Vodafone shares look set to remain below £2 sterling in the run-up to Friday's meeting of Eircom shareholders to approve the demerger of Eircell as a precursor to its sale to Vodafone. The value of the all-share deal will be less than #3.5 billion, based on the current worth of Vodafone, which closed at £1.99 sterling last night in London.

This compares with the figure of over #5 billion that was mooted when the two companies began talks last November and the #4.5 billion price tag when the deal was struck last December.

The subsequent fall in the value of Eircom has cut almost 20 per cent off the value of the deal for Eircom shareholders. They will get just under one Vodafone share for every two shares they will receive in the demerged Eircell group. The deal is worth just over #1.51 per Eircom share based on yesterday's closing price for Vodafone of £1.99 sterling. In December, the deal was worth #1.84 per Eircom share.

The Eircom board is still expected to recommend the offer when it meets ahead of the Friday meeting. Although the company can walk away from the deal because of the low Vodafone share price without incurring any penalties, it is understood to believe it represents the best option for the group.

Yesterday, the world's largest mobile phone company continued the global acquisition spree that has helped push down its shares. It announced that it plans a cash offer of about 200 million Australian dollars for Australian investment vehicle Mobile Communications Holdings Ltd.

The Australian move follows the £5.8 billion sterling acquisition last week of the Japanese and Spanish mobile interests of British Telecom. The issue of 1.8 billion new shares to fund this deal depressed the share price.