Eircom finalises plans for fifth change of ownership in 10 years

EIRCOM has finalised plans for its fifth change of ownership in 10 years as state-owned telecoms group, Singapore Technologies Telemedia (STT) prepares to make its first acquisition outside of Asia.

Eircom’s parent firm Babcock and Brown said it had recommended to shareholders the offer made by STT in June.

The deal values Eircom at €3.94 billion but its buyers will be taking on its €3.87bn in debt.

The board of Eircom has recommended the offer, the company said in a statement to the Australian stock exchange.

The company’s ESOT – employee share ownership trust – which owns 35% of the firm has agreed to co-operate with the deal.

The offer is equivalent to A$1.335 (78c) per Eircom share, representing a 20.2% premium to the closing price on June 24, 2009.

Shareholders will be offered three payment forms by STT, a unit of state investor Temasek Holdings: cash, scrip or a combination of the two.

Fine Gael communications spokesperson Simon Coveney said to date the selling on of Eircom has been “overwhelmingly negative”.

“This is predominantly because consecutive owners were venture capitalists looking to make a quick buck by reselling the company at an inflated value without making the long-term capital investment necessary to deliver for the consumer and the Irish economy,” he said.

He said STT are a “different type of potential new owner”.

“They are a very large global telecommunications company with considerable resources and so there is a realistic hope that this new owner is purchasing Eircom as a long term investment in the Irish economy,” he said.

Eircom is cutting 15% of its staff in the next two years as part of €130m of savings.

Chairman of Chambers Ireland, digital council, Claire Cunningham said if the takeover is successful, STT will bring an interesting perspective to competition issues in Ireland given that it is a “non-incumbent challenger brand in Singapore”.