Eircom shares surge on takeover move

EIRCOM shareholders were €330 million better off last night after the phone company’s shares shot up 15% on the back of a takeover approach from Switzerland’s market leader.

The company, worth over €2.5 billion, said it was in takeover talks, but kept the name of its potential buyer - which emerged last night to be Swisscom - a mystery.

Among the biggest winners from the price surge was Eircom’s employee trust, which owns almost 22% of the company. The value of its holding increased by over €70m, representing around €5,000 for each of the 14,000 current and former employees it represents.

The trust’s stake is now worth over €550m, almost €40,000 per trust member.

In a statement to the stock exchange, Eircom said an unnamed company had made a “preliminary approach”, adding that the talks “may or may not lead to an offer being made”.

Analysts said Swisscom could be joined in the Eircom race by German giant Deutsche Telekom, but added that a dark horse from elsewhere in Europe or even farther afield could take an interest in the company now that it was known to be on the market. Swisscom made no comment yesterday.

Eircom was linked with a potential takeover by Swisscom last month but denied at the time that it was in talks. Australian company Babcock and Brown subsequently built up a 12.5% stake in Eircom and was rumoured to have snapped up more shares earlier this week. The firm was over €40m better off yesterday.

Eircom’s share price has risen by over 25% since the start of the week, adding €500m to the firm’s value.

Dolmen Securities analyst Stuart Draper said Swisscom was known to be on the lookout for acquisitions. It was recently linked with possible takeover deals in Denmark, Austria and the Czech Republic.

Eircom was on the takeover trail in its own right during the summer, when it swooped for Meteor, Ireland’s third-largest mobile operator, for €420m.

Analysts said the Meteor deal made Eircom more attractive to potential buyers because it would be able to offer both fixed and mobile services.

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