Business Opinion: More heat than light seems to be the verdict on the much billed O'Reilly versus O'Brien showdown at the Independent News & Media annual general meeting last week.

Depending which reports you favour, there was either a comprehensive refutation of the issues raised by O'Brien's representative about corporate governance or else something of an orgy of bluster and diversion from the podium cheered by a friendly crowd. Either way, it would be foolish to think that is was the end of the matter.

You would not - as Denis O'Brien has done - spend millions buying 8 per cent of a company and then set about systematically undermining the executives and the board unless you were bonkers or had a reason. O'Brien is not bonkers.

As it stands he has four main options - stop buying shares, keeping buying shares, launch a bid or wait for events to take their course. It follows then that his plan involves weakening the board of IN&M.

Given that the board is part of Tony O'Reilly's double lock on the company - the other is his 26 per cent stake - we can deduce that his objective is to break O'Reilly's control and clear the way for a takeover.

We have to discount the possibility that he would settle for improving the company's performance by reforming the board, because of the unlikelihood he could effect significant change in a timely fashion.

The view that O'Brien's objective is a takeover rather than better governance per se is supported by the fact that despite the very real corporate governance issues he raised, the board does - as O'Reilly always argues - pass muster on the issue that is of prime importance to most investors: performance as measured by dividends and share price. (This of course does not preclude the possibility that a board that met corporate governance norms would not have done a better job.)

It seems more likely then that what O'Brien is trying to do is both distract and unsettle O'Reilly, while at the same time drive a wedge between him and the other institutional shareholders, ahead of a bid.

If this is the case, then O'Reilly may have left himself vulnerable. While the loyalty of his board is unquestioned, it also falls far outside modern corporate governance norms.

Even if you completely disregard the issues raised by the Yale academic Stephen Davis who was commissioned by O'Brien, there is still a significant case to answer, supported by independent corporate governance advisers.

The central issues are the lack of independence of the non-executive directors and the growing acceptance that companies with poor corporate governance pay a price in the long run.

O'Brien has put these issues on the agenda and they are ones that institutional investors and financiers cannot ignore, indeed some are mandated to take them into account. These investors will also be paying close attention to the other mud being thrown by O'Brien about company jets and corporate entertainment.

Although little of it has stuck, O'Brien seems to be hoping there is a silver bullet lurking in O'Reilly's expenses claims.

The proposition that O'Brien is setting about the systematic undermining of investor confidence in the IN&M board as a prelude to a bid is quite consistent with what is emerging. It is reported that his next move will be to press for the disposal of the group's loss-making London flagships, the Independentand the Independent on Sunday.

He is a also said to be gearing up to challenge the group's strategy in South Africa.

The British titles are without doubt a soft spot. They are chronically loss-making and the business case put forward by O'Reilly - that they are a resource for the rest of the group - is far from robust.

It leaves him open to the allegation that the two "Fleet Street" titles are a vanity investment which serve to put O'Reilly in the first rank of media moguls.

If he does target them, O'Brien can't really fail. Should the IN&M board reject a well- argued case for their disposal, then O'Brien's allegations of cronyism gain credence. Should the board bow to his demands, then they are truly undermined and O'Reilly's stature greatly diminished.

To slip into the military parlance that seems obligatory in these situations, O'Brien's main offensive may be some time off, but the softening-up barrage has begun in earnest.