Irish mobile firm backs Babcock & Brown offer

DUBLIN - Eircom Group, Ireland's largest phone company, has advised investors to accept an offer from Babcock & Brown that values the business at €2.42 billion ($5 billion).

Eircom's independent directors "believe that the cash offer, which recognises the successful implementation of Eircom's stated strategy, is fair and reasonable and is in the best interests" of shareholders, chairman Anthony O'Reilly said yesterday in an e-mailed statement.

Babcock & Brown, an Australian investment bank, is bidding with Eircom's own employee share ownership trust. It made the offer of €2.20 a share on April 14.

The offer for Eircom came four months after a failed takeover attempt by Swisscom, Switzerland's largest phone company.

Eircom controls 79 per cent of Ireland's fixed-line phone market and offers an opportunity to access the country's mobile-phone market, where consumers spend about 50 per cent more on calls than in the UK, Germany and Italy.

The cash offer is at a 35 per cent premium to the group's closing price before the Swisscom bid late last year and a 4.3 per cent premium to the price before Babcock & Brown made a preliminary approach early this year.

Shares in Eircom jumped 2.8 per cent after yesterday's announcement - widely expected after Eircom brought forward the date of its annual results last week - to €2.21, beating a 0.4 per cent rise in the Irish SE Index.

Babcock and the employee trust together own more than 50 per cent of Eircom.

Babcock & Brown has built up a 28.8 per cent stake since October, while the employee trust has 21.4 per cent, according to Babcock.

The trust plans to increase its stake to around 35 per cent after the bid, the Irish Times said yesterday.

Babcock & Brown would be Eircom's fifth owner in seven years if the offer goes through.

- BLOOMBERG