There have been two confirmed bids for Eircom from Tony O'Reilly's Valentia Consortium and Denis O'Brien's eIsland Consortium. The deadline for indicative offers to the board passed at 5pm this evening, but it is as yet unclear what Dermot Desmond's consortium proposes to do. A failure to bid by today's deadline would not prevent an interested party from entering any bidding contest for Eircom in the coming weeks. Under the rules of the Irish Takeover Panel, new bidders can come in with better offers during a sale process.
The Eircom board had asked the groups to make an offer showing the price per share and any arrangements with regard to the Employee Share Ownership Trust. Four parties have indicated interest in the fixed-line telephone wing of Eircom - the Valentia consortium chaired by Anthony O'Reilly, the eIsland consortium led by Denis O'Brien, Dermot Desmond's International Investment and Underwriting and United States buyout specialists Kohlberg Kravis Roberts. There has been considerable public interest in the future of the former state telecommunications company, especially now that the shares are down by almost a third of their price at flotation.
The trustees of the Employee Share Ownership Trust held meetings during the weekend with potential bidders to tease out proposal details following presentations to the trustees last week. The support of the ESOT, which has a 15% stake in Eircom, will be crucial to a successful bid. Eighty percent is needed to gain control of Eircom. The public controls 20% of the company, the major institutions control 30% and 35% is controlled by the Dutch and Swedish groups KPN and Telia. The board of Eircom will have to assess tomorrow if any of the indicative offers are acceptable, and if it can proceed to open detailed negotiations with one preferred bidder. It could decide that none of the offers are adequate and abandon the process to sell the company or it could ask the bidders to improve their offers. Eircom has said that it is making no public comment on the bids and that any comment will come through a stock exchange announcement at the appropriate time. Although the board of the company meets tomorrow, it could take several weeks before the successful bidder is revealed.
