Renewed weakness in technology shares after shares in Marconi were suspended weighed heavily and left Vodafone and its 450,000 Irish shareholders nursing a 5p loss on the day.
Vodafone shares fell despite confirmation by the Spanish banking giant Banco Santander that it had sold a 1.1 per cent stake in Vodafone and thus reduced substantially the overhang in Vodafone shares. The sale by Santander of 780 million shares follows the sale in recent weeks of the 219 million shares owned by KPN, and of 146 million by Telia.
Just as KPN and Telia got their Vodafone shares following the sale of Eircell, Santander got its shares when it exchanged its 30.5 per cent stake in Spanish mobile-phone operator Airtel for the Vodafone stake.
Santander's sale comes just days after the six-month lock-up expired last week. A spokesperson for the Spanish group said no decision had been taken on what the company would do with its remaining 1.62 per cent stake in Vodafone. In May, Vodafone chief executive Sir Chris Gent said he did not foresee Vodafone making any more acquisitions using shares for the time being and said he expected the shares overhanging the market to "disappear" in the next few months.
Meanwhile, balloting of the 9,000 members of the Eircom share ownership trust (ESOT) on the terms of the Valentia takeover deal has begun with a deadline of July 25th for a result. A vote in favour by the ESOT members is a precondition for the Valentia offer being made to Eircom shareholders. Valentia is due to send its offer document to Eircom shareholders on July 28th.
The ESOT has circulated a 32-page document detailing the proposal and its recommendation to members to vote in favour.
The information document emphasises the powerful position the ESOT will enjoy within the Valentia consortium, where it will have a 29.9 per cent equity and 25 per cent voting interest. The trust will also be able to nominate the vice-chairman of Valentia - Sir Anthony O'Reilly is chairman - and will also have members on the remuneration, audit and nominations committee.
So far, Valentia has not given any indication of the management structure of Eircom if its takeover is successful.
Providence Equity Partners, Soros Private Equity, Warburg Pincus and the ESOT will each have two board directors, while Providence, Soros and Warburg will between them nominate another. In addition to chairman Sir Anthony and the ESOT-nominated vice-chairman, the chief executive will also be a member of the board. The document does not state who will be Valentia's chief executive.
