Eircom and SwissCom to plan due diligence

8 Nov 2005

The board of Eircom is due to meet this week to decide whether to enter into exclusive takeover talks with SwissCom and for potentially allowing SwissCom executives to conduct due diligence on the company’s books.

Over the weekend Swiss newspaper SonntagsZeitung suggested that Eircom’s board were considering allowing SwissCom executives access the books. Other reports suggest Eircom is preparing a formal response to a takeover bid from the Swiss company.

So far Eircom has declined to confirm or identify SwissCom as a bidder for the company. In a statement last week Eircom confirmed that an approach had been made. It said: “The board of Eircom notes the recent share price movement and confirms that the company has received a preliminary approach from a potential offeror that may or may not lead to an offer being made for the company. A further announcement may be made in due course as and when the need arises.”

According to a report on Forbes.co,m SwissCom is unlikely to face competition from either financial investors or other telecoms operators in pursuit of a deal. It said that Swisscom reports its financial results on Thursday and investors will be looking for comments from the company about Eircom.

When Eircom confirmed the bid last Wednesday, the news sent Eircom’s share price moving with the stock up 13.8pc or 29 cent to €2.36. However, by close of business Thursday Eircom’s share price on the Irish Stock Exchange stood at €2.30 a share. Last night Eircom gained enough ground to close at €2.37.

Eircom is understood to be anticipating a bid at in excess of €2.40 a share. However, it is believed that SwissCom’s bid so far falls slightly short of that mark. It may have to bid over €2.40 a share to win Eircom’s exclusivity.

It has been reported that SwissCom is in acquisition mode and is smarting from failed bids to take over incumbent operators in the Czech Republic and Austria over the past 18 months. A third, but successful, attempt to acquire a state telco would be viewed as a satisfactory result for SwissCom.

By John Kennedy