Bidders increase Gresham offer to €1.45 per share

The three businessmen seeking to take over Gresham Hotel Group have raised their proposed offer for the company from €1.35 to €1.45 per share.

The consortium - which is comprised of property developer Mr Bryan Cullen, solicitor Mr David Coleman and builder Mr JJ Murphy - has also re-inserted a provision making their approach conditional on gaining approval from the holders of 80 per cent of its shares.

This suggests that the new offer level is more acceptable to Israeli hoteliers Red Sea Group, which owns 28 per cent of Gresham.

The Israeli company bought into the company at levels of around €1.00 per share.

Red Sea's unwillingness to consider the consortium's first approach at €1.35 just before Christmas led the businessmen to remove an 80 per cent pre-condition from its second approach, made in mid-January. That proposal, which hinged upon the consortium winning control of 50 per cent of Gresham's shares, has been the subject of discussions between the various parties for the past few weeks.

If the consortium had proceeded on the basis of its second approach, it would almost certainly have led to direct confrontation with Red Sea.

Last Friday, the Takeover Panel ruled that the three businessmen, who are being advised by Deloitte Corporate Finance, could have one more week to either table a formal offer or to walk away from the deal.

In a statement to the Irish Stock Exchange after the market closed last night, Gresham said it had agreed to progress discussions with the consortium.

It said the group's revised approach was conditional on the completion of due diligence on the company, indicating that this process should begin next week.

"The board and the consortium of investors are in discussions with a view to announcing a firm intention to make an offer by the week commencing 22nd March," Gresham said.

The company added that the revised approach did not constitute a firm intention to make an offer, noting that there was "no certainty" an offer would emerge.

The Takeover Panel later said that yesterday's offer deadline would no longer apply.

None of the parties involved in the takeover talks was prepared to comment beyond the statement yesterday, but the consortium's willingness to raise its offer by 10 cents per share shows a clear indication of its determination to win control of Gresham.

The new approach, which represents a 19 per cent premium over last night's closing price of €1.22, would value the hotel group at €115 million.

This raises the proposed offer price by €8 million and, according to analysts' calculations, is a better reflection of Gresham's tax-adjusted net asset value.

The consortium has given no indication of its intentions for Gresham, aside from confirming that a successful bid would lead to the group being de-listed.

It has been suggested that the would-be bidders, who are being led by Jackson Homes owner Mr Cullen, could be viewing the company as a pure property play, but this is far from certain.

Gresham's portfolio of seven properties was last assessed in 2001 and is likely to have risen substantially in value since then.