for Barlo, market sources believe, after it emerged that his company bought almost 15 per cent of the company from Mr Dermot Desmond. It paid 8 cent more than the 40 cent per share being offered to shareholders by the management buyout (MBO) group led by Dr Tony Mullins. Barry O'Halloran reports.
In a development that completely surprised the market, Mr Quinn's Northern-Ireland based company Quinn Group revealed yesterday that it had bought a tranche of 25.6 million shares for 48 cent a share.
The 40 cent a share offer from MBO vehicle Melgan is now effectively irrelevant, with shareholders waiting to see Mr Quinn's next move
Quinn Group's purchase amounted to 14.63 per cent of Barlo. Added to an existing 2.4 per cent held by its subsidiary, Quinn Direct, it gave the group more than 17 per cent of the combined radiators and plastics manufacturer.
Quinn Group bought the shares from Mr Desmond through NCB, which acted for both parties in the transaction. Mr Desmond last year sold his 20 per cent stake in NCB, which he founded in the 1980s, to Quinn Direct.
The news triggered immediate speculation that Quinn Group would make a bid for Barlo. Quinn Group ruled nothing out last night but would not divulge its intentions. Barlo's radiator business supplies the house-building sector, an industry in which Quinn Group is also involved through its cement and concrete divisions.
Sources pointed out last night that Quinn is involved in manufacturing through its cement and glass divisions, while Barlo produces radiators and plastic.
"This would be the kind of business that the people in Quinn Group would understand and relate to," one observer said.
Neither Melgan nor Barlo made any statement yesterday. However, it is clear that the latest turn in a story that began last July with the news that Dr Mullins had indicated that he wanted to take the Dublin-listed company private, has clear ramifications for those ambitions.
As Quinn has 17 per cent, and Mr Desmond retains more than 4.5 per cent, between them they have enough to derail the MBO, as it needs a minimum of 80 per cent acceptances to succeed.
Melgan has extended the deadline for accepting its offer to April 1st from March 17th. It had only received 34.3 per cent acceptances by the first deadline. That included its own backers, including Dr Mullins and the Barlow family.
It is still planning to go ahead with an extraordinary general meeting in Dublin next Wednesday. That meeting is partly needed so shareholders can approve a parallel de-merger of Barlo subsidiary Athlone Extrusions. Its chief executive, Mr Jim McGee, and his management have been planning to buy that company and part of the Barlo plastics business for €68 million.
Mr Desmond brought his stake close to 20 per cent through a series of purchases made since Melgan announced details of its 40 cent a-share/€70 million cash offer for the company on February 11th.
The fresh bid from Mr Quinn is likely to put the focus on Barlo's independent directors, who recommended the MBO offer to shareholders. Mr Desmond's IIU Nominees and Bottin Investments have been mopping up the stock at an average of 42 cent and will also profit from the sale.
Mr Desmond held 4.9 per cent up to the point at which Melgan declared its offer. While yesterday's transaction lowered his holding to slightly less than its original level, on the basis that he bought the shares for an average of 42 cent, it netted him a profit in the region of €1.5 million. Barlo closed up two cents at 44 cents in Dublin last night.
Mr Quinn is the North's most successful businessman. The privately held group that he controls had pre-tax profits last year of €170 million. Its businesses include manufacturing, insurance, financial services and property.
