Soros and O'Reilly stalk Eircom

George Soros - preparing a bid for privatised firm

The billionaire financier George Soros has teamed up with the Irish media magnate Sir Anthony O'Reilly to make a bid for Ireland's privatised telecoms firm Eircom.

"This consortium brings the right blend of telecommunications expertise, Irish management experience and financial muscle to deliver an attractive offer to Eircom shareholders," said Mr O'Reilly.

If an offer was made, it could attract other investors and spark a bidding war for Eircom.

However, some of the parties that have previously expressed an interest in buying the telecoms company have come together in the consortium to avoid such a price war.

Competing bids

The Soros/O'Reilly consortium, which is led by Providence Equity Partners, Warburg Pincus and Soros Private Equity Partners, expects its offer to receive the backing of the telecoms company's management.

But its bid is expected to have competition from the Irish entrepreneur Denis O'Brien, who has been trying for months to buy Eircom, and against the financier Dermot Desmond's consortium, International Investments & Underwriting, according to a report in the Financial Times (FT) newspaper.

The bid, which will be in the order of 2.6-2.7bn euros (£1.6-£1.7bn, $2.35-$2.44bn) according to the FT, could be the first sign that, following dramatic falls, the prices of telecoms shares are bottoming out.

The move prompted speculation that telecoms shares have become so cheap that investors are now ready to step in with opportunistic bids, a move which may reverse the recent trend of plunging telecoms stock.

The financial markets take seriously the views of Mr O'Reilly, who is the executive chairman of Independent News & Media, and Mr Soros, most famous for his role in the devaluation of the pound on Black Wednesday a decade ago.

For sale

If a bid for Eircom is successful, it will be the first takeover of a former state-owned telephone monopoly in Europe.

The Dutch company KPN and the Swedish telecoms incumbent Telia jointly own 35% of Eircom through their holding company Comsource.

Last month, KPN pledged to reduce its 21.9bn euro ($19.6bn; £13.7bn) debt pile by selling off chunks of its business, including the Eircom stake.

The Soros/O'Reilly consortium has not yet approached Comsource, nor has it contacted the Employee Share Ownership Trust which controls 15% of Eircom, the FT reported.

Separate from any bid for the company, Eircom plans to sell its Eircell mobile business to the UK mobile phone firm Vodafone in a 3.5bn euros all share deal.