Eircom takeover valued at €2.6bn
Swisscom will offer in the region of €2.41 per share after Eircom held out for a better deal than the €2.30 previously thought to be on the table, but Eircom will undertake not to hold talks with any other potential buyers for a limited period, believed to be around two weeks.
Eircom shares closed yesterday at €2.31, 6% down from the €2.45 peak hit last week after the company confirmed it had received a takeover approach.
The share price surged 15% on the day of the announcement but has suffered since, as investors became nervous about the likelihood of the deal not going through.
Swisscom has yet to make any public comment on its interest in Eircom, but analysts said the company could break its silence as early as tomorrow, when it publishes third-quarter results.
It has also been linked with a takeover of Danish fixed-line operator TDC, the subject of a €10bn three-way control battle.
Investment banking heavyweight Goldman Sachs told clients recently that Eircom would be a better fit for Swisscom than the TDC transaction, thanks to its smaller size.
Eircom will throw open its books to Swisscom immediately after a board sub-committee agreed to the company’s revised price as a suitable base for negotiations.
It is understood Swisscom will examine Eircom’s finances over the next two weeks, after which it will either make a formal bid or walk away.
The agreement between the companies will shut out other potential bidders, although the prospect of a counterbid has receded in recent days as no other big hitter on the European telecoms scene, such as German giant Deutsche Telekom, has openly declared an interest in Eircom.
Eircom’s biggest shareholder, the employee trust that has a 22% stake in the business, has played its cards close to its chest since the approach was made public.
The trust has made no comment but will be expected to influence the shape of any deal by holding out for an offer of Swisscom shares rather than cash.
This would help to minimise any adverse tax hit felt by the 14,500 current and former Eircom staff who are members of the trust.
