February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — Independent Newspapers boss Tony O’Reilly has linked up with international investor George Soros and other financial backers to make an approach to Eircom for the fixed-line business of Eircom.
An Eircom spokesman confirmed the approach from the consortium but would make no other comment.
"We believe that a strong, developed and efficient telecoms infrastructure is critical to Ireland’s competitive position and attraction as a business location," a statement from the O’Reilly consortium said.
A special meeting to consider a Vodafone share-swap offer for the Eircell mobile arm of the former State company is to be held on May 11.
The offer, worth about 1.68 euros per share from the British Vodafone, the biggest mobile phone company in the world, is expected to be accepted.
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Entrepreneur and former Esat boss Denis O’Brien, through the eIsland consortium, has already made an indicative bid for what will remain of Eircom, mainly the fixed-line phone operation as well as Internet and directory businesses.
The O’Reilly-led consortium’s move could spark a bidding war for Eircom.
Financier Dermot Desmond is also believed to be considering making a bid.
O’Brien’s 2.2 billion euros offer represents 1.10 euros per share. It was rebuffed by Eircom.
According to the Financial Times, the O’Reilly group bid will be in the region of 2.6 billion to 2.7 billion euros — about 1.17 euros per share.
Con Scanlon, chairman of the Employee Share Ownership Trust, which holds 15 percent of Eircom on behalf of the staff, welcomed the O’Reilly move and said he would be surprised if there were not more bidders.
Scanlon, general secretary of the Communication Workers’ Union, said the group is a long-term investor and is prepared to talk to all bidders because it sees itself as a "strategic partner."
About half a million people bought shares in the state company when it was privatized, but they have seen their investment whittled away as the international slump in telecom shares has hit the Eircom price.
The shares were launched at 3.90 euros and were trading at 2.59 euros before the report of a possible new bid.
The Financial Times said O’Reilly has joined with bankers Goldman Sachs, Providence Equity Partners, Warburg Pincus and a fund controlled by George Soros.
The newspaper says the consortium expects its offer will be supported by Eircom’s management and is casting it as a white knight defensive bid.
The biggest shareholder in the company is Comsource, the holding company for the 35 percent held by Scandinavian telecom companies the Swedish Telia and the Dutch KPN.