Inadequate offer for Eircom rejected
In a brief statement the holding company said the offer was close to the lower end of the asking range for the business. Eircom said it would examine offers of between €30 and €40 million for the business.
It said in a statement to the stock exchange that the offer was “incomplete and doesn’t have the support of Eircom’s board”.
The rejection of the offer came just as the Communication Workers Union (CWU) had thrown its support behind the STT bid.
Its endorsement of STT followed the backing for the deal last week by the Employee Share Ownership Trust (Esot).
The union represents more than 5,000 Eircom workers. It said STT’s offer was “the only credible option” for the telecoms group which is strangled by debts of close to €4 billion.
Eircom has changed hands four times over the past decade, driven by private equity groups.
Its last purchase was in 2006 when it was bought by investment group Babcock & Brown.
The CWU said it firmly believed the former state-owned telecoms group needed a new owner that knows the industry and that would commit to it as a long-term investment.
“To that end, we note the interest of STT and, more importantly, the support given to that approach by the Eircom Esot,” said CWU general secretary Sean Fitzpatrick.
“Given that STT is a major industry player, it presents the prospect of an owner that understands the industry, new technologies and who in our view, is the only credible option given the stated alternatives.”
Eircom is being sold by its Sydney-listed parent group, which owns 57% of the company.
Other private equity companies are understood to have expressed interest, with Luxembourg-based CVC having been “heavily engaged”.
The group’s restructuring deal, that will see 1,200 jobs go, yielding annual savings of at least €130 million, is said to have increased its attractiveness to investors.
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