The battle for Eircom has entered its closing stages, with directors of the company scheduled to meet this evening to consider final takeover offers from various suitors.
Valentia, the consortium chaired by Sir Anthony O'Reilly, which has bid #2.7 billion, is expected to make an improved offer. A higher bid is also expected from eIsland, led by Mr Denis O'Brien, which has offered #2.75 billion.
Kolhberg Kravis & Roberts (KKR), the US bank, may also meet the 4 p.m. deadline for final bids. Eircom confirmed yesterday for the first time that it was in talks with KKR and another US group, Blackstone.
Both Valentia and eIsland are expected to top the #1.221 and #1.241 per share they have respectively bid already. It is assumed that the Eircom board will accept the higher offer, but it will have to take into account the position of the Employee Share Ownership Trust (ESOT), which owns 15 per cent of Eircom and is backing Valentia.
KKR's offer - if it materialises - involves backing the current Eircom management, led by the chief executive, Mr Alfie Kane.
Valentia is in a strong position provided it can outbid eIsland today and not lose the support of ESOT, which favours a lower price. ESOT picked Valentia because it will allow it to increase its stake from 14.9 per cent to 29.9 per cent, while eIsland is offering only 25.1 per cent.
A decision is expected tonight or tomorrow, but a significant minority of Eircom's directors are reluctant to recommend any offer and would rather see the company remain on the stock market.
Eircom shares jumped six cents to #1.30 yesterday, their highest level since the splitting of the company and the sale of Eircell to Vodafone last month. Despite yesterday's gains the shares would have to more than double before their value - combined with that of the Vodafone shares received by Eircom shareholders - exceeded the #3.90 flotation price.
