Eircom investors with small shareholdings should hold out for the Valentia cash offer at this stage while larger stakeholders may still benefit from selling their shares now rather than waiting, according to stockbrokers.

Some 500,000 small investors bought into Eircom when it floated on the stock market at #3.90 a share in 1998.

The Eircom board and major shareholders Telia and KPN gave their backing yesterday to an offer of #1.27 cash per share proposed by Sir Anthony O'Reilly's consortium, Valentia.

Some stockbrokers now recommend holding out for the cash rather than selling and incurring stockbrokers commission and other ancillary costs. "The small shareholder should wait until the circular on the offer comes out at this stage," said Dolmen Butler Briscoe stockbrokers joint managing director, Mr Ronan Reid.

"With many shareholders holding about £800 worth of stock, if they sell now they will have to pay commission of between £30 to £50 to the stockbroker and may also pay a bid/offer spread. But if they hold on they get the cash into their hands with no charges."

For those holding larger amounts of shares, say in excess of £5,000, there may still be some merit in selling now rather than waiting although they may have missed the peak.

As the dust settles after days of frantic trading in Eircom shares the share price shed 1.5 per cent yesterday afternoon to settle at #1.27. The Valentia consortium, backed by Sir Anthony and financial markets guru Mr George Soros, has until June 25th to finalise the offer which involves a cash payment of #1.27 per share or #1.25 a share cash plus a warrant over Valentia's share capital, a bid which would guarantee #1.32 per share after 36 months.

The relative costs for larger shareholders are less and there is a time element in holding out for the final payout assuming the bid goes ahead without any hitches.

Mr Kevin McConnell, equity analyst at Bloxham stockbrokers, said shareholders must balance the costs of selling now against the time factor required to maximise the benefits of the Valentia offer.

"The real issue is if investors want to hold onto the stock and stay in a lock-in situation before they get the cash value back out of the stock," Mr McConnell said.

While Valentia has until June 25th to finalise the terms of its offer, the time span between putting a final offer on the table and getting institutional and shareholders approval could take a number of months.