February 16, 2011
By Staff Reporter
By Stephen McKinley
Ireland’s former state-owned telecommunications service, Eircom, has finally accepted a bid from an investor group headed by Sir Anthony O’Reilly, which includes Goldman Sachs and George Soros.
The group, called Valentia, placed a bid of 2.88 billion euros ($2.42 billion), ending six months of uncertainty and a slumping stock price.
The offer beat a rival bid by Esland, led by Denis O’Brien. It works out at 1.32 euros per share.
In Dublin, Eircom was trading at 1.28 euros on Tuesday. Many small-time Irish investors bought shares after the initial public offering at a price of 3.90 euros two years ago.
Eircom officials announced that they were happy with the offer, which has been broadly welcomed in Dublin by stockbrokers and analysts alike.
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"It’s as good a price as they could have gotten," Ronan Reid of Dolmen Butler Briscoe Stockbrokers told the New York Times. "I give the board 10 out of 10."
O’Reilly, whose stake in the deal has not been revealed, made his first bid in October. He has announced that he owns 5 percent of Valentia, however.
After this weekend’s negotiations, Eircom decided to recommend the offer yesterday, and two weeks of horse-tarding over the details have begun.
Last month, the company sold its mobile division to Vodafone in an all-share deal that was worth around Eu1.50 per Eircom share based on yesterday’s Vodafone price.
Other rival offers came from Kohlberg Kravis Roberts and Blackstone Communications Partners last week, neither of which made the Thursday deadline.
An Eircom employee share option trust holds 14.9 percent of Eircom, and it is believed that Eircom’s unionized workforce may have tipped the balance toward O’Reilly’s bid. O’Reilly is seen as more pro-Labor than any of the rival bidders, including Denis O’Brien.
Regulators will examine the deal for any hitches or conflicts of interest, and the size of the transaction may mean that the European Commission will become involved. If not, then it is Tanaiste Mary Harney who will examine the deal and ask the Irish Competition Authority to give its opinion.
A spokesman for Valentia said yesterday the consortium did not believe O’Reilly’s involvement in Independent News & Media will be a problem. O’Reilly and his family are the controlling shareholders in Independent with a 27 percent stake.