Swisscom steps up Eircom interest

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Swisscom confirmed on Wednesday it was in talks with Ireland’s Eircom but warned that a takeover, thought to value the group at at about €2.6bn ($3.06bn), was not assured.

“Swisscom confirms that it has entered into discussions with Eircom in relation to a possible transaction. However, there can be no certainty that an offer will in fact be made,” Switzerland’s foremost telecommunications operator said.

Eircom, which last week said that it had received a preliminary approach, is understood to be willing to open its books to Swisscom to allow the Swiss operator to conduct due diligence.

Cash-rich Swisscom, which is thought to have offered between €2.40 and €2.50 a share for Eircom, is also looking at other European deals, including TDC, the Danish telecoms group, and has earmarked about €10bn for acquisitions.

This year, Swisscom lost out in the auction for Cesky Telekom, the Czech operator, to Spain’s Telefónica. Last year, Swisscom made an abortive bid for Telekom Austria and is thought unlikely to try for the same asset again.

Two rival private equity consortiums are currently conducting due diligence on TDC.

One group comprises of Permira, Apax, Blackstone, Kohlberg Kravis Roberts and Providence Equity Partners; while the other is made up of Apollo Management, BC Partners, Cinven and Silver Lake.

If Eircom recommends an offer from Swisscom, it could trigger a windfall for employees.

They own 21 per cent of the company through a share ownership trust.

Swisscom will have to secure the backing of Babcock & Brown Capital, an Australian investment fund, for any bid.

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