Eircom: O'Reilly in, O'Brien out
A SPOKESMAN for Eircom last night said that the Denis O'Brien-led eIsland's latest bid for Eircom was "not yet sufficiently developed to be capable of being put to shareholders".
Sources at Eircom are adamant that last week's fresh eIsland bid is a "purely outline proposal" and that the board has been advised that the bid is "not in fit shape" for recommendation to shareholders.
It also emerged yesterday that A & L Goodbodys, solicitors to Eircom, had advised the company that Comsource, the 35 per cent shareholder, was still bound by its undertaking to the Sir Anthony O'Reilly-led Valentia consortium.
The board's position, that Mr O'Brien's bid is not "executable" in practice was confirmed on Friday night when they issued a statement making it clear that they would continue to recommend the Valentia offer. The board takes the view that it cannot support a bid which has no chance of success because of the commitments to Valentia from both Comsource and the employees.
Meanwhile Denis O'Brien headed back to Portugal yesterday after an eventful week. Speaking to the Sunday Independent, he expressed his disappointment at the entire bidding process and the board's refusal to recommend his latest his eighth offer.
"Private and institutional shareholders will never again invest in a former State company," he said. "Everybody is losing money. The board is not accepting the highest offer because they are lazy. This is the death knell for flotation of the ESB, Aer Lingus and Aer Rianta. Institutions will not buy them."
But Valentia sources were casting serious doubts on the O'Brien bid, maintaining that their own recommended offer was already on the "edge of the investment grade", meaning that any higher offer would be of dubious commercial merit and might have to be funded in different ways.
Shares in Eircom had a good day on Friday rising 3 to 130 as a result of the further bidding activity. Turnover was high.
Yesterday the influential Lex column in the Financial Times said that it appeared that KPN and Telia's commitment to Valentia was "irrevocable", even if Eircom decided not to recommend Valentia". In that case it went on to suggest that "Eircom would be right to recommend Valentia as the only offer with a good chance of succeeding". The writer called on the board "to disclose the details of the Telia-KPN commitments and explain why its hands are tied".