Private equity groups in for Irish telecom

Soros Private Equity, Providence Equity Partners, Goldman Sachs and Warburg Pincus team up with Anthony O’Reilly to bid for Eircom.

A private equity consortium has made a bid of between E2.6bn and E2.7bn for Eircom. If successful, it would be the first time a formerly state-owned privatised European telecom has been taken private.

The consortium is made up of Soros Private Equity (owned by billionaire financier George Soros), Providence Equity Partners, Goldman Sachs and Warburg Pincus.

Anthony O’Reilly, chairman of Independent News & Media, is to be non-executive chairman of the consortium, which is thought to have come together to prevent a bidding war amongst themselves.

However, a battle with Esat founder Denis O’Brien is likely. Through his company eIsland, O'Brien last year offered E2.1 per Eircom share. Eircom’s board rejected the bid.

Shares in telecoms companies have fallen across Europe following the expensive acquisitions of third-generation mobile licenses. The consortium’s bid indicates that telecom share prices may now be so low as to be attractive to opportunistic financial groups. Eircom’s shares stand at E2.59, just over half their level in March last year.

O'Reilly today made an announcement saying: “This consortium brings the right blend of telecommunications expertise, Irish management experience and financial muscle to deliver an attractive offer to Eircom shareholders.”

The consortium has not yet formally approached Comsource, a holding company through which Swedish and Dutch telecoms Telia and KPN hold a 35 per cent stake in Eircom. A further 15 per cent is owned by Eircom workers through the Employee Share Ownership Trust.