ESAT Telecom's board has firmly rejected Telenor's revised offer of $85 (€82.32) per share for the company, claiming it is inadequate. Esat has also said discussions are continuing with third parties regarding "potential" alternative offers.
Esat chairman and chief executive Mr Denis O'Brien said that Telenor's new offer (up from $72 per share) did not reflect the value of Esat's portfolio of assets, its growth potential or the valuation of similarly publicly-traded companies. "We urge shareholders to reject this inadequate offer," he said in a statement.
The share slipped slightly yesterday, but continued to trade at around $90, well above the revised offer price.
Mr O'Brien said the Telenor document, detailing why the revised offer should be accepted, was very misleading and very selective in how it compared Esat's value to that of other companies which have recently been sold. "Our shareholders have not been fooled by this - judging by the fact that the share continues to trade at $91-$92. The business is performing very strongly at the moment," he said.
In a counter-statement last night, the Telenor board said the offer was wholly in cash and fully financed. It added that it was at a level which represented a 93 per cent premium to the average Esat closing price during the 90 days to November 30th last, the day prior to the announcement of the initial offer and a 47 per cent premium to the Esat closing price on November 29th, the day before Telenor approached Esat.
"Shareholders will wish to consider what the Esat share price would be in the absence of Telenor's offer," Telenor said. "Shareholders are encouraged to take their own view and accept without delay."
Esat stressed that shareholders were under no pressure to make a quick decision - the first closing date is January 14th. "Before that date, Esat will be providing shareholders with information regarding current trading, recent acquisitions and how these will continue to contribute to the creation of shareholder value. This will enable them to base their decision-making on the most up to date information," Esat said.
Analysts said yesterday's rejection document from Esat did not detail how the share price could continue to trade at current levels if the telecoms company remained independent. Telenor itself has pointed to the immediate fall in Esat's share price when its (Telenor's) merger with Telia of Sweden was aborted, although the price recovered quickly.
It is expected that when Esat issues more information to shareholders, in advance of the first closing date, it will give further details of why the offer should be rejected. The Esat board, which met its advisers yesterday, unanimously rejected the offer. Some observers have stressed that this is significant, perhaps pointing to a possible white knight or alternative bid. They also say it is still too early for such an offer to emerge.
However, tactically Telenor has been playing its hand in carefully managed stages to make it difficult for another bidder to enter the race. It reserves the right to make a further offer, and also holds a 49.5 per cent stake in Esat Digifone, the lucrative arm of the Esat group.
In its rejection document, Esat accuses Telenor of "inability or unwillingness or both" to make an adequate offer for Esat. It also poses the question: "Is Telenor trying to exploit its position as a minority shareholder in Digifone to acquire Esat at an inadequate price?"
In a letter to shareholders, prefacing the document, Mr O'Brien says the market's response to Telenor's new offer - made just before Christmas - is clear "and this response undermines any credibility attached to Telenor's value arguments".
