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Eircom Accepts Offer

The Independent Directors of eircom and the board of directors of BCMIH are pleased to announce that they have reached agreement

May 23, 2006

5 Min Read

DUBLIN -- The Independent Directors1 of eircom and the board of directors of BCMIH are pleased to announce that they have reached agreement on the terms of a recommended Cash Offer under which BCMIH will acquire the entire issued and to be issued ordinary share capital of eircom not already owned by BCMIH. The Offer is to be effected by means of a scheme of arrangement under section 425 of the Companies Act.

  • Under the terms of the Cash Offer, eircom Ordinary Shareholders (other than BCMIH) will be entitled to receive €2.20 in cash for each eircom Ordinary Share held.

  • In addition, eircom Ordinary Shareholders will receive a second interim dividend of €0.052 per eircom Ordinary Share for the financial year ended 31 March 2006, which is expected to be paid on 26 June 2006 to the registered holders of eircom Ordinary Shares as at 26 May 2006.

  • Accordingly, under the terms of the Cash Offer and including the second interim dividend, eircom Ordinary Shareholders will receive a total of €2.252 in cash per share.

  • The Cash Offer (including the second interim dividend of €0.052 per eircom Ordinary Share) values the entire issued ordinary share capital of eircom at approximately €2,416 million.

  • The Cash Offer (including the second interim dividend of €0.052 per eircom Ordinary Share) represents:

  • a premium of approximately 35.0 per cent. to the volume-weighted average Closing Price of €1.67 per eircom Ordinary Share for the six months to 5 October 2005, being the last business day prior to the announcement by eircom regarding speculation concerning a possible bid for eircom by Swisscom AG; and

  • a premium of approximately 4.3 per cent. to the Closing Price of €2.16 per eircom Ordinary Share on 20 February 2006, being the last business day prior to the announcement by eircom that it had received a preliminary approach from Babcock & Brown Capital Limited.

  • A Preference Share Alternative will also be made available to all Scheme Ordinary Shareholders (other than Restricted Overseas Persons).

  • The Independent Directors, who have been so advised by Morgan Stanley & Co. Limited and Goodbody Corporate Finance, consider the terms of the Cash Offer to be fair and reasonable. In providing advice to the Independent Directors, Morgan Stanley & Co. Limited and Goodbody Corporate Finance have taken into account the commercial assessments of the Independent Directors.

  • The Independent Directors have indicated to BCMIH that they intend unanimously to recommend that eircom Ordinary Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the Extraordinary General Meeting, as the Independent Directors have irrevocably undertaken to do in respect of their own beneficial holdings of, in aggregate, 4,531,529 eircom Ordinary Shares, representing (as at the date of this announcement) approximately 0.4 per cent. of the existing issued ordinary share capital of eircom.

  • BCMIH is a newly-incorporated company specifically formed for the purpose of implementing the Offer and is funded by Babcock & Brown Capital Limited (“BCM”) and certain of its affiliates (together the “BCM Group”) and the eircom Employee Share Ownership Trust (“ESOT”). BCM and the ESOT have come together with a proposal to make a joint offer. Immediately following completion of the Offer, the BCM Group and the ESOT will indirectly hold 65 per cent. and 35 per cent. of the issued ordinary share capital of BCMIH, respectively.

  • The Offer is subject to certain conditions including approval of the ESOT’s participation in BCMIH and the Offer by the passing of a resolution of the ESOT Beneficiaries. The ESOT Trustee, which has been so advised by NM Rothschild and Merrion, has confirmed to BCMIH that it intends to recommend that the ESOT Beneficiaries vote in favour of the resolution to approve the ESOT’s participation in BCMIH and the Offer.

  • In addition, the Offer will be conditional, inter alia, upon the receipt of certain regulatory clearances and (for the benefit of the ESOT) Irish taxation clearances remaining in full force and effect.

  • BCMIH, the BCM Group and the ESOT, in aggregate own approximately 50.2 per cent. of the eircom Ordinary Shares in issue.

  • Robert Topfer is Chairman of BCMIH and Con Scanlon is Deputy Chairman of BCMIH. It is intended that Pierre Danon will become Chairman of eircom upon completion of the Offer and Con Scanlon will remain Deputy Chairman.

  • The Offer will be financed by equity financing from the BCM Group and the ESOT and debt financing underwritten by Barclays Capital, Credit Suisse, Deutsche Bank, Dresdner Kleinwort Wasserstein and JPMorgan.

  • It is expected that the Scheme Document, containing further details of the Offer, will be dispatched as soon as practicable and that the Scheme will become effective in the third quarter of the 2006 calendar year, subject, inter alia, to the satisfaction of the conditions set out in Appendix I to this announcement and in the Scheme Document.

  • BCMIH and BCM are each being advised by JPMorgan Cazenove. The ESOT is being advised by NM Rothschild and Merrion. eircom is being advised by Morgan Stanley & Co. Limited and Goodbody Corporate Finance.

Commenting on the Cash Offer, Sir Anthony O’Reilly, Chairman of eircom, said:

“After careful consideration the Independent Directors of eircom intend unanimously to recommend shareholders to vote in favour of the resolutions to be proposed at the Court Meeting and the EGM. The Independent Directors believe that the Cash Offer, which recognises the successful implementation of eircom’s stated strategy, is fair and reasonable and is in the best interests of eircom ordinary shareholders, who will receive a substantial return on their investment since the eircom IPO in March 2004.”

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