Eircom board okays £2bn e-Island deal

The Eircom board has agreed to be recommend the £2bn e-Island bid to its shareholders.

The announcement comes just weeks after the group initially agreed to be bought by Valentia.

Eircom said it agreed the terms of the new deal with e-Island - the consortium led by entrepreneur Denis O'Brien - and is recommending it to shareholders.

The new deal puts a higher value on the group.

E-Island's offer beats the bid by Valentia - a consortium led by the chairman of Independent News & Media, Sir Anthony O'Reilly.

The Eircom Employees Share Ownership Trust, which owns 15% of the company, had already accepted Valentia's offer, as had Dutch and Swedish shareholders KPN and Telia, who together own 35% of Eircom.

Eircom's board of directors have switched allegiance to the e-Island consortium, but it remains to be seen whether the ESOT, KPN or Telia will follow suit.

The Valentia bid comprised of two options: €1.32 per share over a period of time or €1.27 per share in cash up front.

That offer was enough for Eircom to grant Valentia a period of exclusive negotiations, but e-Island threw its hat back in the ring last week with an offer of €1.36 per share.

E-Island values the company at around €3bn.