eIsland increases Eircom offer to 'knockout' £1.8bn

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The Independent Online

The battle for Eircom intensified yesterday when eIsland, the group run by the Irish businessman Denis O'Brien, raised its cash offer to 1.32 euros per share, valuing Ireland's former state-owned telecoms monopoly at 3.04bn euros (£1.83bn).

The raised offer, which included the final dividend of 0.0246 euros per share, is higher than a rival agreed bid by the Valentia consortium headed by Sir Anthony O'Reilly, executive chairman of Independent News & Media, publishers of The Independent. Valentia's backers include George Soros, the financier, and Goldman Sachs, the investment bank. The all-cash bid by Valentia of 1.27 euros per share values Eircom at 2.9bn euros.

Earlier in the week, Eircom said it had reached agreement with the Valentia consortium and had given the group until Monday to finalise its bid. Eircom's board met last night to consider the new offer.

Analysts said Mr O'Brien's latest bid may not be enough to persuade Eircom shareholders – including the Dutch phone company Royal KPN and Sweden's Telia AB, which together have a 35 per cent stake – to switch allegiance from Valentia. Valentia also has the support of Eircom's employees, who have a 15 per cent stake.

On RTE, Ireland's state radio, Mr O'Brien yesterday described his new offer as a "knockout blow". He said the offer was the biggest ever made for an Irish company. Mr O'Brien said the offer is the eighth attempt by eIsland to gain control of Eircom. And he challenged Eircom's board to "do the right thing and recommend the best offer."

Mr O'Brien said his testimony before Ireland's Moriarty Tribunal, which is investigating corruption allegations, should not be a deterrent to eIsland's bid being accepted. The tribunal has been looking into allegations that Mr O'Brien paid the former communications minister, Michael Lowry, £100,000 when eIsland was seeking a mobile telephone licence for its Esat unit. Mr O'Brien netted $300m (£215m) when eIsland sold Esat to British Telecom.

"First of all, I am continuing to give my evidence, but I think the fact that one of the biggest financial institutions in the world, JP Morgan Chase, would underwrite a bid for 3bn euros, I think answers that question," Mr O'Brien said.