Speculation on the future of engineering group Unidare is set to intensify after financiers Mr Dermot Desmond and Mr Pierce Casey increased their combined stake in the group from 18.5 per cent to 26.6 per cent.

The move by Mr Desmond and Mr Casey above a 20 per cent shareholding is important as it effectively means that they can block any change of ownership and puts them in a powerful position to influence Unidare's future, even though they are not represented on the board. Under Irish company law, any bidder for Unidare needs to have at least 80 per cent of the shares to compulsorily acquire the remainder.

Beechworth International, the Desmond-Casey investment vehicle, bought another 1.6 million shares on Monday and Thursday this week. The price paid for the additional shareholding was not disclosed, but Unidare traded both days at €2.40 (£1.89) - suggesting that the two financiers spent another £3 million consolidating their stake in the engineering group. This compares to the €2.10 per share they paid for their previous share purchases.

Market sources have divided views on the motives of Mr Desmond and Mr Casey, who have now spent almost £9 million building up their 26.6 per cent stake. The two financiers are limited to buying another 650,000 shares before they reach the 29.9 per cent trigger-point for a mandatory bid for Unidare. At the €2.40 recent price, Unidare is valued at €47.5 million (£37.4 million).

There has been speculation in some quarters that Mr Desmond and Mr Casey are building their stakes as a prelude to selling out at a profit when the Unidare management or some other party makes a bid. Mr Desmond has previously invested in public companies and later taken a profit - his investment and £4 million profit from Golden Vale being the most obvious - while Mr Casey has made a sizeable profit from his investment in Jones Group. Mr Desmond last year built up an 18 per cent stake in Unidare before selling it at a £2 million profit.

The Unidare board, however, has come out strongly against taking the company private despite its poor performance in recent years. One of its directors, Northern Ireland businessman John McGuckian, in the past few weeks has spent £2.5 million to take his own stake in Unidare to nearly 9 per cent. In total, the Unidare directors control 10.6 per cent of the shares.