The consortium led by Sir Anthony O'Reilly is back in poll position in the race for control of Eircom after raising its offer to around euro 3 billion, according to some of Dublin’s leading stockbrokers.
Comsource's 35 per cent stake added to the 15 per cent held by the ESOT trustalready pledged to Valentia, would effectively rule out eIsland's chances of garnering the 80 per cent shareholder backing required for any takeover to go through.
The Eircom board is expected to back the Valentia bid later in the day.
"I think this is the killer blow. The lock-in of the irrevocable relationship with Comsource and stretching the upper limit to 1.50 euros a share is the crucial factor. It substantially raises the hurdle for eIsland to react," Mr Kevin McConnell, analyst at Dublin-based Bloxham Stockbrokers said.
Eircom shares rose more than 3 per cent to euro 1.34on the bid news. The shares have outperformed the ISEQ index by 11 per cent since the start of this year.
"It's a very good deal, much better for shareholders. I'd be very surprised if eIsland remainsin the process," Mr McConnell added.
Ms Jemma Houlihan, analyst at ABN Amro in Dublin concurred. "At worst we've got some uncertainty while Valentia gets all the pieces in place, but it lookslike it's all over," she said.
However, while a spokesman for eIsland declined to comment on whether it would consider raising its offer, he refused to concede the battle was over.
"It's not even a question of giving up, there's an awful lot in the Valentia offer that needsto be clarified," he said.
He added eIsland was still hopeful of putting its case to the employees' group after receiving clearance yesterdayfrom the Irish Takeover Panel to negotiate directly with it.