Valentia Telecommunications' #2.9 billion (£2.3 billion) bid for Eircom required special vetting from the Irish Take Over and Mergers Panel because it offered the Employee Share Ownership Trust a better deal than other shareholders.
The ESOT, which owns just under 15 per cent of Eircom is the only Eircom shareholder which has been offered the opportunity to participate in the leveraged buyout that has been put together by Valentia.
Details of Valentia's offer are due to be published tomorrow when an abridged version of the full offer - known as a Rule 2.5 document - is circulated. It will confirm that the ESOT will have a 29.9 per cent stake in Valentia but its voting rights will be limited to 25 per cent.
Sources familiar with the document say it will state that the take-over panel has cleared this aspect of the deal even though it breaches the general principle that all shareholders should be treated equally in a take-over.
Valentia's exclusive negotiating period with Eircom is due to end today, although it may be extended if the publication of the Rule 2.5 document is delayed. Once the period is up Eircom is free to talk to any counter-bidders that may emerge. A number of US buyout houses, including Kolhberg Kravis & Roberts and Blackstone have been tracking Eircom but did not make a formal bid. IIU, the investment company controlled by Mr Dermot Desmond was also interested in Eircom.
Any one of these might mount a counter offer, although they would have to bid in excess of #1.355 per share before Comsource - the largest Eircom shareholder - can break its commitment to support Valentia. Comsource owns 35 per cent and is a joint venture between KPN of Holland and Telia of Sweden.
Once the Rule 2.5 document is released then Valentia has 28 days in which to make its formal offer, which is deemed to be the posting of a detailed offer document to shareholders who then have 21 days to respond.
Valentia is a consortium of four US financial institutions. The non-executive chairman of Valentia is Sir Anthony O'Reilly, the executive chairman of Independent News & Media who has a stake of just over 4 per cent. The other members are Warburg Pincus, Soros Private Equity Partners and Providence Equity Partners. Goldman Sachs, the US merchant bank is also an investor and will raise debt for the leveraged buyout.
