The board of the Gresham Hotel group has confirmed that it received a takeover approach from a consortium of investors but added that it was not in discussion with them.

In a statement issued to the Irish Stock Exchange yesterday, the board said the approach was conditional on the support of the Red Sea Hotel group, which owns 28 per cent of Gresham. It also stated that the price offered was below the €1.25 to €1.30 per share mentioned in weekend media reports. This would value the group at between €99 million and €103 million.

"Given the condition attaching to the approach, the board directed the consortium to the Red Sea Hotel group," the statement said.

Red Sea also issued a statement stating that it was not in discussion with any party with respect to its shareholding in Gresham.

Sources close to the Israel-based hotel and property group, indicated that although no talks had taken place, the group would consider offers put to it at an appropriate price level.

Yesterday neither side would comment beyond these statements.

Gresham shares traded higher as the Dublin market opened yesterday rising to €1.02, up 9 cent on Friday, as investors sought the stock ahead of a possible takeover bid. After the two statements were issued interest in the stock waned, and it closed at €1, up 7 cent.

Market sources noted the confused position that surrounds the group, which is still reeling from Red Sea's hostile battle to gain control of the Gresham group last year. That battle was estimated to have cost Gresham €1.1 million and resulted in an overhaul of the board of directors.

Red Sea Hotels holds its stake in Gresham through Euro Sea and Hapoalim Nominees.

Mr Harvey Soning, a business adviser to the Red Sea hotel group took over as Gresham chairman in 2002.

Mr Amos Pickel, a director of Red Sea, also joined the Gresham board.

The consortium is understood to consist of three investors with a background in the hotel industry. They are believed to have secured financial backing from a UK private equity house.

The Gresham Group has hotels in Ireland, the UK and Europe. Last year it reported a loss of €4.8million compared with a profit of €9.3million in the previous year. In the six months to the end of June 2003, it reported a loss of €394,000 as trade was hit by the war in Iraq and concerns over the SARS virus.

Since Red Sea took control of the Irish hotel group, Gresham has sold off hotels in Galway, Limerick and Killarney.