ESAT founder Mr Denis O'Brien last night confirmed his latest approach to Eircom valued its non-mobile business at €1.10 (£0.86) per share. It is understood his eIsland consortium has ruled out increasing that offer, if formalised, which is worth about €2.2 billion.
The final value of the approach will not be known until a due diligence examination is carried out. Only then will the extent of Eircom's debt be known because provision for that sum must be added to the €1.10 per share that eIsland may offer.
While Mr O'Brien complained on RTE radio yesterday that Eircom had not made financial information available to his consortium in recent weeks, sources close to Eircom expressed surprise at his comments. They argued Eircom could not disclose such information in the absence of a confidentiality agreement, which Mr O'Brien had yet to sign.
There were other conflicting signals yesterday. Sources close to Mr O'Brien maintained eIsland would not enter a "standstill" agreement, which would prevent him approaching shareholders if his new approach was refused by Eircom's board. Sources familiar with Eircom's strategy said it had received no indication that eIsland would not enter such an agreement.
The director general of the Takeover Panel, Mr Michael Ryan, declined last night to comment when asked about suggestions that it had expressed unhappiness to Mr O'Brien about his radio interview yesterday.
It is thought Mr O'Brien would prefer a "friendly" takeover of Eircom's non-mobile business. This would explain why he did not seek to buy out its 35 per cent shareholder, Comsource, which is owned by Dutch firm KPN and Swedish group Telia.
Buying out its shareholding would have triggered an automatic bid. Mr O'Brien appears to have been reluctant to do that.
While he praised the leadership of Eircom's unions yesterday, it is thought the unions believe €1.10 per share significantly undervalues the company.
They are also opposed to a cash bid, as signalled by eIsland, because members of the employee share option trust would incur income tax and capital gains tax when paid for the 14.9 per cent of Eircom they own.
According to one person familiar with this area, the only alternative to this would be to establish a new trust within the privatised entity, if it was established.
While the unions are unhappy with eIsland's indicative price, it is thought they accept they could not block a deal at that level if Eircom's other shareholders accepted it.
It is thought Comsource may favour acceptance of the deal. It signalled its desire to sell its holding in Eircom last year, although sources emphasised that it had not considered the eIsland approach in detail because no details were available.
A person familiar with the thinking of certain directors at Eircom said they believed the approach had the potential to evolve into a deal at that indicative price.
