Newtel bid for Esat would net An Post a £20m profit

An Post will make a financial killing if Esat Telecom is taken over by Newtel - the Telia/Telenor merged company that launched a hostile €1.58 million (£1.24 billion) bid on Wednesday. The windfall would top £20 million (€25.3 million), possibly by a wide margin.

As part of Esat's £115 million takeover of An Post's PostGEM/ IOL Internet business in October, the State-owned post office bought 1.56 million Esat shares at $20.23 each for a total of £24 million. These shares are now worth $56 million (£44 million) at the Newtel offer price of $36 per ordinary share.

Esat shares, however, continued to trade well above Newtel's $36 per share ($72 per American Depository Receipt, each of which comprises two shares) offer yesterday, and the indications are that Newtel - or some third party - will have to offer well in excess of $40 a share if a bid is to success.

A higher bid would probably drive An Post's windfall profit from its Esat investment to more than £25 million. Last night, Esat ADRs closed on Nasdaq at $81 1/2, a record high.

While most attention has been focused on what the Newtel bid means for chairman Mr Denis O'Brien, even at the current $36 a share offer, the Newtel bid would create no fewer than 16 millionaires among Esat's director and executives.

Apart from Mr O'Brien, the biggest beneficiaries would be Mr Mark Roden and Mr Paul Connolly, whose shares are worth £5.3 million at the Newtel offer price. Mr Sean Corkery, who recently left Esat to join Dell Computer, has shares worth £4.2 million while finance director Mr Neil Parkinson has shares worth £3.9 million. Mr Corkery's successor as Esat chief operating officer, Ms Lucy Gaffney, has shares worth £2.7 million at the current offer price.

A host of non-executive directors, including Mr Leslie Buckley, Mr John Callaghan, Mr Brendan O'Kelly and Mr Denis O'Brien's father, Mr Denis O'Brien Snr, also have shareholdings worth between £1.8 million and £4.5 million at the current price.

In addition, one institutional investor, Fidelity, stands to make a short-term killing of at least $17 million after buying 1.15 million shares three weeks ago at around $57 per ADR.

The next phase in the Newtel bid will be the offer document from the Scandinavian bidder. This is expected to be sent to Esat shareholders long before the 28-day period specified under the takeover code.

One source said that Newtel was "keen to keep the momentum up" and suggested an offer document might even be produced within two weeks.

After that, the 60-day takeover timetable begins ticking, with Esat having 14 days from the publication of the offer document to publish its defence.