Shares in Eircom surged 12 per cent on the Irish Stock Exchange today after the company confirmed it was in talks regarding a potential takeover of the company.
Eircom's board confirmed to the market that the company has received a preliminary approach from an as yet unnamed bidder.
Shares in Eircom surged on news of takeover talks
But a source familiar with the matter said Swiss telecoms operator Swisscom was behind a takeover approach.
The source said that talks were at an early stage and that Eircom had not yet opened its books to Swisscom, although it was expected to do so very soon.
In a brief statemnet to the stock exchange the company said "The Board of Eircom notes the recent share price movement and confirms that the company has received a preliminary approach from a potential offeror that may or may not lead to an offer being made for the Company. A further announcement may be made in due course as and when the need arises."
Earlier Eircom shares reacted instantly to the news rising 26 cent higher to €2.35.
Speculation has been rife in recent weeks that Eircom was in play following recent takeover activity in the European telecoms sector. On Monday Spanish telco, Telefonica, bid €27 billion for UK operator O2.
In October, Eircom denied media reports linking it to Swisscom. However takeover speculation has persisted since Eircom only denied that it was "currently" in talks and made no reference to possible approaches it might have received in the past.
Eircom is among the top remaining bid targets in the sector, along with Greece's OTE and TDC of Denmark, which has also received offers. Eircom controls more than 75 per cent of Ireland's fixed-line market.
Based on average prices for recent deals in the sector, it could carry a price tag of around €4 billion, said Stuart Draper, head of research at Dolmen Stockbrokers.
"That's going on a potential bid price of around 2.39 euros a share and adding in around 1.5 billion in net debt," he said.
Mr Draper speculated that Swisscom was the most likely contender for Eircom. "I suppose there is strong rationale that it would be Swisscom making the approach," he said.
Additional reporting by Reuters