The board of Eircom Group PLC said Tuesday it has accepted a takeover bid from Australia's Babcock & Brown Capital Ltd. that values Ireland's dominant telephone company at 2.42 billion euros ($3.1 billion).
Sydney-based Babcock & Brown said it offered, as expected, 2.20 euros ($2.83) in cash per share for the former state monopoly. Eircom shares rose 2.3 percent to 2.20 euros in Dublin trading.
Eircom Executive Chairman Anthony O'Reilly said the board decided the offer "is fair and reasonable and is in the best interests of Eircom ordinary shareholders."
The executive director of Babcock & Brown, Robert Topfer, said the new management would seek to accelerate the rollout of broadband services and increase market share of Eircom's cell phone division, Meteor. Meteor has 625,000 customers and an 8 percent market share _ a distant third in a mobile-mad country dominated by Vodafone and O2. Topfer said he hoped to increase Meteor's share above 20 percent.
"We clearly need to build the business in an aggressive way," Topfer said.
Eircom, which owns the entire fixed-line network in Ireland, has been heavily criticized for the slow rollout of broadband services.
Pierre Danon, a former BT executive who has been designated to replace O'Reilly as chairman, said the new owners would consider splitting Eircom into different units.
"But for the time being, we intend to run the company as an integrated company," he said.
Danon and Topfer said Eircom would be saddled with 3.8 billion euros ($4.89 billion) in debt, about double its current level, once the takeover goes through. But they dismissed analysts' concerns that this would handicap investment in Eircom infrastructure and services.
After accumulating nearly 30 percent of Eircom stock, Babcock & Brown launched its takeover bid last month in cooperation with an employee trust that holds 21.6 percent. Under the terms of the deal, the employee trust would hold a 35 percent share in the company, Babcock & Brown the rest.
The deal will require approval by Irish and EU regulators, as well as the 7,000-member employee trust.
Babcock said it also has agreed to pay shareholders a dividend of 6.7 U.S. cents.
Swisscom AG, Switzerland's major phone company, sought to buy Eircom last year for more than $3.10 a share. Those talks ended after the Swiss government, which owns two-thirds of Swisscom, barred the company from making foreign acquisitions.
Eircom's flotation was a disaster for most of the small investors who lost about two-thirds of their investment when the dot-com bubble burst. The company's fortunes turned after it was taken over in 2001 by a consortium led by O'Reilly.