Australian fund buys 12.5% eircom stake

Australian investment fund Babcock & Brown Capital and its manager have acquired a combined 12.5% stake in eircom, the fund announced today.

The stake acquisition has sparked takeover rumours at eircom, just weeks after it announced its plan to buy Meteor. Last month, eircom got approval to sell 313 million shares to existing shareholders to fund the €420m purchase of Meteor, which is owned by Western Wireless Corp.

Babcock & Brown Capital bought 10.8% of eircom for AUS$350m (€219m), the Sydney-based fund said in a statement today. Babcock & Brown Ltd, Australia's second-biggest investment bank, paid AUS$55m (€34.4m) for a 1.7% stake.

"We see this as a strategic shareholding in a company with robust fundamentals," said Rex Comb, executive director of Babcock & Brown Capital. This is the first investment for the fund after it raised AUS$1bn (€625m) in an initial offering in February.

Eircom last week moved to quash rumours of takeover talks with Swisscom AG, saying it was "not currently in discussions" with Swisscom or any other company "in relation to a possible offer". Swisscom, Switzerland's biggest phone company, declined to comment.

Portugal Telecom SGPS SA, the country's largest phone company, has also reportedly looked at eircom as a possible takeover target.