Readymix shares drop 7% as it rejects offer

Readymix stock shed nearly 7 per cent of its value yesterday after the company's board rebuffed an offer approach from privately owned Kilsaran Concrete.

In a statement to the stock exchange, the Readymix board said it was rejecting the possible offer of €1.75 per share because it "significantly undervalues the worth and potential" of the company.

The price, which offers an 11 per cent premium over yesterday's closing price of €1.57, would value Readymix at €190 million.

Kilsaran's approach on March 28th was "opportunistic and unsolicited", the board added.

Kilsaran, a family-run business based in Co Louth, had to reveal its designs on Readymix on March 22nd after a sudden rise in its shares attracted the interest of the Irish Takeover Panel.

Kilsaran has made no comment on the matter since that time and attempts to contact management were unsuccessful yesterday.

Analysts said the tone of the statement issued by Readymix suggested a substantially higher offer would be required for the company to come into play.

Goodbody Stockbrokers analyst Mr Robert Eason said a fair offer for Readymix would fall between €1.80 and €2.00, with a successful bid likely to come at the higher end of the range.

Another source suggested that a price of €2.50 would be required before RMC, the British company that holds a 63 per cent stake in Readymix, would become interested in selling. RMC is engaged in a disposal programme but has not openly targeted Readymix for divestment.

Companies likely to be closely watching developments between Kilsaran and Readymix include Cavan-based Quinn Group and Belfast-based Lagan Cement, both of which could draw efficiencies from taking an interest in the company.

Members of the Readymix management team are rumoured to have considered sources of finance for a possible management buyout.