Ryan Hotels' shares remained in strong demand on the Irish market yesterday despite the statement from the Ryan board that it has not received any takeover approaches and is not in discussions with anybody about a possible offer for the company.
After jumping nine cents to €1.15 on Tuesday, the shares hit a high of €1.30 on the market yesterday before closing up five cents on the day on €1.20, with just over 260,000 shares trading. At this level, the shares are trading over 20 per cent above their level before it emerged that the Israeli group, Red Sea Hotels, had snapped up a 16.6 per cent stake and the Donegal-based McEniff brothers a 5.3 per cent stake.
As was suggested by The Irish Times last week, the belief in the market is that a bid will emerge from either Red Sea or the McEniffs, the two possibly acting in concert with an agreement on each picking up the Ryan assets it wants if a bid is successful.
The McEniffs, whose hotels are concentrated in the north-west of the State, are likely to be interested in Ryan's Irish hotels - particularly the four outside Dublin in Cork, Limerick, Galway and Killarney. Hotel industry sources believe that Red Sea's target would be the four overseas hotels in London, Brussels, Amsterdam and Hamburg. The two hotels in Dublin and Dun Laoghaire might be of interest to both the McEniffs and Red Sea, so some accommodation would have to be reached between the two parties if they combine - officially or unofficially - on a joint bid.
But market sources have warned that at current levels, Ryan Hotels is not a cheap target. The 20 per cent rise in the share price in the past few days has put the hotel chain on an earnings premium to both Jurys Doyle and many British hotel groups, such as Friendly, Jarvis, Regal and Thistle.
Add in a takeover premium to the current share price and a takeover becomes more expensive. At yesterday's close, Ryan is valued at just under €90 million (£71 million). Compared to yesterday's price, the McEniffs are thought to have assembled their stake at an average price of €0.80 a share, while Red Sea paid around €1.00 for its 16.6 per cent stake.
