February 16, 2011
By Staff Reporter
By Andrew Bushe
DUBLIN — British phone giant Vodafone has offered to buy Eircell, the mobile arm of Eircom, for 4.5 billion euros (£3.54 billion) in a deal that would give 500,000 shareholders less than had been expected.
Eircom also issued a statement rejecting the 2.25 billion euros offer for its fixed-line business from the Denis O’Brien-led consortium e-Island. It said the offer "undervalued" the business.
When news broke two months ago that Vodafone was in discussions with Eircom, ii was speculated the Eircell price would be in the region of 4.6-5.1 billion euros.
News of the announcement sent the Eircom share down on the markets to 2.83 euros, compared to the launch price of 3.90 euros when it was floated in New York, London and Dublin last year.
Under the terms of the deal, Eircell will be demerged and shareholders will get one share in a new company, Eircell 2000, for each Eircom share they hold.
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Vodafone, which is now the world’s largest mobile phone company, is offering to exchange 0.9478 of its shares for every two new Eircell 2000 shares.
The deal will be voted on at an annual general meeting in March, when it will be unanimously recommended by the board of Eircom.
Eircom chairman Ray MacSharry said it was a good deal for the economy and it unlocked value for shareholders.
He said that if O’Brien or anyone else does not make a new bid for the fixed-line business, it would be consolidated with other company activities, such as multimedia, internet providers and e-commerce.
O’Brien said that since e-Island made its offer for the fixed-line business, the Vodafone price had effectively gone down by 20 percent, Eircom had announced a decline of 30 percent in operating profits, and the telecom sector internationally had dropped by 25-30 percent in value.
"The world has changed in the last two months," O’Brien said. "I think everybody needs to be very realistic."
He said e-Island would be reviewing the situation before saying if they would decrease or maintain their offer.
"It looks right now [that] there is absolutely no justification to increase the offer," he said.