Eircom has revised elements of its €420 million takeover bid for mobile firm Meteor after the Competition Authority queried aspects of the transaction.
As Swisscom confirmed yesterday that it was behind the approach for Eircom, it emerged that the Competition Authority had sought information on the likely structure of Eircom after Meteor is subsumed into it.
The request is unlikely to scupper the deal, although it has pushed back the authority's time line for consideration of the case. That in turn could delay the prospects of any further bidders emerging for Eircom, particularly if potential bidders already have mobile units.
With hedge funds in London trading heavily in Eircom shares, some market sources are speculating about the possibility of a rival bid for Eircom from the Hong Kong-based conglomerate Hutchison Whampoa, owner of 3, the third generation (3G) mobile service. While Hutchison is known to be concentrating on 3G services, the sources said it may have an interest in extending the reach of its Irish mobile business and may look at launching a rival bid for Eircom.
They said Hutchinson would wait until the Meteor deal was signed off, for fear that by expressing an interest in Eircom at this point they would endanger the expected successful outcome of the Competition Authority review. A spokesman for Hutchison said the company never made any comment about such speculation.
The authority is concerned about the possibility that Eircom would use profits from its fixed-line business to cross-subsidise the development of Meteor, which is a distant third in the mobile market behind Vodafone and O2. It had also looked at the possibility that Meteor might, in the future, reverse that process.
Within the past week, Eircom submitted a revised submission to the authority that gave assurances that such concerns would be addressed in the preparation and presentation of its accounts.
The authority must decide by November 22nd whether to clear the deal or proceed with a "second stage" investigation that would take three months to complete. "We have received proposals from the parties and they are being considered," the authority's spokesman said.
No other bid for Eircom has emerged since news of Swisscom's approach emerged last week. On Tuesday the company secured exclusive access to Eircom's books for a short period after it increased the value of its initial indicative offer to "a tad above" €2.40.
Eircom shares lost one cent to close in Dublin last night at €2.31. Swisscom will be questioned about its approach today when it reports third-quarter figures. In view of the extensive scrutiny of Eircom's books in recent years, some believe due diligence will take less than a fortnight.
The Swisscom spokeswoman declined last night to elaborate on the statement confirming its interest in Eircom, which warned there was no certainty of a deal.
