By Andrew Bushe
DUBLIN — The long-running takeover battle for the land-line business of former state telecom company Eircom appeared to be over last week when Denis O’Brien’s eIsland consortium threw in the towel after the Tony O’Reilly’s Valentia group got the backing of almost 85 percent of shareholders.
In a statement to the markets, eIsland revealed that its bid had received backing from just 1.5 percent of the equity.
A cash bid of about 3 billion euros (_2.36 billion) by Valentia received 84.6 percent acceptance from shareholders.
The Valentia takeover is still subject to approval from the Irish government.
Either group needed approval from 80 percent of shareholders by Sept. 28.
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The eIsland statement said that as this condition had not been satisfied, it had “decided to allow the offer to lapse.”
The withdrawal of the eIsland ends months of bidding and counter-bidding.
Vodafone has already taken over Eircell, the mobile phone arm of Eircom, in a share swap deal.
When the state company was floated in June 1999, there was a huge response, with over half a million people buying shares. The Valentia and Vodafone deals will leave them with a loss of about a third on what they paid.
The result will have serious implications for the government’s plans to privatize other state companies.
The offer from the Valentia consortium, which includes Providence Equity Partners, the Soros Fund Management and Goldman Sachs, is 1.365 euros per share, which includes a dividend payment of three cents per share.
It resulted in the Eircom board withdrawing their support for a 1.36 euros per share offer by eIsland.
Valentia already had the backing of a staff trust that owns 14.9 percent.
The offer “locked in” support from the Comsource 35 percent shareholding in Eircom unless there was a counter-bid of more than 1.50 euros per share.
Comsource is the holding company for the shares held by the Dutch KPN (21 percent) and Swedish Telia (14 percent) telecom companies.
O’Reilly said he is delighted with the outcome and Valentia would now move on to the next stage: obtaining the outstanding regulatory clearances.