Norwegian telecoms group Telenor, which has bid jointly for Esat Telecom with Swedish group Telia, is expected to make a solo bid for Esat now the merger between Telia and Telenor has collapsed.
The bid for Esat has been made using the Newtel Ireland AB vehicle, in which Telia and Telenor are joint shareholders. But it is thought likely that the Irish Takeover Panel will not raise any objection if ownership of Newtel Ireland is vested in Telenor solely, with the bid proceeding under the existing timetable.
All Telia and Telenor said yesterday was that they were discussing the future of the €1.58 billion (£1.1 billion) cash offer for Esat and that the takeover panel was being kept informed. But it is thought likely that the Newtel Ireland AB bidding vehicle will become wholly owned by Telenor and that the bid process will proceed.
Telenor already owns 49.5 per cent of mobile phone operator Esat Digifone and has a clear interest in continuing with the bid. Telia, however, has no current interest in Esat or its mobile phone associate and also plans to sell its 14 per cent shareholding in Eircom in the new year.
Esat shares remained steady in New York around $78 after their $4 fall in the immediate aftermath of the collapse of the Telia-Telenor merger. But at this level they are still well above the $71 a share offer on the table from Newtel and this clearly anticipates a higher offer. The only question for the market is whether this higher offer will come from Newtel - under Telenor's sole ownership - or whether a third party will enter the fray as a "white knight".
Market sources are sceptical about the prospects of a third party making a higher bid for Esat, with Telenor's part-ownership of Esat Digifone - the jewel in the Esat crown - likely to dissuade other bidders. The expectation is that, probably some time after the first closing date on January 7th, Newtel will increase its offer, with market sources thinking in terms of around $85 a share.
If Telenor does succeed in a solo bid for Esat, the main question is whether the Norwegians would be interested in the entire company or whether they would try to sell on the non-mobile business to some other company already active in the fixed telecoms market in Ireland.
Telenor has previously tried to buy Esat's stake in Esat Digifone and market sources believe that the Norwegians are really interested only in the mobile part of Esat's telecoms business and would be happy to sell on the fixed-line business to the likes of NTL or BT.
Telia's six-member management board met in Stockholm yesterday, following the breakdown of the €50 billion merger, and also to consider what to do about several deals in which both companies were jointly involved. Telia spokesman Mr Ulf Backman said the sale of its 14 per cent shareholding in Eircom was being looked at to see if the deal was final. "We are looking at the possibilities there," Mr Backman said.
