The entrepreneur, Tony O'Reilly, has linked up with the international financier, George Soros, and leading finance houses to investigate whether to bid for Eircom. While the group has placed no value on whatever bid it may make, industry sources say it would be in excess of 2.6 billion euros. The consortium is expected to compete against an anticipated hostile offer from Denis O'Brien.
Responding to Mr O'Reilly's moves, a spokesman for Denis O'Brien's E-island consortium said that discussions with the Board and management of Eircom are continuing in a constructive and friendly manner. E-island is already in talks with Eircom management and has indicated it may bid about €1.10 for the rump of Eircom after Eircell is sold.
The spokesman added that due diligence is in its final stages after three months of work and said that the O'Reilly-led bid seems to be at a very early stage with no indication of price. Industry sources have speculated that the O'Reilly group could pay up to €1.17 per share. The E-island spokesman also said that, while Denis O'Brien's group was controlled by an Irish management team with extensive experience in the telecoms business, it seemed that overseas venture capitalists are behind the O'Reilly consortium.
The O'Reilly consortium, led by Providence Equity Partners, Warburg Pincus and a third private equity fund controlled by George Soros, says that it hopes its offer will be supported by Eircom's management and has cast it as a "white knight defensive bid". A formal approach to the company has been made, but it is unclear if key shareholders, Telia and KPN, the Swedish and Dutch telecoms operators, have informally agreed to back the O'Reilly/Soros consortium. The interest was believed to have been triggered by Eircom's decision to sell its mobile phone interests to Vodafone following continuing poor share price performance.
Employees' representatives at the company have welcomed the latest interest. Con Scanlon, Chairman of the Employee Share Ownership Trust, said on RTÉ radio that the forecast bid by the O'Reilly/Soros consortium is unlikely to be the last. He said that the Trust would obviously welcome a bidding war.
