Another potential suitor for former State-owned giant

IF BABCOCK & BROWN succeeds with its takeover bid for Eircom, it will be the fourth time in less than seven years the telecom giant has changed hands.

The company made its debut on the Irish, London and New York stock markets in 1999 when the Government sold off its 85% stake in the then Telecom Éireann - the first major privatisation of a State-owned company.

However, while the Government raised more than e6 billion, nearly 500,000 ordinary shareholders eventually lost out after the company's value plummeted.

The company attempted to unlock the value of its mobile arm, Eircell, by selling it to Vodafone in 2000, but this did little to lift the share price. A lengthy battle between Denis O'Brien and Tony O'Reilly in 2001 saw Eircom land in the hands of American private equity investors.

The Valentia consortium - fronted by Dr O'Reilly and including billionaire financier George Soros among its investors - won out in the end, but shareholders were still left sitting on losses of 30% on their original investment.

In 2003, the private equity investors, Dr O'Reilly and its employee share ownership trust (ESOT) netted millions from a refinancing of the company's debt in advance of its return to the stock market the following year.

The reflotation in Dublin and London proved to be a much more low-key affair than the initial privatisation, but the shares have done well since, gaining 36%.

It looked like Eircom would be taken private last November, but the talks with Swisscom broke down after the Swiss Government blocked its national telecoms operator from foreign takeovers.

As in the takeover battle of 2001, it will be the company's employees who will have the final say on any change of ownership.

They hold 20% of Eircom's shares and can make or break a takeover bid.

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