Eircom meeting breaks up without making recommendation

The Eircom board meeting broke up this evening without making any recommendation to shareholders. It is understood that talks will continue with the Tony O'Reilly consortium and the Denis O'Brien group over the next few days. The O'Reilly group, Valentia, increased its offer to a minimum of €1.22 per share today, however that is still 2 cents lower than the O'Brien offer. It is now expected that the O'Reilly group will have to match the highest offer.

It has also emerged that the O'Reilly group and the unions may still have some issues to resolve regarding the increased stake to be given to workers. The offer, which includes a €0.21 dividend, was agreed on Friday morning, as part of a deal to secure the support of the Employee Share Ownership Trust. This deal gave the ESOT a 29.9% stake in the company on the basis that Valentia matched Denis O'Brien's e-Island initial offer. But following e-Island's new bid on Friday evening, Valentia is still €0.02 off e-Island's €1.24 per share bid.

The Eircom board is now caught between recommending the highest offer, or the offer which the ESOT, who currently own 14.9% of the company, would favour. It is expected that KPN and Telia, who own 35% of Eircom, will want the board to recommend the biggest cash offer. Eircom shares are trading at €1.22 today, after increasing €0.04 in heavy trading in London yesterday.