BCM and ESOT in joint €2.3bn bid for Eircom

17 Apr 2006

Australian investment firm Babcock & Brown and the Eircom Employee Share Ownership Trust (ESOT) have made a joint bid for Ireland’s largest telecoms company Eircom with an offer price of €2.20 per Eircom share plus the payment by Eircom of a €0.052 per share final dividend. It amounts to a €2.36bn takeover proposal. The joint investors together currently hold 50pc in Eircom.

In a statement issued yesterday, Babcock & Brown Capital Limited (BCM) said offer contemplated by the joint proposal is subject to due diligence and other pre-conditions. As such Eircom effectively has to open up its books to Babcock & Brown before an acquisition agreement is reached.

BCM and its associates currently hold 308,999,053 ordinary shares in Eircom representing 28.8 per cent of the issued capital. The average entry price is EUR2.05 per share. The ESOT currently holds 21.4 per cent of Eircom, so together the joint bidders hold in excess of 50pc of Eircom.

Robert Topfer, executive director of BCM, commented: “We look forward to the Eircom board’s response and are pleased that the ESOT have joined us in our approach. We have the support of a first class consortium of banks and anticipate a smooth transaction.

“We look forward to the opportunity to address all stakeholders on the merits of our proposal, once we have received a definitive response from the board,” he said.

During the past few months BCM has been meeting with industry figures and various Eircom stakeholders in Ireland, particularly ESOT. However, it emerged last week that the Communications Workers Union, which represents 41pc of members of the ESOT has claimed that BCM has not met with them.

BCM’s bid for Eircom came within months of Swisscom pulling out of its bid for Eircom. In terms of what the company intends to do if it does emerge as Eircom’s new owner, it has been suggested by sources that the company intends to look at potentially splitting Eircom into two distinct wholesale and retail entities to take advantage of opportunities in the broadband and mobile markets.

By John Kennedy