Bidding war for Eircom continues

The race of Eircom has taken a new twist with two more players expressing an interest in acquiring its fixed line business.

US private equity firms Kohlberg Kravis Roberts & Co and Blackstone Communications have both expressed their interest in the acquisition. The announcement came as the company invited all bidders to submit final proposals by 4pm on Thursday.

Up until yesterday, the former state owned Irish Republic telecoms monopoly, had received proposals from the e Island consortium, led by Denis O’Brien, and the Valentia consortium, headed by Irish media magnate Sir Anthony O’Reilly. The bidding war, which began last October with an offer by e Island, has already pushed up the price to the upper limit of its fair value.

E Island made its third proposal on 5 June which included yet another sweetener. This is an offer of warrants over 5% of the common equity of e Island plus an increased ESOT (employee share ownership trust) shareholding from to 24.9 to 25.1 per cent. The increase to over 25% entitles strategic voting rights to the ESOT. The cash price of 1.241 euros, which includes a dividend of 2.1 euro cents, plus the 5% share option to staff and management remains as per the previous offer issued in a statement a day earlier.

e Island appears to be frustrated by the drawn out process that has taken place to date. It is now “considering its position” in view of its lapsed proposed offer.

Eircom has confirmed that discussions with both of the new prospective bidders are at a “very preliminary stage and there can be no assurance that these discussions will result in an acceptable, or any, offer for the company”.