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BT is Esat's white knight
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January 11, 2000: 3:22 p.m. ET
U.K. operator trumps Telenor with $2.5B friendly offer for Irish telecom
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LONDON (CNNfn) - British Telecommunications Tuesday stepped in to buy Esat Telecom, Ireland's No. 2 telecom operator, for 1.5 billion pounds ($2.5 billion), in the face of an unsolicited bid from Norway's state-owned telecom, Telenor.
Esat had been looking for a friendly "white knight" suitor after Telenor bid $2.1 billion for the Irish company Dec. 23. BT's all-cash offer is for $100 for each Esat American depositary share and $50 for each Esat share, topping Telenor's revised bid by 18 percent.
The ADSs of Esat (ESAT) rose 3 to 96-7/8 shortly before noon ET Tuesday on the Nasdaq market. The company's shares also are listed on Easdaq, the pan-European market for growth stocks.
In London trading, BT shares [BT-A] closed down 34 pence at 1,179, while the American depositary receipts of BT (BTY) fell 6-5/16 to 192-1/2 Tuesday afternoon on the New York Stock Exchange.
Both the British and Irish firms' boards have approved the deal, and BT already has bought a 24.9 percent share of Esat from investors including U.S. money manager Fidelity.
Esat's attractions include the number two position, behind state-owned Eircom, in fixed-line business, and a leading share of the Irish market for providing corporate Internet access.
Telecom analyst Chris Godsmark of brokerage Investec Henderson Crosthwaite said the deal was a "good move" for BT, because "Esat is the best-placed operator" in the fast-growing Irish telecom market.
A key question remains the fate of Esat Digifone, the company's cellular subsidiary. Digifone has 42 percent of the digital cellular market in Ireland and is jointly owned by Esat and failed bidder Telenor. How BT works with Telenor in the ownership of Digifone will be crucial.
"BT looks forward to working with Telenor to ensure the continued success of the [Digifone] business," BT CEO Peter Bonfield said. A BT spokesman said it was too early to speculate on the future ownership of Digifone.
Telenor refused to comment on the BT bid, although a source close to the company said senior managers were talking to financial advisors to discuss the available options.
Godsmark said BT undoubtedly will want to increase its holding in Digifone, but pointed out that the U.K. firm and Telenor already have established a good working relationship in a German joint venture.
Esat originally was the subject of a $1.6 billion bid from Newtel, the Nordic telecom company that was to have been formed by the merger of Telenor and Swedish state-owned carrier Telia.
However, that merger collapsed amid nationalistic antagonism, and Telenor decided to proceed alone with the Esat bid. It raised the value of its original offer toward the end of December. 
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