International Investment & Underwriting (IIU) has signalled it is still in the race for Eircom despite failing to meet this week's deadline for indicative bids. The IFSC-based finance house, which is controlled by the businessman, Mr Dermot Desmond, contacted the company on Monday to say it would not be lodging a bid by the 5 p.m. deadline set by Eircom's advisers.
IIU indicated it was not pulling out of the contest. The media-shy group has yet to publicly confirm it is interested in Eircom but reconfirmed its interest privately to Eircom. Goodbody Corporate Finance and Merrill Lynch, which are advising Eircom, were trying yesterday to find a way to accommodate IIU within the framework they have devised. The two other suitors for Eircom, eIsland and the Valentia consortium, both complied with Monday's voluntary deadline and have submitted indicative bids. Both would be expected to object to any rejig of the process to accommodate Mr Desmond's consortium.
Eircom shares opened at 120 cents yesterday but fell back during the day to close at 116 cents, valuing the company at over #2.55 billion. Both eIsland and Valentia are understood to have made indicative offers of about 115-120 cents a share. The board of Eircom spent yesterday considering the proposals. A sub-committee of the main board, under chairman Mr Ray MacSharry, has been established to steer the process. The members include non-executive directors Mr Jim Flavin and Mr Pat Molloy as well as Mr Alfie Kane, the chief executive and Mr Peter Lynch, the chief financial officer.
Mr Flavin is the chief executive of the quoted investment company DCC, while Mr Molloy is a former chief executive of Bank of Ireland. The board of Eircom has to decide whether to reject the offers currently on the table or recommend one of them to shareholders. The expectation is the process will take several days - if not weeks - to conclude.
Under the Irish Takeover Panel rules, IIU can make a bid at any stage during the process. If its offer is more attractive than an offer already recommended to shareholders by the board, the board would be entitled to change its recommendation.
Corporate finance sources speculated yesterday that IIU may have decided not to bid at this stage for strategic reasons. Mr Desmond and his advisers may be waiting to see the terms of any offer recommended by the Eircom board before mounting their own bid to trump it.
Kohlberg Kravis Roberts, the specialist buyout house, is also keeping its cards close to its chest. The company has held talks with Eircom's advisers but has not submitted a bid. The US company may yet become involved with one of the consortiums or else be interested in buying some of Eircom's assets off a successful bidder.
Vodafone announced yesterday that it would move to compulsorily acquire the out standing shares in Eircell. It said that, as of last Sunday, it had received acceptances from shareholders representing almost 82 per cent of the former Eircom subsidiary's shareholders.
The shareholders who have not accepted the offer will be deemed to have accepted it and will be issued with Vodafone shares on the same terms as the shareholders who accepted the offer.
