The board of Eircom has recommended to shareholders the latest Valentia offer for the takeover of the former state phone company.
The Tony O'Reilly led group now has 28 days to post its formal offer to shareholders. The new bid of 1.365 euro is only slightly ahead of the rival eIsland offer, but Valentia has secured the key backing of 35% shareholder Comsource and the 15% held by the employees.
It also emerged this evening that Warburg Pincus has withdrawn from the Valentia consortium. Its 21.5% stake will be taken up by Providence Equity Partners 43%, which now becomes the largest shareholder in Valentia. The ESOT will have 30% and Tony O'Reilly 4%.
The directors of Eircom and Valentia had announced this morning that they had reached agreement on an increased offer from Valentia.
The new offer, which includes a three cent dividend, values Eircom at around three billion euro. Today's latest offer from Valentia tops a bid of 1.36 euro from the Denis O'Brien-led eIsland last month.
Valentia also said it had a letter from Comsource, Eircom's largest shareholder which is owned by Sweden's Telia and Dutch KPN. The letter says that Comsource has given an 'irrevocable undertaking' to sell its 35% stake in Eircom to Valentia. Comsource can only be released from this agreement if a rival bid goes above 1.50 euro.
In a statement, eIsland said the ESOT trustees appeared to have agreed to recommend the Valentia offer without exploring with eIsland the possible discussions which a decision yesterday by the Irish Takeover Panel had made possible.
EIsland had earlier urged the directors of Eircom not to recommend Valentia's proposal. It had also urged Comsource not to make any further amendments or extensions to the existing irrevocable agreement.
The Valentia consortium has had the backing of the Eircom ESOT during the entire bidding war for the fixed line assets of the company. The ESOT owns 14.9% of Eircom and its support was seen as crucial for any bid to succeed.
Eircom shares closed up four cents at 1.34 euro in Dublin today on the back of today's developments.
