Valentia deal with ESOT was rejected by Takeover Panel
However, six days later the Takeover Panel (ITP), in a follow-up board meeting, consented to the agreement after receiving extensive submissions and confirmations from one of the consortium members, Goldman Sachs.
On June 1 2001, the ITP wrote to the Valentia consortium and informed it that its proposed agreement with the Eircom's employee share ownership trust (ESOT) was not acceptable because it was an offer not available to all Eircom shareholders, including the 550,000 retail shareholders.
The agreement gave the employees, who controlled a crucial 15% of Eircom, a 29.9% share of the Valentia consortium which was bidding to take over the former State telecom company.
The initial proposal, according to the ITP, was in breach of Rule 16 of the takeover rules. It states that an agreement offering favourable terms to shareholders is not allowed if it is not extended to all shareholders.
Over the next six days, there was an intensive exchange of correspondence between Goldman Sachs and the ITP in which the ITP sought various confirmations and assurances in relation to the proposed structures.
In one letter the consortium referred to the interest of ESOT shareholders as employees in the future of the business. It also pointed out that ESOT would be a fully participating shareholder with a long-term interest in the company.
Among the assurances given by the consortium was that ESOT's participation in Valentia would not be on more favourable terms that those being offered to other Consortium members.
On June 7, six days after its initial letter, the ITP gave its consent to implement the agreement.
Valentia also gave an undertaking that any offer made for Eircom would be available to all Eircom shareholders and that it would make an offer for 100% of the telecom's shares.
Green Party TD Eamon Ryan has tabled questions in the Dáil today asking Finance Minister Charlie McCreevy why he agreed to amend tax legislation that had the effect of facilitating the Valentia deal with ESOT.
