Sir Anthony O'Reilly was remaining tight-lipped yesterday about his involvement in a possible bid for Eircom. He declined to answer questions after the annual general meeting in Dublin of Waterford Wedgwood about the consortium put together by Goldman Sachs which he is chairing. "I am here to talk about Waterford Wedgwood," said Sir Anthony, who is also chairman of the luxury goods group.
He refused to be drawn on comments from rival bidder, Mr Denis O'Brien, implying the 64year-old former Heinz chairman was a little too old to lead a takeover battle or run Eircom. Faced with persistent questioning from the media, Sir Anthony stuck to the mantra that he was only prepared to talk about Waterford Wedgwood.
The consortium led by the Independent News & Media chairman is considering launching a €2.6 billion (£2 billion) bid for Eircom, once the telecoms company has disposed of its mobile business to Vodafone next month. The bid would be the equivalent of €1.18 per share and significantly ahead of the €1.10 per share that Mr O'Brien's eIsland consortium has indicated that it would pay. Both potential bidders are backed by international banks and venture capital businesses.
Eircom could be worth up to €1.31 per share after the sale of Eircell, according to Ms Jemma Houlihan, a telecoms analyst with ABN Amro stockbrokers. The valuation would require the management to make cost savings in addition to those already announced and end uncertainty over the future of the 35 per cent of the company held by Comsource. The well-flagged desire of the Dutch-Swedish alliance to dispose of its stake will continue to depress the shares after the demerger.
"We believe it is highly unlikely that any bidder would pay over €1.31 for the fixed-line business, as to do so would be sharing all of the upside with current shareholders," said Ms Houlihan.
The broker recommends that shareholders should hold onto their shares for the time being but consider selling if Eircom's share price goes over €3.00 in the run-up to the demerger next month. There was heavy trading in Eircom shares yesterday with 7.5 million changing hands in Dublin and another eight million in London. The shares shed one cent to close at €2.63.
Neither Sir Anthony's nor Mr O'Brien's consortium is expected to make a bid in the short term. Although eIsland has been examining the situation and talking to Eircom for some months, it is unlikely to move until the rival consortium's intentions become clearer. The grouping led by Sir Anthony is only now in the process of obtaining information from Eircom. The third potential bidder, Mr Dermot Desmond, has been talking to Eircom but has yet to show his hand.
