There is a clear conflict between Belfast property company, Ewart, and Dublin property group, Dunloe House, over who initiated the takeover approach. Ewart is adamant the bid by Dunloe was "unsolicited". Equally adamant is Noel Smyth who stands by his statement to the Belfast Telegraph that the initial approach to bring the two companies together had come from Ewart chairman, Brian O'Connor, and non-executive director, Harold Ennis.

Ewart is understood to have been so fired up by Noel Smyth's statement that it issued a formal complaint to the Takeover Panel in London. Dunloe was asked to comment; it insisted that its account of what took place was the correct one.

As this was unresolved, the panel is understood to have asked Dunloe not to include any mention in the offer document. There was, therefore, a deafening silence on this issue in the offer document issued last week. But both accounts of events cannot be correct.

Now that the formal £21.1 million sterling (£25 million) has been launched, Ewart shareholders, with its share price well above the offer price, have given the thumbs down to the terms. Even without the higher market price, this initial offer should indeed be rejected as it is too low.

But the most important issue for Ewart shareholders now is to weigh up Noel Smyth's contention that the existing share price "would not be sustainable without an offer". The implication is that if this offer does not succeed, or if there is no counter offer, or if there is a higher offer from Dunloe, then the share price will drop. How valid is this?

In the absence of a bid, Ewart's share price should be trading at the net asset value or at a small premium. Ewart had its last property valuation on June 30th, 1997. This showed a net asset backing per share of 66p. Last week it carried out a mini-coup by leasing its Ross's Court Belfast property to the Argos superstore group. It is a good deal on two scores; first, it had been a dud property producing nothing but it will now give Ewart a reliable rental stream, initially £350,000 per annum, rising to £400,000 in the fifth year. Second, it could be sold to an institution on a 9 per cent yield. This would increase the valuation by around £2 million, or 6p per share.

Ewart, as part of its defence, is going to rush out its interim results to the end of December 1997 on Friday. These are expected to be good. While its room for a further revaluation of the properties is limited, it could add 5 per cent, or 3p per share. All that would bring the net asset backing per share up to 75p. That makes the Dunloe offers of 67p cash sterling, or 70p loan stock sterling, or 66p sterling (79p) in shares look decidedly too low. Also on the income side, Ewart pays dividends while Dunloe does not. Dunloe could point to the loan note alternative which has a coupon of 5 per cent which is much higher than the annualised dividend yield from Ewart (at 70p).

Ewart should be able to fend off this initial bid from Dunloe with ease (unless, of course, the stock markets collapsed!). As extra fodder it could bring in a white knight - it would be ideal for a large private property company seeking a share quotation - and some companies are known to have expressed an interest. A white knight, however, would first have to convince two major shareholders; Mr Smyth, who owns 26 per cent, and Mr O'Connor, who owns 15 per cent.

A white knight would also have to see value in making a bid and looking at the projected net asset values there would be no great bonanza. But reliable market sources say an indicative price of 75p sterling per share has already been mooted. Ewart will now come out with its response (rejection) document and interim results this week.

Dunloe will have to up its bid to 80p (sterling), or more, for the bid to be considered satisfactory.

All this toing and froing is expensive and since the first approach was made in November 1997, there has been a 5.6 per cent adverse exchange rate movement against sterling. Also it could cost Dunloe around £0.5 million in fees. Ewart's could come to £0.25 million. A lot of that could have been avoided had the two factions on the Ewart board: Brian O'Connor, Harold Ennis, Barry Gilligan, David Robinson and Richard Deeny, on the one side; and Noel Smyth and Stewart Harrington, on the other, reached a mutually acceptable deal. But with Ewart now a takeover candidate, market forces should decide the outcome, and that can only be good for Ewart shareholders.