NEW YORK-Newtel AB, formed by the merger of Sweden’s Telia AB and Norway’s Telenor AS, announced Dec. 7 it will not sweeten its hostile cash bid of $1.59 billion to take over Esat Telecom Group plc, Ireland’s second-largest telecommunications carrier.
Already a 49.5-percent owner of Esat Telecom’s mobile phone subsidiary, Esat Digifone, Newtel proposed Dec. 1 to purchase the parent for a price equal to $72 for each American Depository Receipt, the equivalent of $36 for each share of Esat Telecom common stock.
The offer represented an 11-percent premium over the $65 closing share price of Esat Telecom’s ADRs Nov. 30, according to Moody’s Investors Service, London. The debt-rating agency noted Newtel had arranged a $2 billion loan to help finance the potential acquisition.
“Esat would not only further Newtel’s international expansion plans, but it would also allow them to obtain a majority interest in (Esat) Digifone, one of the two (Global System for Mobile communications) operators in Ireland,” said Eric de Bodard, managing director, and Michael West, senior analyst, for Moody’s European corporate ratings.
Newtel’s offer for Esat Telecom followed by several days the Nordic carrier’s announcement that it planned to sell its stake in Eircom plc, the former state monopoly that is Ireland’s largest telecommunications provider.
Denis O’Brien, chief executive of Esat Telecom, was approached first by Newtel and also was first to reject its offer. He said it “fundamentally undervalues the prospects of our business and we therefore intend to contest it vigorously.”
Newtel then launched its hostile takeover bid, which Esat Telecom’s board of directors also rejected.
“A meeting of the board of directors was convened earlier today at which it unanimously concluded that the offer fundamentally undervalues Esat,” the company said in a statement released Dec. 1. “The board of Esat … urges shareholders to reject the unwelcome and unsolicited takeover offer.”
The board also said it would issue a further announcement in due course. In the meantime, it urged company shareholders to take no action on the Newtel offer.
