Swisscom in €3bn takeover approach for Eircom

Shares in Eircom, Ireland's biggest telecoms company, surged yesterday after the group confirmed it had received a takeover approach, understood to have come from the Swiss operator Swisscom.

Eircom shares ended the day at a record high of €2.42, up €0.35, valuing the business at €2.6bn (£1.8bn). Eircom is chaired by Sir Anthony O'Reilly, the chief executive of Independent News & Media, the publisher of The Independent.

This is the second approach for a major player in the telecoms sector this week, after Telefónica's agreed £17.7bn bid for O2, the UK's biggest mobile phone operator, on Monday. Some analysts speculated that Swisscom could bid €3bn for Eircom. Swisscom declined to comment on whether it was behind the approach.

Eircom denied newspaper reports last month that it was in talks with Swisscom, saying it was "not currently in discussions with that company or any other in relation to a possible offer". It is understood that at that stage no formal approach had been made by the Swiss.

Eircom is the Irish equivalent of BT and the dominant incumbent operator. It was privatised in 2002 in a move which split its fixed-line and mobile businesses. But Eircom re-entered the mobile phone market this year by raising €423m in a rights issue to buy Meteor, an Irish mobile phone operator, which is owned by Western Wireless of the US.

Other potential suitors linked with a bid for Eircom include Deutsche Telekom and private-equity bidders. But the cash-rich Swisscom was seen as the best-placed bidder, particularly now that the Irish company has returned to the lucrative wireless market.