Babcock and Brown and the Esot employee trust have finally tabled a bid for Eircom that values the company at €2.4 billion and will give Esot 35 per cent of the company if approved.
Sir Anthony O'Reilly
Under the terms of the cash offer, Eircom shareholders will receive €2.20 per share. They will also receive a second interim dividend of €0.052 per share for the financial year ended March 31st that is expected to be paid on June 26th.
In a statement issued this morning Eircom's independent directors said they consider the terms of the offer to be "fair and reasonable" and will recommend the deal to shareholders.
"After careful consideration, the independent directors of Eircom intend unanimously to recommend shareholders to vote in favour of the resolutions to be proposed at the court meeting and the EGM," Sir Anthony O'Reilly, chairman of Eircom, said.
"The independent directors believe that the cash offer, which recognises the successful implementation of Eircom's stated strategy, is fair and reasonable and is in the best interests of Eircom ordinary shareholders, who will receive a substantial return on their investment since the Eircom IPO in March 2004."
The offer has been made in the name of BCMIH, a newly formed investment vehicle formed by Babcock and Brown and Esot.
The offer is subject to conditions, including Esot members' approval for it to participate in BCM, and regulatory approval.
Immediately following completion of the offer, Babcock and Esot will indirectly hold 65 per cent and 35 per cent of the issued ordinary share capital of BCMIH, respectively.
If the offer is successful, Pierre Danon would replace Sir Anthony as chairman. Con Scanlon would remain deputy chairman.
BCM would be Eircom's fifth owner in seven years if the offer goes through. The group was floated on the stock market in 1999 just before the telecoms markets peaked and its share price tumbled rapidly.
It was taken private again by a consortium headed by Sir Anthony in 2001 and relisted two years ago.
BCMIH said it expected to be a long-term investor in Eircom, which it believes is well positioned to benefit from good macro-economic, social and demographic trends in Ireland.
It plans to grow Eircom's revenue in broadband and mobile, and to rebalance the existing business to take account of emerging trends in telecommunications.
BCMIH said it would continue to operate Eircom's network assets together with its retail assets but would still consider splitting the network and retail businesses if it could get Government and regulatory support for such a move.
BCM's Chairman Robert Topfer said the group planned to fund the deal with €3.8 billion of debt underwritten by Barclays Capital, Credit Suisse, Deutsche Bank, Dresdner Kleinwort Wasserstein and JPMorgan.