Eircom shares up as Swisscom bid resurrected

EIRCOM shares gained 3% yesterday after Swisscom put itself on a collision course with the Swiss government with plans to resurrect its aborted takeover bid.

Swisscom promised a showdown with the Swiss government, its major shareholder with a controlling 66% stake, as early as next week.

A statement released by the company yesterday said the Swisscom board, which includes a government representative, had “analysed the situation in detail” and had asked for direct talks with the government, which stunned the markets last week with the announcement it would use its shareholding to block any foreign takeovers planned by Swisscom.

The news was seen as a major slap on the wrists for Swisscom management and came just in time to prevent the company making a formal offer for Eircom that would have valued it at around €2.6 billion.

Swisscom’s management and financial advisers had spent the previous fortnight examining Eircom’s books and were believed to have been happy with their findings.

Major European stockbrokers were highly critical of Swisscom after the Eircom approach collapsed and recommended to investors they offload their shares.

Analysts said the company would be unable to reconcile the conflicting demands of management and government. Eircom shares went into freefall on last week’s news and bottomed out at €1.91, 22% lower than the €2.45 peak recorded when news of Swisscom’s interest became public. But yesterday they climbed from €1.95 to €2. Swisscom’s outline offer was thought to have been €2.41 per share.