Mr Denis O'Brien may end up with 20 per cent of Eircom if his eIsland bid for the former State company is successful.
It is envisaged in the bid that US venture capital company Spectrum will own a further 50 per cent and the Employee Share Ownership Trust (ESOT) will own the rest. Spectrum is expected to dilute its shareholding after a successful bid.
EIsland will formally present its latest bid for Eircom this week, putting pressure on rival Valentia Telecommunications to top its €2.99 billion (£2.35 billion) offer. If Valentia does not match eIsland within 14 days of the formal offer being made, then Eircom's largest shareholder will be free to accept the deal.
Comsource, the Dutch-Swedish joint venture which owns 35 per cent of Eircom, has given a commitment to accept a lower €2.79 billion bid - or €1.27 per share - from Valentia. It can break its commitment if a higher offer, which Valentia fails to match, is made.
EIsland is ready to launch its €1.36 per share bid as soon as today. The consortium may hold off in order to allow itself more time to negotiate with Eircom's other large share holder.
The ESOT, which owns a key 14.9 per cent of the company, has also backed Valentia, whose non-executive chairman is Sir Anthony O'Reilly. The ESOT will become a member of the Valentia bid and increase its stake in the business to 29.9 per cent.
EIsland's advisers met the ESOT last week in an effort to persuade them to change allegiance. The trust is in the process of balloting its 13,000 members on whether they want to participate in the Valentia bid. The ballot closes at 2 p.m. on Wednesday, and the result should be available on Thursday.
Although there might be some advantage in launching its offer before all the ESOT members have voted, eIsland would be reluctant to antagonise the trust. Once the eIsland bid is formally put to the ESOT and the other shareholders, the trust will be obliged to put it to its members in any case. It is not clear what form this ballot would take. It could either be a straight vote on the eIsland proposal or possibly a choice between the two bids, which would avoid the trust finding itself in the difficult position of having a mandate to accept both deals.
The structure of the eIsland bid will become clear when its offer document is published. Both bidders are offering the ESOT the chance to increase its stake to 29.9 per cent by re-investing some of the €450 million proceeds from the sale of its original 15 per cent stake. EIsland claims, however, that the trust will only have to put up €180 million in ordinary equity to be part of its bid compared to the €361 million the ESOT will have to commit under the Valentia proposals. EIsland claims that because it does not require the ESOT to take up any preference shares, the trust will have more cash to distribute to its members. The consortium calculates that the surplus available under its offer would be worth €20,500 per member, compared to €4,600 per person under the rival bid.
A crucial issue will be whether or not the eIsland proposal will allow the surplus to be distributed in a tax-efficient manner. Sources familiar with both bids say the two proposals have attracted similar investment grades from rating agencies, indicating that both consortiums will be paying much the same borrowing costs.
