American buyout giant Kohlberg Kravis Roberts has emerged as a possible fourth bidder for Eircom ahead of the Monday deadline for bids.
The news that the US group has held discussions with Eircom's advisers comes as groups headed by Mr Denis O'Brien, Sir Anthony O'Reilly and Mr Dermot Desmond consider their options over the weekend. Eircom expects interested parties to show their hands on Monday.
Eircom's Employee Share Ownership Plan Trustee (ESOP) will meet potential bidders over the weekend. The support of the ESOP, which holds a 15 per cent stake in the company and wants to increase this to around 30 per cent, is seen as crucial, with the successful bidder requiring the support of 80 per cent of the company's stock.
Kohlberg Kravis Roberts, which was the pioneer of multibillion dollar leveraged buyouts in the 1980s and 1990s, is understood to have had preliminary discussions with Eircom's advisers, Goodbody Corporate Finance. It is not clear how firm its intentions are at this stage.
It is understood the group has not had any meetings with the ESOP.
It is also not clear if Kohlberg Kravis Roberts intends to enter the bidding process on its own or whether it may align itself with one of the other potential bidders. One source suggested it could align itself with Mr Dermot Desmond's International Investment and Underwriting (IIU).
Kohlberg Kravis Roberts in New York would not comment last night, stating it was company policy "to decline to comment on speculation about transactions or potential transactions". IIU was not available for comment.
Kohlberg Kravis Roberts was formed by three partners in 1987 with the aim of investing in poorly performing companies which it could restructure and sell at a profit. It first came to public notice in 1989 when it won control of the US food and tobacco group group RJR Nabisco for $31.4 billion in a takeover battle that gave rise to the best-selling book and film Barbarians at the Gate. Since then Kohlberg Kravis Roberts has invested in a variety of industries, including some small US telecom and technology companies.
At meetings over the weekend the ESOP trustees are expected to tease out specific issues in the various offers. These include the potential for the ESOP to increase its stake from the current 15 per cent level, bidders' business plans for Eircom and how they propose to sustain jobs at the company.
Bidders are expected to offer between #1.20 to #1.25 per share for Eircom. There were indications yesterday that some of the potential bidders would ignore the Monday deadline to try to gain advantage in any competitive bidding situation. Because the deadline has been set by Eircom and is not a requirement under Irish Takeover Panel rules, one source suggested at least one consortium would wait to see the "colour of the others' money".
The source, who is close to one consortium, explained that once any bid was made, other parties can then step in with their bids, adding that an early bidder could "give away competitive advantage".