The Dunloe House board is considering what action to take following the snubbing of its takeover approach to Belfast property company, Ewart. A Dunloe spokesman told The Irish Times "we are disappointed but not discouraged". Ewart's share price has been strong over the past two months, rising from 56p to 75p before retreating to 70p. Dunloe's, in contrast, has fallen from 24p to 21p.
This movement will make it more difficult for Dunloe to make an offer which would be perceived as attractive. As an offer period is deemed to exist, Dunloe will have to make a formal announcement shortly. Informed industry sources say this might be as early as this week.
Dunloe, controlled by Dublin solicitor, Mr Noel Smyth, had "approached" Ewart last month "with a view to merge both companies". However, Ewart shortly afterwards said that the approach which provided for three alternative forms of consideration (shares, loan notes, cash) were at a level considered to be "unacceptable" by the Ewart board.
Mr Smyth and Mr Stewart Harrington who are directors of both Dunloe and Ewart, were not parties to the Ewart board discussions. Ewart has now demanded that Dunloe "end the period of uncertainty surrounding Ewart by reverting with a formal offer".
The suggested offer was never revealed but is understood to have been around Ewart's net asset value of 65p sterling per share. As the independent board of Ewart does not appear to be prepared to want informal talks, Dunloe will now have to decided to make a formal offer or withdraw. The three management directors of Ewart did not favour the initial approach by Dunloe, according to informed industry sources. But they have only a nominal shareholding, amounting to less than 1 per cent.
Mr Smyth has a substantial shareholding representing a 26.5 per cent stake. Ewart's chairman, Mr Brian O'Connor, who spends much of his time looking after his business interests in Hong Kong, has a 15.7 per cent holding. While Mr Smyth cannot take part in any Ewart board meeting on Dunloe, he could draw on his voting strength in the event of a formal bid.
However, informed sources say a contested bid is unlikely. If Dunloe cannot get support from the full Ewart board, it is likely to seek support from some of the directors. Dunloe agreed terms this week to buy a 3.85 acre site at Sir John Rogerson's Quay, Dublin, from Mr Smyth for up to £7.5 million in cash. The consideration will be based on an independent valuation. The plan is to develop the site into a £40 million residential, office, hotel and leisure complex.
