Thursday 16 August 2018

Majority stake up for grabs as Eir back on the market

Aine McCarthy, prepay propositions manager, Eir, with reality TV fans Thalia Heffernan and Sarah Tansey eir mobile at the announcement of its partnership with Hayu – the all-reality subscription on-demand service from NBC Universal International. Photo Chris Bellew/Fennell Photography
Aine McCarthy, prepay propositions manager, Eir, with reality TV fans Thalia Heffernan and Sarah Tansey eir mobile at the announcement of its partnership with Hayu – the all-reality subscription on-demand service from NBC Universal International. Photo Chris Bellew/Fennell Photography
Donal O'Donovan

Donal O'Donovan

Eir's main investors are in talks that could see a majority stake in the business sold to a foreign telecoms company, while the current core shareholders retain significant holdings, the Irish Independent understands.

Eir yesterday confirmed that its major shareholders had informed the company that they have been approached by a "potential investor who may wish to make a significant investment in (Eir) alongside them".

It is relatively unusual for shareholders, rather than company management or the board of directors, to be approached by an outside bidder, especially in the case of a sale to a trade buyer.

Eir's biggest shareholders are private equity funds Anchorage Capital (42pc) and Davidson Kempner Capital (14pc) and Singapore's sovereign wealth fund, GIC.

That cohort of financial backers gradually emerged as anchor investors as private equity giant Blackstone and other funds sold off shares they picked up when the company collapsed into insolvency in 2012.

Around 24pc of the company is still owned by a mix of finance houses including former lenders.

It is not clear if the new investor will offer to mop up those small stakes as part of its approach.

A €1.29bn equity valuation was placed by Eir on the company last year, but shareholders could demand a premium to cede majority control to an outsider.

In 2014, two years after re-emerging from insolvency, Eir's then owners struggled to find a trade buyer for the business and pulled a planned stock market flotation, having failed to convince the markets that their own valuations for the business were warranted.

The company has churned through a series of owners, in the public and private markets, since it was privatised almost 20 years ago.

The wider Irish recovery, and Eir's own return to sustained profit, means it is now more attractive to a wider potential investor base including trade buyers.

Last year GIC, Singapore's sovereign wealth fund, bought a 16pc stake in Eir for €230m.

Subsequently, York Capital Management sold its 9.8pc stake in the firm to incumbent shareholders Anchorage Capital Group, GIC and Davidson Kempner Capital.

Despite an ongoing, large scale, investment programme in broadband infrastructure, Eir's need for external finance is limited.

It already has ready access to the debt markets, so new investment will provide an exit or partial exit for shareholders.

Releasing full-year results this week, Eir said that its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4pc to €520m in the 12 months to the end of June, while underlying revenue was 1pc higher at €1.32bn.

Over the past five years, Eir has cut its headcount by 2,200 to 3,279, and cut its operating cost base by over €148m a year.

The former semi-state company has witnessed a sharp improvement in its fortunes since it exited examinership, with rationalisation, investment and a recovering economy helping to revive the business.

Eir yesterday announced a partnership to screen shows by subscription-based on-demand reality TV channel Hayu on Eir Mobile.

Irish Independent

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