February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — In a move that will create up to 20 new Irish millionaires, the board of Esat Telecom has accepted a counter-bid by British Telecom worth about $2.47 billion in response to a hostile offer by the Norwegian Telenor company.
The deal will leave Denis O’Brien, Esat’s chairman and chief executive and the founder and driving force behind the company, with a fortune of about $300 million.
"I am going to have a bit of fun and lead a normal life. That is the only ambition I have," he said.
The BT offer represents an improvement of 17.6 percent on the terms offered by Telenor. The deal is contingent on shareholder approval and whether Telenor comes back with a higher offer.
BT offered $100 per American Depository Receipt and $50 per share in Esat, which is quoted on the Dublin and American Nasdaq stock markets.
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BT said it was assured of acceptance of its offer on behalf of 24.9 percent of Esat through an agreement with Denis O’Brien and with the U.S. company Fidelity Investments.
The deal will boost the BT’s position in Ireland, where it already has a 50 percent holding in Ocean, a fixed line company, in partnership with the ESB.
O’Brien said about half a billion dollars had been invested in Esat, which has yet to make a profit.
Esat’s fixed line business has a turnover of about £100 million a year and the mobile business has another £200 million in revenue.
"They are set to increase quite dramatically in the current year," he said.
"We have a very strong position in the Irish market and that is why BT have put this offer on the table. Another reason is that BT now realizes that Ireland is going to make a critical position in the e-commerce world we all live in today.
"We have about 42 percent of the mobile market, 60 percent of the business Internet market, about 35 percent of the consumer market and about 20 percent of the data market. We also have a big position in the telephone long-distance market."
Telenor already owns 49.5 percent of Esat’s mobile arm, Digifone, and O’Brien said he did not know what would happen to it.
BT had been rumored to be preparing an offer as a "white knight," as it had been keen to move into the rapidly growing Irish market.
BT’s chairman, Sir Iain Vallance, said the growth in the Irish market since liberalization had been "phenomenal."
O’Brien said Esat had been approached by a number of suitors immediately after the first bid by Telenor last year.
"We started discussions with them very quickly and discussions carried on over Christmas. They obviously speeded up in the last couple of days whereby BT made this offer of $100 a share."
He said they had always regarded BT as the best buyer of Esat because, from a technical and customer point of view, they were leaders in the business.
"They are truly a global player in every way," O’Brien said.
On Dec. 22 Telenor had increased its offer to $1.902 billion on the basis of $85 per ADS and $42.50 per share. The Esat board had rejected the new offer.
Telenor had taken over an offer first made by made by Newtel, a joint company that had been born out of a merger of Telenor and Telia of Sweden. The merger of the Scandinavian state companies collapsed.