B&B seeks to reassure: dismisses plans to split up eircom

22 May 2006

Babcock & Brown, the Australian banking group that is lining up to acquire eircom for around USD2.36 billion, has given in to trade union pressure, saying it will not split up the company if its bid is successful. B&B had originally put forward a plan to hive off eircom’s retail business from its networks unit, allowing it to sell the former and then concentrate on selling telecoms services to other telecom providers. However, a source close to the deal now says ‘eircom will continue to be run as a fully integrated company following the acquisition,’ before adding, ‘Any plans to split up the group have been put on the long finger.’

B&B’s break-up plan would most likely have encountered regulatory hurdles with the industry regulator ComReg and the Irish government. It has also assured the Communications Workers’ Union, which represents 85% of the group’s staff, that it will safeguard existing work practices. Meanwhile, the incumbent’s employee share ownership trust (ESOT) has confirmed it plans to increase its 21.5% stake in the company following guidance by corporate advisers that it must hold more than 30% to be considered a bona fide co-bidder with B&B by the UK Takeover Panel.

Ireland, eir