Takeover buzz sends Eircom up

DUBLIN - Ireland's largest telecoms operator Eircom said it had received an approach that could lead to a takeover, sending its shares surging to record highs yesterday as the market braced for a possible Swiss bid.

The company declined to name its possible suitor, but analysts and bankers said the most likely candidate was cash-rich Swiss operator Swisscom, which has been tipped in the past as a possible bidder and is seeking acquisitions.

Swisscom declined to comment.

But as bid fever swept the telecom sector just two days after Spain's Telefonica bid 17.7 billion ($45.3 billion) for cellphone group O2, shares in Eircom climbed 13.4 per cent to 2.37 ($4.14), valuing the company at about 2.54 billion.

With peers such as O2, Denmark's TDC and Greece's OTE, Eircom has been one of the sector's top takeover tips since it returned to the lucrative Irish wireless market with its purchase of mobile group Meteor in July.

"We think Swisscom's behind it," said one corporate financier. "They want to do a deal and they could easily do this because it's pretty small."

One Dublin dealer said the market was also speculating that Deutsche Telekom might focus on Ireland after the German giant said it had no plans to trump the O2 bid.

Another said talk was rife that Australian investment fund Babcock & Brown was back in the market seeking more shares.

Babcock & Brown Capital bought 12.5 per cent of Eircom for US$308 million ($444 million) last month, saying Eircom should benefit from its phone investments.

- REUTERS