SMALL shareholders reluctantly accepted Monday's increased offer by Thorium for Bolton-based bar chain Yates's, but there was further speculation that the increased offer might now lead to a counter-bid, raising the value of the company even more.

Thorium, a bid vehicle set up by US company GI Partners, said it had agreed a deal with Yates's independent directors to offer 147p per share for the group, raising the bid value to about £98.4 million.

The new bid is £5.4 million higher than Thorium's previous 140p per share offer and represents a premium of about 12.2 per cent to Yates's share price of 131p last Thursday.

The company said it had increased its bid after deciding it wanted "to take steps to bring the offer to a conclusion as swiftly as possible".

Michael Yates, the Stockport businessman and small shareholder who had criticised both the deal and the Yates's board who recommended the deal, said: "It's a fairly bitter pill to swallow. I still think the bid could be better, and I would have liked to see a change at the top of the company.

"The performance of Yates's under the current management has been disappointing to say the least, but it looks like this new offer might have the support of the major shareholders, which means I'll have to sell, along with many others." But one city trader, who disposed of shares last week when the deal looked dead, said: "It looks like I jumped ship too early, but this certainly could open the door to another offer. Now that the bid is starting to reflect the company's value, others might see signs of life." Thorium now needs acceptances representing 90 per cent of the shares for its offer to become unconditional -- forcing other minority shareholders to sell. Crucially, Thorium said it had secured the backing of previously dissatisfied Dickson family founding shareholders in Yates, who control 20.4 per cent of the shares, giving it effective control of just under 54 per cent of the company. Last Wednesday, the founding family investors in Yates attacked the Thorium bid for undervaluing the pub group claiming the offer failed to take account of the potential future benefits of a recent £18 million refit of 93 of the firm's pubs.

Yates's, which employs 4,000 people and has 129 Yates and 23 Ha!Ha! outlets, has seen annual profits slide from £15.6 million in 2000 to £10 million in 2003, although its full-year results last month showed a slight recovery at £10.6 million.

After the announcement, share prices in Yates's leaped by 12p to close at 144.5p yesterday, with over 8 million shares being traded.

SMALL shareholders reluctantly accepted yesterday's increased offer by Thorium for Bolton-based bar chain Yates's, but there was further speculation that the increased offer might now lead to a counter-bid, raising the value of the company even more.

Thorium, a bid vehicle set up by US company GI Partners, said it had agreed a deal with Yates's independent directors to offer 147p per share for the group, raising the bid value to about £98.4 million.

The new bid is £5.4 million higher than Thorium's previous 140p per share offer and represents a premium of about 12.2 per cent on Yates's share price of 131p last Thursday.

The company said it had increased its bid after deciding it wanted "to take steps to bring the offer to a conclusion as swiftly as possible".

Michael Yates, the Stockport businessman and small shareholder who had criticised both the deal and the Yates's board who recommended the acceptance of the deal, said: "It's a fairly bitter pill to swallow. I still think the bid could be better, and I would have liked to see a change at the top of the company.

"The performance of Yates's under the current management has been disappointing to say the least, but it looks like this new offer might have the support of the major shareholders, which means I'll have to sell, along with many others."

But one city trader, who disposed of shares last week when the deal looked dead, said: "It looks like I jumped ship too early, but this certainly could open the door to another offer. Now that the bid is starting to reflect the company's value, others might see signs of life."

Thorium now needs acceptances representing 90 per cent of the shares for its offer to become unconditional -- forcing other minority shareholders to sell.

Yates's has seen annual profits slide from £15.6 million in 2000 to £10 million in 2003, although its full-year results last month showed a slight recovery at £10.6 million.

After the announcement, share prices in Yates's leaped by 12p to close at 144.5p yesterday.