Eircom agrees O'Reilly bid

Eircom: Going with O'Reilly, keeping O'Brien bid on one side

Eircom, the Irish telecoms operator, has agreed a takeover offer from media magnate Tony O'Reilly and given him two weeks to finalise terms.

Mr O'Reilly heads the Valentia consortium, which also includes financier George Soros.

It is offering Eircom shareholders a choice of either 1.27 euro a share in cash or 1.25 euro a share in cash and the right to buy some Valentia shares.

News that Eircom is entering exclusive talks with Valentia is a blow to other bidders for the company, which include e-Island - a group headed by Irish entrepreneur Denis O'Brien, which last week put in an increased 1.29 euro a share bid.

On Monday, e-Island said it had again lifted its bid - this time to 1.305 euro a share.

Ignored

But this appears to have been ignored by Eircom.

In a statement, Eircom said: "Valentia has been granted a period of exclusivity until 25 June 2001 in which to finalise the terms of the offer, which the independent directors of Eircom intend unanimously to recommend."

Eircom and Valentia said the 1.25 euro a share cash plus the rights over Valentia shares would guarantee shareholders 1.32 euro a share for their holdings.

Comsource - a consortium including operators Telia of Sweden and the Dutch KPN - on Monday said it had agreed to accept the Valentia offer for its 35% stake in Eircom.

KPN said it would receive 588m-605m euros ($499m-514m; £360m-371m) for its 21% stake held through Comsource.

Dividend in question

Others interested in Eircom have included US buyout specialists Kohlberg Kravis Roberts and New York-based Blackstone Communications Management Associates, a private equity fund.

Eircom shares were marginally down at 1.29 euros in mid-morning trading in Dublin.

Conclusion of a deal with Valentia would mean that Eircom shareholders would not get their dividend, which is due to be paid on 6 September.

E-Island said its latest offer would include paying existing Eircom shareholders the proposed 0.0246 euro a share dividend.