Murrayhill, controlled by Mr Denis O'Brien, has initiated a takeover bid for PGA European Tour Courses plc, the company which develops, owns and manages golf facilities across Europe.
Mr O'Brien's firm made its bid following its disclosure that it had acquired 29.99 per cent from ClubCorp (UK) for 50.5p per share - or £9.6 million sterling (€15.2 million).
The purchase gives Mr O'Brien approximately 41 per cent of PGA. As Murrayhill now owns over 30 per cent of the voting rights in PGA, it is required to make a cash offer to all the remaining shareholders of PGA.
These include sports promoter Mr Mark McCormack's International Management Group and the Professional Golfers' Association, which each hold 19 per cent of the company. Other shareholders include an investment company called American Golf which owns 4 per cent, while the remainder (18 per cent) is held by around 2000 individual shareholders.
The offer price, which values PGA at £32 million, represents a premium of around 44 per cent of the company's share price of 35p at the close of business on August 3rd, 2001 - the last day of business before the announcement by Mr David Warren that he held discussions with a number of parties within PGA, with a view to taking over the company.
It is still unclear what Mr Warren's next move will be in light of Mr O'Brien's bid.
"The offer price of 50.5p represents a substantial premium to the company's share price as at August 3rd, 2001. I intend to enter into friendly discussions with the PGA ETC board immediately with a view to securing their recommendation of the offer," said Mr O'Brien.
Murrayhill must gain 50 per cent of PGA for the offer to become unconditional. "The main purpose has been to buy this stake to give Denis a central position in the future of the company no matter what happens. Obviously then, with launching this offer, we'd prefer to get to 51 per cent and if we get to 100 per cent, we'd be happy," said a source close to the deal.
Whatever the outcome of the bid, Mr O'Brien would be in a very strong position as majority shareholder.
"Obviously we'll be seeking board recommendation and it's important to stress at this stage that it's a friendly offer," said a spokesman.
"Ultimately, Denis would have a strategic stake moving forward with regard to any future developments. Even if this doesn't go through, as the largest shareholder he would have a very important role in any future developments at the company."
Murrayhill has now up to 28 days to send out its offer document. It can leave the offer open for a minimum of 21 days and that can be extended to up to 60 days under the city code.
PGA was floated on the London Stock Exchange in 1996. For the year ended December 31st last, it produced adjusted profit before tax of £2.1 million and adjusted earnings per share of 2.4p.
Mr O'Brien had been expected to make a bid for PGA given his passion for golf and his wealth from the Esat sale. He had been building up his stakeholding in the company over the past year and a half.
PGA operates a number of championship courses in various countries, including Portugal, where it leased a course from Mr O'Brien's own golf development at Quinto do Lago.
The Quinto do Lago property, bought over three years ago by Mr O'Brien for £25 million, includes four 18-hole golf courses leased to a number of international companies. It also includes a five-star hotel and several sailing lakes.
